Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Report contains certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These statements may include statements that expressly or implicitly predict future results, performance or events. Statements other than statements of historical fact are forward-looking statements. You can find many of these statements by looking for words such as "anticipates," "expects," "believes," "estimates," "intends" and "forecast," and words or phrases of similar meaning.
We make forward-looking statements about the projected impact on our business operations of the COVID-19 pandemic; Next Gen 2.0 initiatives including store consolidations, operational improvements, and facilities rationalizations; LIBOR; derivatives and hedging; the results and performance of models and economic forecasts used in our calculation of the ACL; projected sources of funds and the Company's liquidity position; our securities portfolio; loan sales; adequacy of our ACL, including the reserve for unfunded commitments; provision for credit losses; non-performing loans and future losses; performance of troubled debt restructurings; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; PPP forgiveness and SBA fees; the economic environment; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including mortgage servicing rights values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology. 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: current and future economic and market conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, and any slowdown in economic growth particularly in the western United States; the length and immediate and long-term effects of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions and demand for our products; economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates; our ability to effectively manage problem credits; our ability to successfully implement technology, efficiency and operational excellence initiatives; our ability to successfully develop and market new products and technology; changes in laws or regulations; and our ability to successfully negotiate with landlords or reconfigure facilities. We also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements, applicable law and regulations (including federal securities laws and state and federal banking laws and regulations), and other factors deemed relevant by the Company's Board of Directors, and will be subject to regulatory approval or conditions.
Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Risks and uncertainties include those set forth in our filings with the Securities and Exchange Commission and the following factors that might cause actual results to differ materially from those presented:
•the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on the economy and financial markets, the continued effectiveness of our work from home arrangements and staffing levels in operational facilities, challenges associated with our return to office plans such as maintaining a safe office environment and integrating at-home and in-office staff, the impact of market participants on which we rely and actions taken by governmental authorities and other third parties in response to the pandemic and the impact of lower equity market valuations on our service and management fee revenue;
•continued deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans;
•our ability to successfully, including on time and on budget, implement and sustain information technology product and system enhancements and operational initiatives;
•our ability to attract new deposits and loans and leases;
•our ability to retain deposits, especially during store consolidations;
•demand for financial services in our market areas;
•competitive market pricing factors;
•our ability to effectively develop and implement new technology;
•continued market interest rate volatility;
•prolonged low interest rate environment;
•continued compression of our net interest margin;
•stability and cost of funding sources;
•continued availability of borrowings and other funding sources such as brokered and public deposits;
•changes in legal or regulatory requirements or the results of regulatory examinations that could increase expenses or restrict growth;
•our ability to recruit and retain key management and staff;
•availability of, and competition for, acquisition opportunities;
•our ability to raise capital or incur debt on reasonable terms;
•regulatory limits on the Bank's ability to pay dividends to the Company;
•financial services reform and the impact of legislation and implementing regulations on our business operations, including our compliance costs, interest expense, and revenue;
•a breach or failure of our operational or security systems, or those of our third-party vendors, including as a result of cyber-attacks; and
•competition, including from financial technology companies.
There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements are made as of the date of this Form 10-Q. We do not intend to update these forward-looking statements. Readers should consider any forward-looking statements in light of this explanation, and we caution readers about relying on forward-looking statements.
General
Umpqua Holdings Corporation, an Oregon corporation, is the financial holding company of Umpqua Bank. The Bank's wholly-owned subsidiary, Financial Pacific Leasing, Inc., is a commercial equipment leasing company.
Umpqua Bank is the largest bank with headquarters in the Pacific Northwest and is considered one of the most innovative banks in the United States, recognized for its company culture and customer experience strategy. The Bank provides a broad range of banking, wealth management, mortgage and other financial services to corporate, institutional, and individual customers.
Along with its subsidiaries, the Company is subject to the regulations of state and federal agencies and undergoes regular examinations by these regulatory agencies.
Executive Overview
Recent Developments – COVID-19
At this time, the extent and magnitude of the impact on our business of the ongoing COVID-19 pandemic and related governmental reaction due to numerous uncertainties are still not fully known. The impact of COVID-19 continues to evolve and the recovery could be slowed or reversed by a number of factors, including a resurgence in COVID-19 infections, whether due to the spread of variants or otherwise, the availability and rate of vaccinations, and the rate in which state and local governments are permitting businesses to re-open.
To limit the impact of COVID-19 on our business operations, customers and associates, we have continued to restrict travel, maintain remote-work programs for associates, restrict lobby access to some stores and have customers bank by appointment, online, or via our app, increase facilities cleaning scope and frequency, and deploy resources for programs such as the Payroll Protection Program. We have also addressed other customer needs during the pandemic by continuing to offer our Umpqua Go-To® application which offers customers and associates a safe and effective way to conduct banking.
While we do not know and cannot quantify all of the specific impacts, the extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which remain uncertain and cannot be predicted, including the scope and duration of the pandemic; actions taken by governmental authorities and other third parties in response to the pandemic; the effect on our customers, counterparties, employees and third party service providers; and the effect on the economy and markets.
The following is a discussion of our results for the three months ended March 31, 2021, as compared to the applicable prior periods.
Financial Performance
•Net income per diluted common share was $0.49 for the three months ended March 31, 2021, as compared to net loss per diluted common share of $8.41 for the three months ended March 31, 2020. The increase in net income for the three months ended March 31, 2021, is due to the goodwill impairment taken in 2020, a decrease in provision for credit losses and an increase in residential mortgage banking revenue.
•Net interest margin, on a tax equivalent basis, was 3.18% for the three months ended March 31, 2021, as compared to 3.41% for the three months ended March 31, 2020. The decrease in net interest margin for the three months ended March 31, 2021, compared to the same period in the prior year, was driven by lower yields on interest-earning assets due to the interest rate cuts that the Federal Reserve instituted as a response to the COVID-19 pandemic. The decrease was partially offset by increased volume of interest-earning assets, as well as due to a reduction in the cost of interest-bearing liabilities.
•Residential mortgage banking revenue was $65.0 million for the three months ended March 31, 2021, as compared to $17.5 million for the three months ended March 31, 2020. The increase in residential mortgage banking revenue for the three months ended March 31, 2021 was primarily driven by an increase in originations due to elevated refinance demand due to lower interest rates. This resulted in an increase in the income from the origination and sale of residential mortgages of $23.2 million, for the three months ended March 31, 2021 as compared to the same period in the prior year. The fair value of the MSR asset decreased due to changes to inputs in the valuation model, including changes in discount rates and prepayment speeds, by $2.0 million for the three months ended March 31, 2021, as compared to a decrease of $25.4 million for the three months ended March 31, 2020.
•For-sale mortgage closed loan volume increased by 42% for the three months ended March 31, 2021 as compared to the same period in the prior year. In addition, the gain on sale margin increased to 3.82% for the three months ended March 31, 2021, as compared to 3.43% in the same period of the prior year.
•Total loans and leases were $22.2 billion as of March 31, 2021, an increase of $381.5 million, as compared to December 31, 2020. The increase in total loans is primarily due to an increase in the commercial real estate balances of $92.2 million and an increase in net PPP loan balances of $297.6 million. The change in net PPP loan balances during the quarter was the result of an increase in round two PPP net loan balances of $659.2 million, offset by a decrease in PPP round one net loan balances of $361.6 million. The PPP loans may increase loan balances only temporarily as PPP loan balances will decline as customers complete the applicable loan forgiveness process through the SBA.
•Total deposits were $25.9 billion as of March 31, 2021, an increase of $1.3 billion, compared to December 31, 2020. This increase was due to growth in demand, money market, and savings deposits, which is attributable to higher savings rates and government stimulus payments driving increased average balances per deposit accounts. The increase is partially offset by a decline in time deposits.
•Total consolidated assets were $30.0 billion as of March 31, 2021, compared to $29.2 billion at December 31, 2020. The increase was mainly due to an increase in on-balance sheet liquidity, as well as an increase in loans due to PPP loan production.
Credit Quality
•Non-performing assets decreased to $56.2 million, or 0.19% of total assets, as of March 31, 2021, as compared to $69.2 million, or 0.24% of total assets, as of December 31, 2020. Non-performing loans and leases were $54.8 million, or 0.25% of total loans and leases, as of March 31, 2021, as compared to $67.4 million, or 0.31% of total loans and leases, as of December 31, 2020.
•The allowance for credit losses on loans and leases was $311.3 million, as of March 31, 2021, a decrease of $17.1 million, as compared to December 31, 2020. The reserve for unfunded commitments was $19.8 million, as of March 31, 2021, a decrease of $526,000, as compared to December 31, 2020. The decrease in the allowance for credit losses is due to net charge-offs during the period.
•The Company had no provision for credit losses for the three months ended March 31, 2021. This was compared to a provision for credit losses of $118.1 million for the three months ended March 31, 2020. The decrease compared to the same period in 2020, was due to stabilization of credit quality metrics and economic forecasts used in credit models as of March 31, 2021.
Liquidity
•Total cash and cash equivalents was $3.2 billion as of March 31, 2021, an increase of $668.0 million from December 31, 2020. The increase in cash and cash equivalents reflects the Bank's current liquidity position with the growth in deposit balances.
Capital and Growth Initiatives
•Umpqua launched "Next Gen 2.0" as a continuation of our initiative to modernize the Bank. Like its predecessor, the Next Gen 2.0 program includes initiatives to grow revenue, invest in strategic areas for future growth, including technology and digital enhancements, and to continue to advance operational excellence goals to reduce operating costs and invest the savings in strategic growth opportunities. We have prioritized converting new PPP customers to expanded relationships with additional products and services, implemented new technology to gain efficiencies and advance the customer experience, and planned consolidation of stores and back office facilities for expense reduction.
•The Company's total risk based capital ratio was 15.8% and its Tier 1 common to risk weighted assets ratio was 12.6% as of March 31, 2021. As of December 31, 2020, the Company's total risk based capital ratio was 15.6% and its Tier 1 common to risk weighted assets ratio was 12.3%.
•The Company paid a quarterly cash dividend of $0.21 per common share on February 26, 2021 to shareholders of record as of February 16, 2021.
Summary of Critical Accounting Policies
Our critical accounting policies are described in detail in the Summary of Critical Accounting Policies section of the Form 10-K for the year ended December 31, 2020, filed with the SEC on February 25, 2021. The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. The Company's critical accounting policies include the allowance for credit losses, residential mortgage servicing rights, and fair value. There have been no material changes in these policies during the three months ended March 31, 2021.
Results of Operations
Overview
For the three months ended March 31, 2021, net income was $107.7 million or $0.49 per diluted common share, which compares to net loss of $1.9 billion or $8.41 per diluted common share for the three months ended March 31, 2020.
In the first quarter of 2021, the Company realigned its operating segments based on changes in management's focus and its internal reporting structure. The Company now reports two segments: Core Banking and Mortgage Banking. This aligns with how we manage the profitability of the Company and also provides greater transparency into the financial contribution of mortgage banking activities.
The Core Banking segment includes all lines of business, except Mortgage Banking, including wholesale, retail, wealth management, as well as the operations, technology, and administrative functions of the Bank and Holding Company. The Mortgage Banking segment includes the revenue earned from the production and sale of residential real estate loans, the servicing income from our serviced loan portfolio, the quarterly changes in the MSR asset, and the specific expenses that are related to mortgage banking activities including variable commission expenses. Revenue and related expenses related to residential real estate loans held for investment are included in the Core Banking segment as portfolio loans are an anchor product for our consumer channels and are originated through a variety of channels throughout the Company. Refer to the segment information footnote for additional detail of the segments' financial statements.
As a result of the Company's efforts to manage through the pandemic, as well as the beginning phases of Umpqua Next Gen 2.0, we are reporting solid financial trends within the Core Banking segment, including loan portfolio growth, an increase in non-interest income, and lower non-interest expense. The Core Banking segment was responsible for 81% of our reported net income for the quarter ended March 31, 2021. The increase in net income for the three months ended March 31, 2021 for the Core Banking segment, compared to the same period of the prior year is attributable to the goodwill impairment recorded in first quarter of 2020, in addition to the decrease in the provision for credit losses.
The increase in net income for the three months ended March 31, 2021 for the Mortgage Banking segment, compared to the same period of the prior year, is attributable to increased residential mortgage banking revenue from strong mortgage production due to lower interest rates and higher margins. The fair value of the MSR asset decreased due to changes to inputs in the valuation model, including changes in discount rates and prepayment speeds, by $2.0 million for the three months ended March 31, 2021, as compared to a decrease of $25.4 million for the three months ended March 31, 2020.
The following table presents the return on average assets, average common shareholders' equity and average tangible common shareholders' equity for the three months ended March 31, 2021 and 2020. For each period presented, the table includes the calculated ratios based on reported net income. Our return on average common shareholders' equity was negatively impacted as the result of capital required to support goodwill. To the extent this performance metric is used to compare our performance with other financial institutions that do not have merger and acquisition-related intangible assets, we believe it is beneficial to also consider the return on average tangible common shareholders' equity. The return on average tangible common shareholders' equity is calculated by dividing net income by average shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs). The return on average tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with the return on average common shareholders' equity.
Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity
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|
Three Months Ended
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|
(dollars in thousands)
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|
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|
|
March 31, 2021
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|
March 31, 2020
|
|
Return on average assets
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|
|
|
|
1.49
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%
|
|
(25.82)
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%
|
|
Return on average common shareholders' equity
|
|
|
|
|
16.33
|
%
|
|
(174.94)
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%
|
|
Return on average tangible common shareholders' equity
|
|
|
|
|
16.43
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%
|
|
(301.30)
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%
|
|
Calculation of average common tangible shareholders' equity:
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Average common shareholders' equity
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|
|
|
|
$
|
2,674,871
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|
|
$
|
4,257,711
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|
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Less: average goodwill and other intangible assets, net
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|
(15,598)
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|
(1,785,608)
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Average tangible common shareholders' equity
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$
|
2,659,273
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|
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$
|
2,472,103
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|
Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy. Umpqua believes the exclusion of certain intangible assets in the computation of tangible common equity and tangible common equity ratio provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results and capital of the Company. Tangible common equity is calculated as total shareholders' equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs). In addition, 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 tangible common equity and tangible common equity ratio is considered a non-GAAP financial measure and should be viewed in conjunction with the total shareholders' equity and the total shareholders' equity ratio.
The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of March 31, 2021 and December 31, 2020:
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(dollars in thousands)
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March 31, 2021
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December 31, 2020
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Total shareholders' equity
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$
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2,681,869
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$
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2,704,577
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Subtract:
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Goodwill
|
2,715
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|
|
2,715
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Other intangible assets, net
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12,230
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|
|
13,360
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Tangible common shareholders' equity
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$
|
2,666,924
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|
|
$
|
2,688,502
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Total assets
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$
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30,036,680
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|
|
$
|
29,235,175
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Subtract:
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|
|
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Goodwill
|
2,715
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|
|
2,715
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|
|
Other intangible assets, net
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12,230
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|
|
13,360
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|
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Tangible assets
|
$
|
30,021,735
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|
|
$
|
29,219,100
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|
Tangible common equity ratio
|
8.88
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%
|
|
9.20
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%
|
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
Net Interest Income
Net interest income for the three months ended March 31, 2021 was $221.4 million, an increase of $2.9 million compared to the same period in 2020. This increase was driven by the lower cost of interest-bearing liabilities due to lower retail and brokered time deposits as the Bank has allowed these higher-cost deposits to runoff. The decrease in interest expense was partially offset by lower average yields on interest-earning assets for the period.
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.18% for the three months ended March 31, 2021, as compared to 3.41% for the same period in 2020. The decrease in net interest margin for the three months ended March 31, 2021, primarily resulted from a decrease in the average yields on interest-earning assets, partially offset by the decline in the cost of interest-bearing liabilities and the increase in average loan and lease balances. The Federal Open Market Committee expects to maintain the target rates at the current levels until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. Key interest rate declines experienced over the past year have negatively impacted the Company's net interest margin.
The yield on loans and leases for the three months ended March 31, 2021 decreased by 56 basis points, as compared to the same period in 2020, primarily attributable to the decrease in short and long-term interest rates. The cost of interest-bearing liabilities decreased 77 basis points, for the three months ended March 31, 2021, as compared to the same period in 2020, also due to the decrease in interest rates and corresponding deposit pricing strategy.
Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds. The Company continues to be "asset-sensitive." The decrease in yields on earning assets has compressed the net interest margin, even as liabilities reprice downward. Further rate changes will continue to have an impact on our net interest margin. In addition, the increase in average loans and leases in the current period is due mostly to PPP loans, which are expected to be short-term in nature due to SBA forgiveness of these loans.
The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the three months ended March 31, 2021 and 2020:
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|
|
(dollars in thousands)
|
Three Months Ended
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
|
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
|
$
|
703,557
|
|
|
$
|
4,845
|
|
|
2.75
|
%
|
|
$
|
406,434
|
|
|
$
|
4,264
|
|
|
4.20
|
%
|
|
Loans and leases (1)
|
21,692,639
|
|
|
216,296
|
|
|
4.02
|
%
|
|
21,196,989
|
|
|
241,729
|
|
|
4.58
|
%
|
|
Taxable securities
|
2,945,896
|
|
|
13,710
|
|
|
1.86
|
%
|
|
2,760,461
|
|
|
17,283
|
|
|
2.50
|
%
|
|
Non-taxable securities (2)
|
252,741
|
|
|
1,915
|
|
|
3.03
|
%
|
|
241,105
|
|
|
1,894
|
|
|
3.14
|
%
|
|
Temporary investments and interest bearing cash
|
2,483,451
|
|
|
624
|
|
|
0.10
|
%
|
|
1,084,854
|
|
|
3,331
|
|
|
1.23
|
%
|
|
Total interest-earning assets
|
28,078,284
|
|
|
$
|
237,390
|
|
|
3.41
|
%
|
|
25,689,843
|
|
|
$
|
268,501
|
|
|
4.19
|
%
|
|
Other assets
|
1,314,206
|
|
|
|
|
|
|
3,154,930
|
|
|
|
|
|
|
Total assets
|
$
|
29,392,490
|
|
|
|
|
|
|
$
|
28,844,773
|
|
|
|
|
|
|
INTEREST-BEARING LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand deposits
|
$
|
3,125,398
|
|
|
$
|
414
|
|
|
0.05
|
%
|
|
$
|
2,471,556
|
|
|
$
|
3,543
|
|
|
0.58
|
%
|
|
Money market deposits
|
7,360,512
|
|
|
1,491
|
|
|
0.08
|
%
|
|
7,107,626
|
|
|
11,759
|
|
|
0.66
|
%
|
|
Savings deposits
|
1,998,927
|
|
|
163
|
|
|
0.03
|
%
|
|
1,485,171
|
|
|
241
|
|
|
0.07
|
%
|
|
Time deposits
|
2,681,361
|
|
|
8,610
|
|
|
1.30
|
%
|
|
4,630,956
|
|
|
24,747
|
|
|
2.15
|
%
|
|
Total interest-bearing deposits
|
15,166,198
|
|
|
10,678
|
|
|
0.29
|
%
|
|
15,695,309
|
|
|
40,290
|
|
|
1.03
|
%
|
|
Repurchase agreements and federal funds purchased
|
395,946
|
|
|
76
|
|
|
0.08
|
%
|
|
337,796
|
|
|
395
|
|
|
0.47
|
%
|
|
Borrowings
|
539,077
|
|
|
1,772
|
|
|
1.33
|
%
|
|
906,624
|
|
|
4,046
|
|
|
1.79
|
%
|
|
Junior subordinated debentures
|
343,473
|
|
|
3,052
|
|
|
3.60
|
%
|
|
361,983
|
|
|
4,903
|
|
|
5.45
|
%
|
|
Total interest-bearing liabilities
|
16,444,694
|
|
|
$
|
15,578
|
|
|
0.38
|
%
|
|
17,301,712
|
|
|
$
|
49,634
|
|
|
1.15
|
%
|
|
Non-interest-bearing deposits
|
9,897,749
|
|
|
|
|
|
|
6,880,457
|
|
|
|
|
|
|
Other liabilities
|
375,176
|
|
|
|
|
|
|
404,893
|
|
|
|
|
|
|
Total liabilities
|
26,717,619
|
|
|
|
|
|
|
24,587,062
|
|
|
|
|
|
|
Common equity
|
2,674,871
|
|
|
|
|
|
|
4,257,711
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$
|
29,392,490
|
|
|
|
|
|
|
$
|
28,844,773
|
|
|
|
|
|
|
NET INTEREST INCOME
|
|
|
$
|
221,812
|
|
|
|
|
|
|
$
|
218,867
|
|
|
|
|
NET INTEREST SPREAD
|
|
|
|
|
3.03
|
%
|
|
|
|
|
|
3.04
|
%
|
|
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
|
|
|
|
|
3.18
|
%
|
|
|
|
|
|
3.41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. The amount of such adjustment was an addition to recorded income of approximately $381,000 for the three months ended March 31, 2021, as compared to $332,000 for the same period in 2020
|
The following table sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for the three months ended March 31, 2021 as compared to the same period in 2020. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2021 compared to 2020
|
|
|
Increase (decrease) in interest income and expense due to changes in
|
|
(in thousands)
|
Volume
|
|
Rate
|
|
Total
|
|
INTEREST-EARNING ASSETS:
|
|
|
|
|
|
|
Loans held for sale
|
$
|
2,382
|
|
|
$
|
(1,801)
|
|
|
$
|
581
|
|
|
Loans and leases
|
5,360
|
|
|
(30,793)
|
|
|
(25,433)
|
|
|
Taxable securities
|
1,079
|
|
|
(4,652)
|
|
|
(3,573)
|
|
|
Non-taxable securities (1)
|
89
|
|
|
(68)
|
|
|
21
|
|
|
Temporary investments and interest bearing cash
|
1,989
|
|
|
(4,696)
|
|
|
(2,707)
|
|
|
Total interest-earning assets (1)
|
10,899
|
|
|
(42,010)
|
|
|
(31,111)
|
|
|
INTEREST-BEARING LIABILITIES:
|
|
|
|
|
|
|
Interest bearing demand deposits
|
745
|
|
|
(3,874)
|
|
|
(3,129)
|
|
|
Money market
|
403
|
|
|
(10,671)
|
|
|
(10,268)
|
|
|
Savings
|
66
|
|
|
(144)
|
|
|
(78)
|
|
|
Time deposits
|
(8,336)
|
|
|
(7,801)
|
|
|
(16,137)
|
|
|
Repurchase agreements
|
59
|
|
|
(378)
|
|
|
(319)
|
|
|
Borrowings
|
(1,390)
|
|
|
(884)
|
|
|
(2,274)
|
|
|
Junior subordinated debentures
|
(243)
|
|
|
(1,608)
|
|
|
(1,851)
|
|
|
Total interest-bearing liabilities
|
(8,696)
|
|
|
(25,360)
|
|
|
(34,056)
|
|
|
Net increase in net interest income (1)
|
$
|
19,595
|
|
|
$
|
(16,650)
|
|
|
$
|
2,945
|
|
|
(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.
|
Provision for Credit Losses
The Company had no provision for credit losses for the three months ended March 31, 2021. This was compared to a provision for credit losses of $118.1 million for the three months ended March 31, 2020. The change in the provision for credit losses for three months ended March 31, 2021 as compared to the same prior year period, is primarily attributed to a stabilization of credit quality metrics and economic forecasts used in credit models in the current quarter. The Company adopted CECL as of January 1, 2020, so there may be volatility in the provision for credit losses as CECL requires a current expected credit loss for the life of the loan, instead of incurred losses under prior guidance. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the three months ended March 31, 2021 was zero as compared to 2.24% for the same period in 2020.
For the three months ended March 31, 2021, net charge-offs were $17.6 million as compared to $21.7 million for the three months ended March 31, 2020. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended March 31, 2021 was 0.33%, as compared to 0.41% for the same period in 2020.
Typically, loans in a non-accrual status will not have an allowance for credit loss as they will be written down to their net realizable value or charged-off. However, the net realizable value for homogeneous leases and equipment finance agreements are determined by the loss given default calculated by the CECL model, and therefore homogeneous leases and equipment finance agreements on non-accrual will have an allowance for credit loss amount until they become 181 days past due, at which time they are charged-off. The non-accrual leases and equipment finance agreements of $15.4 million as of March 31, 2021 have a related allowance for credit losses of $12.2 million, with the remaining loans written-down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.
Non-Interest Income
Non-interest income for the three months ended March 31, 2021 was $108.8 million, an increase of $68.2 million or 168% as compared to the same period in 2020. The following table presents the key components of non-interest income for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Change Amount
|
|
Change Percent
|
|
Service charges on deposits
|
|
|
|
|
|
|
|
|
$
|
9,647
|
|
|
$
|
11,473
|
|
|
$
|
(1,826)
|
|
|
(16)
|
%
|
|
Card-based fees
|
|
|
|
|
|
|
|
|
7,374
|
|
|
7,417
|
|
|
(43)
|
|
|
(1)
|
%
|
|
Brokerage revenue
|
|
|
|
|
|
|
|
|
3,915
|
|
|
4,015
|
|
|
(100)
|
|
|
(2)
|
%
|
|
Residential mortgage banking revenue, net
|
|
|
|
|
|
|
|
|
65,033
|
|
|
17,540
|
|
|
47,493
|
|
|
271
|
%
|
|
Gain (loss) on sale of debt securities, net
|
|
|
|
|
|
|
|
|
4
|
|
|
(133)
|
|
|
137
|
|
|
nm
|
|
(Loss) gain on equity securities, net
|
|
|
|
|
|
|
|
|
(706)
|
|
|
814
|
|
|
(1,520)
|
|
|
(187)
|
%
|
|
Gain on loan and lease sales, net
|
|
|
|
|
|
|
|
|
1,373
|
|
|
1,167
|
|
|
206
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank owned life insurance income
|
|
|
|
|
|
|
|
|
2,071
|
|
|
2,129
|
|
|
(58)
|
|
|
(3)
|
%
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
20,089
|
|
|
(3,777)
|
|
|
23,866
|
|
|
nm
|
|
Total non-interest income
|
|
|
|
|
|
|
|
|
$
|
108,800
|
|
|
$
|
40,645
|
|
|
$
|
68,155
|
|
|
168
|
%
|
|
nm = Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the quarter, the Company added the card-based fees line item. Prior period has been reclassified to conform to the current presentation. Card-based fees are comprised of debit and credit card income, ATM fees, and merchant services income. Debit and credit card income is primarily comprised of interchange fees earned whenever our customers' debit and credit cards are processed through card payment networks.
Service charges on deposits decreased by $1.8 million for the three months ended March 31, 2021 compared to the same period in the prior year. The decrease is primarily related to a change in customers' spending habits as a result of the COVID-19 pandemic, which has resulted in overdraft fees decreasing as customers are keeping more funds liquid and making fewer transactions.
Other income for the three months ended March 31, 2021 increased by $23.9 million, when compared to the same period in the prior year, primarily due to a gain on the swap derivative fair value of $11.8 million as compared to a loss of $14.3 million in the prior period, due to changes in long-term interest rates.
Residential mortgage banking revenue, which is the primary source of income for the Mortgage Banking segment, increased for the three months ended March 31, 2021, as compared to the same period of 2020, by $47.5 million. The increase for the three month period was primarily driven by an increase in originations in 2021 due to elevated refinance demand because of lower interest rates, which resulted in an increase in revenue related to originations and sale of residential mortgages of $23.2 million, as compared to prior year. The change in fair value of the MSR asset due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds decreased by $2.0 million for the three months ended March 31, 2021, as compared to a decrease of $25.4 million for the three months ended March 31, 2020.
For-sale mortgage closed loan volume increased 42% or $487.3 million for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020. In addition, the gain on sale margin increased to 3.82%, for the three months ended March 31, 2021, as compared to 3.43% in the same period of the prior year due to constrained industry capacity. Direct expense related to the origination of for-sale mortgage loans as a percentage of loan production was 1.90% for the three months ended March 31, 2021, as compared to 2.09% as compared to the three months ended March 31, 2020.
Origination volume is generally linked to the level of interest rates. When rates fall, origination volume would be expected to be elevated relative to historical levels. When rates rise, origination volume would be expected to fall. Margins observed in the current quarter could narrow somewhat in future periods as mortgage industry capacity constraints ease and refinance demand is met. The MSR asset value is also sensitive to interest rates, and generally falls with lower rates and rises with higher rates.
Servicing income was $9.1 million for the three months ended March 31, 2021, as compared to $8.9 million, for the same period of 2020. Income was higher primarily due to a larger portfolio of loans serviced for others.
The following table presents our residential mortgage banking revenue for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
(in thousands)
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Origination and sale
|
|
|
|
|
$
|
62,505
|
|
|
$
|
39,347
|
|
|
Servicing
|
|
|
|
|
9,087
|
|
|
8,880
|
|
|
Change in fair value of MSR asset:
|
|
|
|
|
|
|
|
|
Changes due to collection/realization of expected cash flows over time
|
|
|
|
|
(4,545)
|
|
|
(5,329)
|
|
|
Changes in valuation inputs or assumptions (1)
|
|
|
|
|
(2,014)
|
|
|
(25,358)
|
|
|
Residential mortgage banking revenue, net
|
|
|
|
|
$
|
65,033
|
|
|
$
|
17,540
|
|
(1)The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.
Non-Interest Expense
Non-interest expense for the three months ended March 31, 2021 was $187.6 million a decrease of $1.8 billion or 90%, as compared to the same period in 2020. Excluding the goodwill impairment taken in 2020, non-interest expense, for the three months ended March 31, 2021, increased $9.9 million over the same period in the prior year. The following table presents the key elements of non-interest expense for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Change Amount
|
|
Change Percent
|
|
Salaries and employee benefits
|
|
|
|
|
|
|
|
|
$
|
124,134
|
|
|
$
|
109,774
|
|
|
$
|
14,360
|
|
|
13
|
%
|
|
Occupancy and equipment, net
|
|
|
|
|
|
|
|
|
34,635
|
|
|
37,001
|
|
|
(2,366)
|
|
|
(6)
|
%
|
|
Communications
|
|
|
|
|
|
|
|
|
2,763
|
|
|
3,128
|
|
|
(365)
|
|
|
(12)
|
%
|
|
Marketing
|
|
|
|
|
|
|
|
|
1,372
|
|
|
2,530
|
|
|
(1,158)
|
|
|
(46)
|
%
|
|
Services
|
|
|
|
|
|
|
|
|
10,750
|
|
|
10,770
|
|
|
(20)
|
|
|
—
|
%
|
|
FDIC assessments
|
|
|
|
|
|
|
|
|
2,599
|
|
|
2,542
|
|
|
57
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization
|
|
|
|
|
|
|
|
|
1,130
|
|
|
1,247
|
|
|
(117)
|
|
|
(9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
10,209
|
|
|
10,730
|
|
|
(521)
|
|
|
(5)
|
%
|
|
Non-interest expense before goodwill impairment
|
|
|
|
|
|
|
|
|
187,592
|
|
|
177,722
|
|
|
9,870
|
|
|
6
|
%
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
|
—
|
|
|
1,784,936
|
|
|
(1,784,936)
|
|
|
nm
|
|
Total non-interest expense
|
|
|
|
|
|
|
|
|
$
|
187,592
|
|
|
$
|
1,962,658
|
|
|
$
|
(1,775,066)
|
|
|
(90)
|
%
|
|
nm = Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment of $1.8 billion was recorded as of March 31, 2020, due to an interim impairment analysis in the first quarter of 2020, triggered by the decline in interest rates and economic impacts of COVID-19, as well as declines in the Company's stock price. There was no impairment recorded in the current period.
Salaries and employee benefits increased by $14.4 million for the three months ended March 31, 2021 as compared to the same period in the prior year. This increase is primarily related to an increase in Mortgage Banking compensation of $11.0 million for the three months ended March 31, 2021 related to higher origination volumes during the period.
Occupancy and equipment expense decreased by $2.4 million mainly due to decreased software expenses for the three months ended March 31, 2021 as compared to the same period in the prior year.
FINANCIAL CONDITION
Cash and Cash Equivalents
Cash and cash equivalents were $3.2 billion at March 31, 2021, compared to $2.6 billion at December 31, 2020. The increase of interest bearing cash and temporary investments reflects strong deposit growth in the quarter, outpacing loan growth and borrowing declines. An elevated on-balance sheet liquidity position enhances the Company's liquidity flexibility given the market volatility and uncertainty in the current environment.
Investment Securities
Investment debt securities available for sale were $3.2 billion as of March 31, 2021, compared to $2.9 billion at December 31, 2020. The increase was due to purchases of $555.3 million of investment securities, offset by sales and paydowns of $227.1 million, as well as a decrease of $87.3 million in fair value of investment securities available for sale.
The following tables present the available for sale and held to maturity investment debt securities portfolio by major type as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Securities Available for Sale
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(dollars in thousands)
|
Fair Value
|
|
%
|
|
Fair Value
|
|
%
|
|
U.S. Treasury and agencies
|
$
|
736,658
|
|
|
23
|
%
|
|
$
|
762,202
|
|
|
26
|
%
|
|
Obligations of states and political subdivisions
|
275,080
|
|
|
9
|
%
|
|
279,511
|
|
|
10
|
%
|
|
Residential mortgage-backed securities and collateralized mortgage obligations
|
2,156,087
|
|
|
68
|
%
|
|
1,890,845
|
|
|
64
|
%
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
$
|
3,167,825
|
|
|
100
|
%
|
|
$
|
2,932,558
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Securities Held to Maturity
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(dollars in thousands)
|
Amortized Cost
|
|
%
|
|
Amortized Cost
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities and collateralized mortgage obligations
|
$
|
2,954
|
|
|
100
|
%
|
|
$
|
3,034
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity securities
|
$
|
2,954
|
|
|
100
|
%
|
|
$
|
3,034
|
|
|
100
|
%
|
We review investment securities on an ongoing basis for the presence of impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors.
Gross unrealized losses in the available for sale investment portfolio were $38.4 million at March 31, 2021. This consisted primarily of unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations of $35.1 million. The unrealized losses were attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no allowance for credit losses was considered necessary on these debt securities as of March 31, 2021.
Restricted Equity Securities
Restricted equity securities were $22.1 million at March 31, 2021 and $41.7 million at December 31, 2020, the majority of which represents the Bank's investment in the FHLB of Des Moines. The decrease is attributable to redemptions of FHLB stock during the period due to decreased FHLB borrowing activity. FHLB stock is carried at par and does not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions and can only be purchased and redeemed at par.
Loans and Leases
Total loans and leases outstanding at March 31, 2021 were $22.2 billion, an increase of $381.5 million as compared to December 31, 2020. The increase is attributable to net new loan and lease originations of $267.9 million, primarily due to our participation in the PPP, as well as the transfer of $212.4 million from loans held for sale to loans held for investment. The increase was partially offset by loans sold of $81.2 million and net charge-offs of $17.6 million.
The following table presents the concentration distribution of the loan and lease portfolio, net of deferred fees and costs, as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(dollars in thousands)
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Commercial real estate
|
|
|
|
|
|
|
|
|
Non-owner occupied term, net
|
$
|
3,455,773
|
|
|
15
|
%
|
|
$
|
3,505,802
|
|
|
16
|
%
|
|
Owner occupied term, net
|
2,358,169
|
|
|
11
|
%
|
|
2,333,945
|
|
|
11
|
%
|
|
Multifamily, net
|
3,421,320
|
|
|
15
|
%
|
|
3,349,196
|
|
|
15
|
%
|
|
Construction & development, net
|
876,297
|
|
|
4
|
%
|
|
828,478
|
|
|
4
|
%
|
|
Residential development, net
|
190,841
|
|
|
1
|
%
|
|
192,761
|
|
|
1
|
%
|
|
Commercial
|
|
|
|
|
|
|
|
|
Term, net
|
4,350,763
|
|
|
20
|
%
|
|
4,024,467
|
|
|
18
|
%
|
|
Lines of credit & other, net
|
825,162
|
|
|
4
|
%
|
|
862,760
|
|
|
4
|
%
|
|
Leases & equipment finance, net
|
1,420,977
|
|
|
6
|
%
|
|
1,456,630
|
|
|
7
|
%
|
|
Residential
|
|
|
|
|
|
|
|
|
Mortgage, net
|
3,958,644
|
|
|
18
|
%
|
|
3,871,906
|
|
|
18
|
%
|
|
Home equity loans & lines, net
|
1,097,168
|
|
|
5
|
%
|
|
1,136,064
|
|
|
5
|
%
|
|
Consumer & other, net
|
205,746
|
|
|
1
|
%
|
|
217,358
|
|
|
1
|
%
|
|
Total, net of deferred fees and costs
|
$
|
22,160,860
|
|
|
100
|
%
|
|
$
|
21,779,367
|
|
|
100
|
%
|
As of March 31, 2021, there were $258.2 million in mortgage loans that were transferred from loans held for sale to loans held for investment and are carried at fair value.
In April 2020, the Bank began originating loans to qualified small businesses under the PPP administered by the SBA. As of March 31, 2021, we have $2.0 billion of SBA-approved PPP loans, net of related fees and costs, to approximately 18,000 customers, which are classified as commercial term loans. Of the $2.0 billion net PPP loans at March 31, 2021, there were $1.4 billion in net loans to approximately 11,000 customers for round one PPP loans, and there were $659.2 million in net loans to approximately 7,000 customers for round two PPP loans. We will recognize the remaining unamortized balance of the PPP-related net loan processing fees of approximately $44.4 million, as a yield adjustment over the remaining term of these loans, although the forgiveness of these loans by the SBA accelerates the accretion of these fees.
Asset Quality and Non-Performing Assets
The following table summarizes our non-performing assets and TDR loans as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
|
Loans and leases on non-accrual status
|
$
|
29,216
|
|
|
$
|
31,076
|
|
|
Loans and leases past due 90 days or more and accruing
|
25,612
|
|
|
36,361
|
|
|
Total non-performing loans and leases
|
54,828
|
|
|
67,437
|
|
|
Other real estate owned
|
1,405
|
|
|
1,810
|
|
|
Total non-performing assets
|
$
|
56,233
|
|
|
$
|
69,247
|
|
|
Restructured loans (1)
|
$
|
9,921
|
|
|
$
|
14,991
|
|
|
Allowance credit losses on loans and leases
|
$
|
311,283
|
|
|
$
|
328,401
|
|
|
Reserve for unfunded commitments
|
19,760
|
|
|
20,286
|
|
|
Allowance for credit losses
|
$
|
331,043
|
|
|
$
|
348,687
|
|
|
Asset quality ratios:
|
|
|
|
|
Non-performing assets to total assets
|
0.19
|
%
|
|
0.24
|
%
|
|
Non-performing loans and leases to total loans and leases
|
0.25
|
%
|
|
0.31
|
%
|
|
Allowance for credit losses on loans and leases to total loans and leases
|
1.40
|
%
|
|
1.51
|
%
|
|
Allowance for credit losses to total loans and leases
|
1.49
|
%
|
|
1.60
|
%
|
|
Allowance for credit losses to total non-performing loans and leases
|
604
|
%
|
|
517
|
%
|
(1)Represents accruing TDR loans performing according to their restructured terms.
At March 31, 2021 and December 31, 2020, troubled debt restructurings of $9.9 million and $15.0 million, respectively, were classified as accruing restructured loans. The restructurings were granted in response to borrower financial difficulty, and generally provide for a modification of loan repayment terms.
A further decline in the economic conditions due to the COVID-19 pandemic as well as in our general market areas or other factors could adversely impact individual borrowers or the loan portfolio in general. Accordingly, there can be no assurance that loans will not become 90 days or more past due, placed on non-accrual status, restructured or transferred to other real estate owned in the future. Umpqua is committed to helping borrowers during this unprecedented time of uncertainty and is working with customers on payment deferrals, forbearances, and other loan modifications.
COVID-19 Related Payment Deferrals and Forbearance
Due to the deterioration of the U.S. economy resulting from the COVID-19 pandemic, the Company has had an increase in loan payment deferral and forbearance requests. Once a deferral or forbearance request is received, a late charge waiver is put in place and payments are suspended for an agreed-upon period. Accrued and unpaid interest during the deferral period will be collected upon the expiration of the deferral or on a regular repayment schedule at the end of the deferral period. For certain loan types, the maturity date may be extended to allow for full amortization. In accordance with the deferral guidance at the federal and state levels, these loans are generally classified based on their past due status prior to their deferral period, so they are classified as performing loans that accrue interest.
A summary of outstanding loan balances with active payment deferral or forbearance as of March 31, 2021 are shown in the table below, disaggregated by major types of loans and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans with Deferrals or Forbearances
|
|
(dollars in thousands)
|
Number of Loans
|
|
Loan Balance Outstanding
|
|
% of Loan Portfolio
|
|
Commercial real estate
|
|
|
|
|
|
|
Non-owner occupied term, net
|
22
|
|
$
|
111,307
|
|
|
3
|
%
|
|
Owner occupied term, net
|
13
|
|
27,029
|
|
|
1
|
%
|
|
Multifamily, net
|
2
|
|
5,759
|
|
|
—
|
%
|
|
Construction & development, net
|
1
|
|
1,636
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
Term, net
|
5
|
|
1,074
|
|
|
—
|
%
|
|
Lines of credit & other, net
|
6
|
|
869
|
|
|
—
|
%
|
|
Leases & equipment finance, net
|
539
|
|
19,506
|
|
|
1
|
%
|
|
Residential
|
|
|
|
|
|
|
Mortgage, net
|
271
|
|
152,250
|
|
|
4
|
%
|
|
Home equity loans & lines, net
|
32
|
|
3,828
|
|
|
—
|
%
|
|
Consumer & other, net
|
39
|
|
735
|
|
|
—
|
%
|
|
Total
|
930
|
|
$
|
323,993
|
|
|
1
|
%
|
|
|
|
|
|
|
|
Excluded from the mortgage loans with payment deferrals or forbearance in the above table are $166.3 million of repurchased GNMA loans on deferral, as the credit risk of these loans are guaranteed by government programs such as the Federal Housing Agency, Veterans Affairs, and USDA Rural Development.
The Bank continues to monitor COVID-19 deferrals and if a customer continues to experience financial difficulty after the initial deferral and further concessions are granted, the loan will be reviewed to determine if a TDR designation is appropriate.
Allowance for Credit Losses
The ACL totaled $331.0 million at March 31, 2021, a decrease of $17.6 million from $348.7 million at December 31, 2020. The following table shows the activity in the ACL for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
(dollars in thousands)
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Allowance for credit losses on loans and leases
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
|
|
|
$
|
328,401
|
|
|
$
|
157,629
|
|
|
|
Impact of adoption of CECL
|
|
|
|
|
—
|
|
|
49,999
|
|
|
|
Adjusted balance, beginning of period
|
|
|
|
|
328,401
|
|
|
207,628
|
|
|
|
Provision for credit losses on loans and leases
|
|
|
|
|
526
|
|
|
105,502
|
|
|
|
Charge-offs
|
|
|
|
|
(20,915)
|
|
|
(24,455)
|
|
|
|
Recoveries
|
|
|
|
|
3,271
|
|
|
2,745
|
|
|
|
Net charge-offs
|
|
|
|
|
(17,644)
|
|
|
(21,710)
|
|
|
|
Balance, end of period
|
|
|
|
|
$
|
311,283
|
|
|
$
|
291,420
|
|
|
Reserve for unfunded commitments
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
|
|
|
$
|
20,286
|
|
|
$
|
5,106
|
|
|
|
Impact of adoption of CECL
|
|
|
|
|
—
|
|
|
3,238
|
|
|
|
Adjusted balance, beginning of period
|
|
|
|
|
20,286
|
|
|
8,344
|
|
|
|
(Recapture) provision for credit losses on unfunded commitments
|
|
|
|
|
(526)
|
|
|
12,583
|
|
|
|
Balance, end of period
|
|
|
|
|
19,760
|
|
|
20,927
|
|
|
Total allowance for credit losses
|
|
|
|
|
$
|
331,043
|
|
|
$
|
312,347
|
|
|
As a percentage of average loans and leases (annualized):
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
|
|
0.33
|
%
|
|
0.41
|
%
|
|
|
Provision for credit losses
|
|
|
|
|
—
|
%
|
|
2.24
|
%
|
|
Recoveries as a percentage of charge-offs
|
|
|
|
|
15.64
|
%
|
|
11.22
|
%
|
With the adoption of CECL, we recorded a one-time cumulative-effect pre-tax adjustment in the amount of $53.2 million. The allowance for credit losses on loans and leases increased by $50.0 million and the allowance for unfunded commitments increased by $3.2 million, resulting in a January 1, 2020, or day 1, balance of the Allowance for Credit Losses of $216.0 million.
The provision for credit losses includes the provision for loan and lease losses, provision (recapture) for unfunded commitments, and the provision for credit losses related to accrued interest on loans. There was no provision of credit losses for the three months ended March 31, 2021. The decrease from the provision for credit losses of $118.1 million for the three months ended March 31, 2020 was due to the stabilization of credit quality metrics and economic forecasts used in credit models.
The following table sets forth the allocation of the allowance for credit losses on loans and leases and percent of loans in each category to total loans and leases as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(dollars in thousands)
|
Amount
|
|
% Loans to total loans
|
|
Amount
|
|
% Loans to total loans
|
|
Commercial real estate
|
$
|
154,475
|
|
|
46
|
%
|
|
$
|
141,710
|
|
|
47
|
%
|
|
Commercial
|
128,838
|
|
|
30
|
%
|
|
150,864
|
|
|
29
|
%
|
|
Residential
|
21,090
|
|
|
23
|
%
|
|
27,964
|
|
|
23
|
%
|
|
Consumer & other
|
6,880
|
|
|
1
|
%
|
|
7,863
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses on loans and leases
|
$
|
311,283
|
|
|
|
|
$
|
328,401
|
|
|
|
The following table shows the change in the allowance for credit losses from December 31, 2020 to March 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Q1 2021 net charge-offs
|
|
Reserve build/(release)
|
|
March 31, 2021
|
|
% of Loan and Leases Outstanding
|
|
Commercial real estate
|
|
$
|
157,070
|
|
|
$
|
339
|
|
|
$
|
12,734
|
|
|
$
|
170,143
|
|
|
1.65
|
%
|
|
Commercial
|
|
153,054
|
|
|
(17,523)
|
|
|
(4,892)
|
|
|
130,639
|
|
|
1.98
|
%
|
|
Residential
|
|
29,625
|
|
|
38
|
|
|
(7,285)
|
|
|
22,378
|
|
|
0.44
|
%
|
|
Consumer
|
|
8,938
|
|
|
(498)
|
|
|
(557)
|
|
|
7,883
|
|
|
3.83
|
%
|
|
Total allowance for credit losses
|
|
$
|
348,687
|
|
|
$
|
(17,644)
|
|
|
$
|
—
|
|
|
$
|
331,043
|
|
|
|
|
% of loans and leases outstanding
|
|
1.60
|
%
|
|
|
|
|
|
1.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To calculate the ACL, the CECL models use a forecast of future economic conditions and are dependent upon specific macroeconomic variables that are relevant to each of the Bank's loan and lease portfolios. For the first quarter of 2021, the Bank used Moody's February baseline forecast. Key components include a U.S. economy experiencing strong growth, then normalized growth thereafter, GDP growth over both the short and long term, and unemployment rate of 6.1% through 2021 with a return to less than 5% unemployment by the third quarter of 2022. The models for calculating the ACL are sensitive to changes in these and other economic variables, which could result in volatility as these assumptions change over time. In addition, the forward-looking assumptions revert to historical data when they reach the point where future assumptions are no longer estimated.
We believe that the allowance for credit losses as of March 31, 2021 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available. If the economic conditions continue to decline, the Bank may need additional provisions for credit losses in future periods.
Residential Mortgage Servicing Rights
The following table presents the changes in our residential mortgage servicing rights portfolio for the three months ended March 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
(in thousands)
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Balance, beginning of period
|
|
|
|
|
$
|
92,907
|
|
|
$
|
115,010
|
|
|
Additions for new MSR capitalized
|
|
|
|
|
14,065
|
|
|
10,023
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value:
|
|
|
|
|
|
|
|
|
Changes due to collection/realization of expected cash flows over time
|
|
|
|
|
(4,545)
|
|
|
(5,329)
|
|
|
Changes due to valuation inputs or assumptions (1)
|
|
|
|
|
(2,014)
|
|
|
(25,358)
|
|
|
Balance, end of period
|
|
|
|
|
$
|
100,413
|
|
|
$
|
94,346
|
|
(1)The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.
Information related to our residential serviced loan portfolio as of March 31, 2021 and December 31, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
March 31, 2021
|
|
December 31, 2020
|
|
Balance of loans serviced for others
|
$
|
13,030,467
|
|
|
$
|
13,026,720
|
|
|
MSR as a percentage of serviced loans
|
0.77
|
%
|
|
0.71
|
%
|
Residential mortgage servicing rights are adjusted to fair value quarterly with the change recorded in residential mortgage banking revenue. The value of servicing rights can fluctuate based on changes in interest rates and other factors. Generally, as interest rates decline and borrowers are able to take advantage of a refinance incentive, prepayments increase and the total value of existing servicing rights declines as expectations of future servicing fees collections decline. Historically, the fair value of our residential mortgage servicing rights will increase as market rates for mortgage loans rise and decrease if market rates fall. Mortgage refinance volumes remain elevated due to continued low mortgage rates during the period; however, accelerated prepayment speeds have slowed due to increased long-term interest rates during the latter part of the quarter.
The fair value of the MSR asset decreased by $2.0 million for the three months ended March 31, 2021, due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds. The fair value of the MSR asset decreased by $4.5 million due to the passage of time, including the impact of regularly scheduled repayments, paydowns and payoffs during the three months ended March 31, 2021.
Goodwill
At both March 31, 2021 and December 31, 2020, the Company had goodwill of $2.7 million. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired. There were no changes to goodwill during the three months ended March 31, 2021.
Deposits
Total deposits were $25.9 billion at March 31, 2021, an increase of $1.3 billion, as compared to December 31, 2020. The increase is mainly attributable to growth in non-interest bearing demand and money market deposits, offset by a decline in time deposits. The increase in non-maturity deposit account categories is driven by increased customer savings rates as customers look to increase their own liquidity in this uncertain environment; in addition, the increase is attributable to the impact of economic assistance payments. The decrease in time deposits is mainly due to the runoff of higher-cost time deposits.
The following table presents the deposit balances by category as of March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
(dollars in thousands)
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Non-interest bearing demand
|
$
|
10,500,482
|
|
|
41
|
%
|
|
$
|
9,632,773
|
|
|
39
|
%
|
|
Interest bearing demand
|
3,244,624
|
|
|
12
|
%
|
|
3,051,487
|
|
|
12
|
%
|
|
Money market
|
7,554,798
|
|
|
29
|
%
|
|
7,173,920
|
|
|
29
|
%
|
|
Savings
|
2,109,211
|
|
|
8
|
%
|
|
1,912,752
|
|
|
8
|
%
|
|
Time, greater than $250,000
|
763,532
|
|
|
3
|
%
|
|
899,563
|
|
|
4
|
%
|
|
Time, $250,000 or less
|
1,714,186
|
|
|
7
|
%
|
|
1,951,706
|
|
|
8
|
%
|
|
Total deposits
|
$
|
25,886,833
|
|
|
100
|
%
|
|
$
|
24,622,201
|
|
|
100
|
%
|
The Company's brokered deposits totaled $382.7 million at March 31, 2021, compared to $424.1 million at December 31, 2020.
Borrowings
At March 31, 2021, the Bank had outstanding $420.4 million of securities sold under agreements to repurchase, an increase of $45.0 million from December 31, 2020. The Bank had outstanding borrowings consisting of advances from the FHLB of $281.4 million at March 31, 2021, which decreased $490.0 million from December 31, 2020. The decrease is attributable to maturity payoffs during the quarter. The FHLB advances are secured by loans and have fixed interest rates ranging from 1.40% to 7.10% that mature in 2021 through 2030.
Junior Subordinated Debentures
We had junior subordinated debentures with carrying values of $369.8 million and $343.5 million at March 31, 2021 and December 31, 2020, respectively. The increase is mainly due to the $26.6 million change in fair value for the junior subordinated debentures elected to be carried at fair value, which is due mostly to an increase in the discount rates offset by a decrease in the credit spread, and an increase in the implied forward curve resulting in an increase in interest cash flows. As of March 31, 2021, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis based on a spread over three-month LIBOR.
Liquidity and Cash Flow
The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs. The Bank's liquidity strategy includes an elevated on-balance sheet liquidity position to further enhance flexibility due to the increased market volatility and uncertainty as a result of the COVID-19 pandemic. As a result, the Company believes that it has sufficient cash and access to borrowings to effectively manage through the COVID-19 pandemic as well as meet its working capital and other needs. The Company will continue to prudently evaluate and maintain liquidity sources, including the management and utilization of our borrowing sources.
We monitor the sources and uses of funds on a daily basis to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance. Public deposits represented 6% of total deposits at March 31, 2021 and 7% of total deposits at December 31, 2020. The amount of collateral required varies by state and may also vary by institution within each state, depending on the individual state's risk assessment of depository institutions. Changes in the pledging requirements for uninsured public deposits may require pledging additional collateral to secure these deposits, drawing on other sources of funds to finance the purchase of assets that would be available to be pledged to satisfy a pledging requirement, or could lead to the withdrawal of certain public deposits from the Bank. In addition to liquidity from core deposits and the repayments and maturities of loans and investment securities, the Bank can utilize established uncommitted federal funds lines of credit, sell securities under agreements to repurchase, borrow on a secured basis from the FHLB or issue brokered certificates of deposit.
The Bank had available lines of credit with the FHLB totaling $7.6 billion at March 31, 2021, subject to certain collateral requirements, namely the amount of pledged loans and investment securities. The Bank had available lines of credit with the Federal Reserve totaling $683.0 million, subject to certain collateral requirements, namely the amount of certain pledged loans. The Bank had uncommitted federal funds line of credit agreements with additional financial institutions totaling $460.0 million at March 31, 2021. Availability of these lines is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage.
The Company is a separate entity from the Bank and must provide for its own liquidity. Substantially all of the Company's revenues are obtained from dividends declared and paid by the Bank. There were $50.0 million of dividends paid by the Bank to the Company in the three months ended March 31, 2021. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Company. The Company is required to seek FDIC and Oregon Division of Financial Regulation approval for quarterly dividends from Umpqua Bank to the Company. The timing of the quarterly dividend is after each quarter's earnings release to provide the Company's Board of Directors and regulators with the opportunity to review final quarterly financial results and financial projections, prior to the announcement of any dividend. The Company expects to continue this cadence in future quarters.
As disclosed in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $392.0 million during the three months ended March 31, 2021, with the difference between cash used in operating activities and net income consisting primarily of proceeds from the sale of loans held for sale of $1.8 billion, and the decrease in other assets of $128.2 million, offset by originations of loans held for sale of $1.6 billion and the gain on sale of loans of $50.2 million. This compares to net cash used in operating activities of $119.1 million during the three months ended March 31, 2020, with the difference between cash used in operating activities and net loss consisting of goodwill impairment of $1.8 billion, originations of loans held for sale of $1.1 billion, the net increase in other assets of $219.6 million, and gain on sale of loans of $38.3 million, offset by proceeds from the sale of loans held for sale of $1.2 billion, provision for loan and lease losses of $118.1 million, and a loss on fair value of residential mortgage servicing rights carried at fair value of $30.7 million
Net cash of $495.1 million used in investing activities during the three months ended March 31, 2021, consisted principally of purchases of available for sale investment securities of $555.3 million, and net loan originations of $267.9 million, offset by proceeds from available for sale investment securities of $227.1 million and the proceeds from sales of loans and leases of $82.5 million. This compares to net cash of $74.1 million used in investing activities during the three months ended March 31, 2020, which consisted principally of purchases of investment securities available for sale of $140.4 million, net loan originations of $109.5 million, and purchases of restricted equity securities of $20.0 million, offset by proceeds from investment securities available for sale of $168.9 million, and proceeds from sales of loans and leases of $22.0 million.
Net cash of $771.1 million provided by financing activities during the three months ended March 31, 2021, primarily consisted of $1.3 billion net increase in deposits and the net increase in securities sold under agreements to repurchase of $45.0 million, offset by $490.0 million repayment of borrowings and $46.2 million of dividends paid on common stock. This compares to net cash of $488.1 million provided by financing activities during the three months ended March 31, 2020, primarily consisted of proceeds from borrowings of $600.0 million and $218.0 million net increase in deposits, offset by $310.0 million repayment of borrowings and $46.2 million of dividends paid on common stock.
Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during 2021, it is possible that our deposit growth may not be maintained at previous levels due to pricing pressure, store consolidations, or customers' spending habits due to the COVID-19 pandemic. In addition, in order to generate deposit growth, our pricing may need to be adjusted in a manner that results in increased interest expense on deposits.
Off-balance-Sheet Arrangements
Information regarding Off-Balance-Sheet Arrangements is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.
Concentrations of Credit Risk
Information regarding Concentrations of Credit Risk is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.
Capital Resources
Shareholders' equity at March 31, 2021 and December 31, 2020 was $2.7 billion. The change in shareholders' equity during the three months ended March 31, 2021 was principally due to the other comprehensive loss, net of tax, and cash dividends declared, offset by net income.
The Company's dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis. There is no assurance that future cash dividends on common shares will be declared or increased. We cannot predict the extent of the economic decline due to COVID-19 or other factors that result in inadequate earnings, regulatory restrictions and limitations, changes to our capital requirements, or a decision to increase capital by retention of earnings, that may result in the inability to pay dividends at previous levels, or at all.
The timing of the quarterly dividend is after each quarter's earnings release to provide the Company's Board of Directors with the opportunity to review final quarterly financial results and financial projections, prior to the announcement of any dividend. The Company expects to continue this cadence in future quarters. On February 1, 2021, the Company declared a cash dividend for the fourth quarter of 2020 in the amount of $0.21 per common share based on fourth quarter 2020 performance, which was paid on February 26, 2021.
The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the three months ended March 31, 2021 and the three months ended March 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Dividend declared per common share
|
|
|
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
Dividend payout ratio
|
|
|
|
|
43
|
%
|
|
(2)
|
%
|
As of March 31, 2021, a total of 9.5 million shares are available for repurchase under the Company's share repurchase plan. During the three months ended March 31, 2021, no shares were repurchased under this plan. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, our capital plan, and bank or bank holding company regulatory approvals. In addition, our stock plans provide that option and award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares.
The following table shows the Company's consolidated and the Bank's capital adequacy ratios compared to the regulatory minimum capital ratio and the regulatory minimum capital ratio needed to qualify as a "well-capitalized" institution, as calculated under regulatory guidelines of the Basel III at March 31, 2021 and December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
For Capital Adequacy purposes
|
|
To be Well Capitalized
|
|
(dollars in thousands)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
3,392,620
|
|
|
15.81
|
%
|
|
$
|
1,716,294
|
|
|
8.00
|
%
|
|
$
|
2,145,368
|
|
|
10.00
|
%
|
|
Umpqua Bank
|
$
|
3,179,886
|
|
|
14.82
|
%
|
|
$
|
1,716,686
|
|
|
8.00
|
%
|
|
$
|
2,145,857
|
|
|
10.00
|
%
|
|
Tier I Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,694,597
|
|
|
12.56
|
%
|
|
$
|
1,287,221
|
|
|
6.00
|
%
|
|
$
|
1,716,294
|
|
|
8.00
|
%
|
|
Umpqua Bank
|
$
|
2,932,861
|
|
|
13.67
|
%
|
|
$
|
1,287,514
|
|
|
6.00
|
%
|
|
$
|
1,716,686
|
|
|
8.00
|
%
|
|
Tier I Common
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,694,597
|
|
|
12.56
|
%
|
|
$
|
965,416
|
|
|
4.50
|
%
|
|
$
|
1,394,489
|
|
|
6.50
|
%
|
|
Umpqua Bank
|
$
|
2,932,861
|
|
|
13.67
|
%
|
|
$
|
965,636
|
|
|
4.50
|
%
|
|
$
|
1,394,807
|
|
|
6.50
|
%
|
|
Tier I Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Average Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,694,597
|
|
|
9.18
|
%
|
|
$
|
1,174,659
|
|
|
4.00
|
%
|
|
$
|
1,468,324
|
|
|
5.00
|
%
|
|
Umpqua Bank
|
$
|
2,932,861
|
|
|
9.98
|
%
|
|
$
|
1,175,098
|
|
|
4.00
|
%
|
|
$
|
1,468,873
|
|
|
5.00
|
%
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
3,347,926
|
|
|
15.63
|
%
|
|
$
|
1,713,891
|
|
|
8.00
|
%
|
|
$
|
2,142,364
|
|
|
10.00
|
%
|
|
Umpqua Bank
|
$
|
3,134,116
|
|
|
14.63
|
%
|
|
$
|
1,713,809
|
|
|
8.00
|
%
|
|
$
|
2,142,262
|
|
|
10.00
|
%
|
|
Tier I Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,636,194
|
|
|
12.31
|
%
|
|
$
|
1,285,418
|
|
|
6.00
|
%
|
|
$
|
1,713,891
|
|
|
8.00
|
%
|
|
Umpqua Bank
|
$
|
2,873,383
|
|
|
13.41
|
%
|
|
$
|
1,285,357
|
|
|
6.00
|
%
|
|
$
|
1,713,809
|
|
|
8.00
|
%
|
|
Tier I Common
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,636,194
|
|
|
12.31
|
%
|
|
$
|
964,064
|
|
|
4.50
|
%
|
|
$
|
1,392,536
|
|
|
6.50
|
%
|
|
Umpqua Bank
|
$
|
2,873,383
|
|
|
13.41
|
%
|
|
$
|
964,018
|
|
|
4.50
|
%
|
|
$
|
1,392,470
|
|
|
6.50
|
%
|
|
Tier I Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Average Assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
$
|
2,636,194
|
|
|
8.98
|
%
|
|
$
|
1,174,129
|
|
|
4.00
|
%
|
|
$
|
1,467,661
|
|
|
5.00
|
%
|
|
Umpqua Bank
|
$
|
2,873,383
|
|
|
9.79
|
%
|
|
$
|
1,174,065
|
|
|
4.00
|
%
|
|
$
|
1,467,581
|
|
|
5.00
|
%
|
Along with enactment of the CARES Act, the federal bank regulatory authorities issued an interim final rule to provide banking organizations that are required to implement CECL before the end of 2020 the option to delay the estimated impact on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay. The Company elected this capital relief and will delay the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital.