Attached files
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| EX-99.1 - PRESS RELEASE ANNOUNCING SECOND QUARTER 2017 FINANCIAL RESULTS - UMPQUA HOLDINGS CORP | umpqq22017ex991earningsrel.htm |
| 8-K - 8-K - UMPQUA HOLDINGS CORP | umpqq220178-k.htm |
UMPQUA HOLDINGS CORPORATION
2nd Quarter 2017 Earnings Conference Call Presentation
July 20, 2017
2
Forward-looking Statements and Notes
This presentation 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 presentation we make forward-
looking statements about fee revenue and operating efficiency initiatives and the credit discount accretion related to loans
acquired from Sterling. 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 inability to effectively manage
problem credits; our inability to successfully implement efficiency initiatives; our ability to successfully develop and market
new products and technology; and changes in laws or regulations.
Second Quarter 2017 Highlights
3
Net earnings available to common shareholders of $56.8 million, or $0.26 per diluted common share
Net interest income increased by $5.4 million, driven by growth in interest-earning assets and a 6 basis point increase
in net interest margin
Provision for loan and lease losses decreased by $1.0 million to $10.7 million, and net charge-offs remained at 0.22%
of average loans and leases (annualized)
Non-interest income increased by $10.9 million, driven primarily by higher revenues from the origination and sale of
residential mortgages
Non-interest expense increased by $1.3 million, driven primarily by higher salaries and employee benefits expense,
reflecting higher mortgage banking-related compensation, consistent with the increase in mortgage originations, and
annual merit and incentive changes
Gross loan and lease growth of $491.5 million, or 11% annualized
Deposit growth of $292.7 million, or 6% annualized
Non-performing assets to total assets decreased to 0.23%
Estimated total risk-based capital ratio of 14.1% and estimated Tier 1 common to risk weighted assets ratio of 11.1%
Declared quarterly cash dividend of $0.16 per common share
Repurchased 225,000 shares of common stock for $3.9 million
Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016
Return on average assets 0.92% 0.75% 1.11% 1.01% 0.91%
Return on average tangible assets 0.99% 0.81% 1.20% 1.09% 0.99%
Return on average common equity 5.76% 4.74% 7.04% 6.28% 5.61%
Return on average tangible common equity 10.67% 8.83% 13.19% 11.79% 10.59%
Efficiency ratio ‐ consolidated 64.71% 68.15% 59.65% 62.11% 66.15%
Net interest margin ‐ consolidated 3.91% 3.85% 3.83% 3.95% 4.07%
Non‐performing loans and leases to loans and leases 0.29% 0.29% 0.32% 0.31% 0.28%
Non‐performing assets to total assets 0.23% 0.24% 0.25% 0.25% 0.27%
Net charge‐offs to average loans and leases (annualized) 0.22% 0.22% 0.29% 0.24% 0.23%
Tangible common equity to tangible assets (1) 9.12% 9.15% 9.10% 9.14% 9.30%
Tier 1 common to risk‐weighted asset ratio (2) 11.1% 11.3% 11.5% 11.3% 11.0%
Total risk‐based capital ratio (2) 14.1% 14.5% 14.7% 14.5% 14.3%
Selected Ratios
4
Performance
Credit Quality
Capital
For the quarter ended
> (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided at the end of this slide presentation.
> (2) Capital ratio estimated for current quarter, pending completion and filing of regulatory reports.
Summary Income Statement
5
> Note: tables may not foot due to rounding.
($ in millions except per share data) Q2 2017 Q1 2017 Q2 2016
Net interest income before provision 212.1$ 206.7$ 209.2$
Provision for loan and lease losses 10.7 11.7 10.6
Net interest income after provision 201.4 195.1 198.6
Non-interest income 71.1 60.2 74.7
Non-interest expense 184.0 182.7 188.5
Income before provision for income taxes 88.5 72.6 84.8
Provision for income taxes 31.7 26.6 30.5
Net income 56.8 46.0 54.3
Dividends and undistributed earnings allocated to participating securities 0.0 0.0 0.0
Net earnings available to common shareholders 56.8$ 46.0$ 54.3$
Earnings per share - diluted $0.26 $0.21 $0.25
Quarter ended
Net Interest Income and Margin
6
$209.2 $209.9 $207.8 $206.7
$212.1
4.07% 3.95% 3.83% 3.85% 3.91%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
$100
$120
$140
$160
$180
$200
$220
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Net interest income Net interest margin
(in millions)
3.86% 3.77% 3.65% 3.71%
Adjusted
NIM (1)
> (1) Net interest margin, excluding interest income related to credit discount from Sterling deal and related to 310-30 covered loan PIFs
3.78%
Provision for Loan and Lease Losses
7
$10.6
$13.1 $13.2
$11.7
$10.7
$0
$2
$4
$6
$8
$10
$12
$14
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Provision for Loan and Lease Losses(in millions)
Non-interest Income
8
(in millions)
$9.8 $10.2 $14.5 $10.7 $12.4
$5.6 $1.3
$4.1
$1.8
$3.3
$2.2 $2.1
$2.1
$2.1
$2.1
$36.8 $47.2
$58.4
$26.8
$33.9
$4.6
$4.1
$4.2
$4.1
$3.9
$15.7
$15.8
$15.3
$14.7
$15.5
$0
$20
$40
$60
$80
$100
$120
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Other (1) Gain on loan sales BOLI income Residential mortgage banking revenue, net Brokerage fees Service charges
$80.7
$98.6
$60.2
$74.7
> (1) Includes other income, gains or losses on investment securities and losses on junior subordinated debentures carried at fair value.
$71.1
9
$366 $306 $250 $245 $312
$1,046 $1,119
$1,061
$755
$918
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Closed mortgage volume
Portfolio For Sale
(in millions)
Mortgage Banking
4.02% 4.08%
3.05%
3.27%
3.53%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Gain on sale margin
$1,230
$1,412 $1,424
$1,311
$1,000
Non-interest Expense
10
(in millions)
Non-interest Expense and Efficiency Ratio Non-interest Expense Bridge
$182.7
$184.0
$188.5
$181.2 $183.5 $182.7 $184.0
66.2%
62.1% 59.7%
68.2%
64.7%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
130.0%
$115.0
$125.0
$135.0
$145.0
$155.0
$165.0
$175.0
$185.0
$195.0
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Non-interest expense Efficiency ratio
$2.8 $(1.8)
$1.7
$(1.2)
(in millions)
$(2.8)
Selected Balance Sheet
11
($ in millions) Q2 2017 Q1 2017 Q2 2016
Total assets 25,257.8$ 24,861.5$ 24,132.5$
Interest bearing cash and temporary investments 295.9 422.0 535.8
Investment securities available for sale, fair value 3,132.6 3,243.4 2,482.1
Loans and leases, gross 18,321.1 17,829.6 17,355.2
Allowance for loan and lease losses (136.9) (136.3) (131.0)
Goodwill and other intangibles, net 1,821.2 1,822.8 1,828.3
Deposits 19,460.0 19,167.3 18,258.5
Securities sold under agreements to repurchase 330.2 304.3 360.2
Term debt 852.2 852.3 903.0
Total shareholders' equity 3,958.8 3,931.2 3,902.2
Ratios:
Loan to deposit ratio 94.1% 93.0% 95.1%
Book value per common share $17.98 $17.84 $17.70
Tangible book value per common share (1) $9.71 $9.57 $9.41
Tangible common equity to tangible assets (1) 9.12% 9.15% 9.30%
> (1) Non-GAAP financial measure. A reconciliation to the comparable GAAP measurement is provided in the appendix of this slide presentation.
Loan and Deposit Growth
Loans and Leases (Gross)
$6.4 $6.5 $7.2
$7.7
$15.3
$16.9 $17.5
$18.3
(in billions)
19%
14%
16%
3%1%
9%
6%
6%
16%
6%
4% Non-owner occupied term CRE
Owner occupied term CRE
Multifamily
Commercial construction
Residential development
Commercial term
Commercial lines of credit & other
Leases & equipment finance
Mortgage
Home equity lines & loans
Consumer & other
As of Jun 30, 2017
32%
12%35%
7%
14% Demand, non-interest
bearing
Demand, interest bearing
Money market
Savings
Time
$9.4 $9.2 $9.4 $9.1
$16.9 $17.7
$19.0 $19.5
(in billions) Total Deposits
As of Jun 30, 2017
12
Credit Quality
0.76% 0.77% 0.77% 0.76% 0.75%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Allowance for loan and lease losses to loans and leases
0.27% 0.25% 0.25% 0.24% 0.23%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Non-performing assets to total assets
0.23%
0.24%
0.29%
0.22% 0.22%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Net charge-offs to average loans and leases
(annualized)
13
Prudent Capital Management
14
> All regulatory capital ratios remained in excess of well-capitalized and internal policy limits
> Focused on prudently managing capital
• Quarterly dividend of $0.16 per share, ~3.5% dividend yield
• Q2 total payout ratio of 61%
9.12% 9.4%
11.1% 11.1%
Tangible Common
Equity/Tangible Assets
Tier 1 Leverage Tier 1 Common Risk Based Tier 1 Risk Based Total Risk Based
Q2 2017 Capital Ratios (1)
Common TRUP LLR
> (1) Regulatory capital ratios are estimates pending completion and filing of the Company’s regulatory reports.
> Note: LLR = loan loss reserve, TRUP = trust preferred capital, Common = tangible common equity.
14.1%
Appendix – Non-GAAP Reconciliation
Non-GAAP Reconciliation – Tangible Book Value
16
Thank you