UMPQUA HOLDINGS CORP [UMPQ] Filings

10-Q 1 umpq-20220930.htm 10-Q umpq-20220930

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the quarterly period ended:	September 30, 2022
	or


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			for the transition period from to .

Commission File Number: 001-34624

Umpqua Holdings Corporation

(Exact Name of Registrant as Specified in Its Charter)


Oregon			93-1261319
(State or Other Jurisdiction			(I.R.S. Employer Identification Number)
of Incorporation or Organization)

One SW Columbia Street, Suite 1400

Portland, Oregon 97204

(Address of Principal Executive Offices)(Zip Code)

(503) 727-4100

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


TITLE OF EACH CLASS	TRADING SYMBOL	NAME OF EXCHANGE
Common Stock	UMPQ	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer

☐ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding for each of the issuer's classes of common stock, as of the latest practical date:

Common stock, no par value: 217,053,322 shares outstanding as of October 27, 2022.

Table of Contents

UMPQUA HOLDINGS CORPORATION

FORM 10-Q

Table of Contents


GLOSSARY		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets (unaudited)	4
	Condensed Consolidated Statements of Operations (unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	6
	Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited)	7
	Condensed Consolidated Statements of Cash Flows (unaudited)	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	68
Item 4.	Controls and Procedures	69
Part II. OTHER INFORMATION		69
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71

SIGNATURES		72

Table of Contents


GLOSSARY OF DEFINED TERMS
ACL						Allowance for credit losses
ASU						Accounting Standards Update

Bank						Umpqua Bank
Bank Merger						The proposed merger of Columbia State Bank, a Washington state-chartered bank and a wholly owned subsidiary of Columbia, with the Bank, with the Bank as the surviving bank
Basel III						Basel capital framework (third accord)


CECL						Current Expected Credit Losses
Columbia						Columbia Banking System, Inc.
Company						Umpqua Holdings Corporation
COVID-19						Coronavirus Disease 2019
CVA						Credit valuation adjustments
DCF						Discounted cash flow
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
Federal Reserve						Board of Governors of the Federal Reserve System
FHLB						Federal Home Loan Bank
FinPac						Financial Pacific Leasing, Inc.
FOMC						Federal Open Market Committee

GAAP						Generally accepted accounting principles
GDP						Gross Domestic Product
GNMA						Government National Mortgage Association
HELOC						Home equity line of credit
LGD						Loss given default
LIBOR						London Inter-Bank Offered Rate
Mergers						Merger Sub will merge with and into Umpqua, with Umpqua as the surviving entity, and immediately following such merger, Umpqua will merge with and into Columbia, with Columbia as the surviving corporation.
Merger Agreement						Agreement and Plan of Merger dated as of October 11, 2021, by and among the Company, Columbia, and Merger Sub
Merger Sub						Cascade Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia
MSR						Mortgage servicing rights


PD						Probability of default
PPP						Paycheck Protection Program

SBA						Small Business Administration
SEC						Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate

TDR						Troubled debt restructuring
Umpqua						Umpqua Holdings Corporation and its subsidiaries

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in thousands, except shares)	September 30, 2022		December 31, 2021
ASSETS
Cash and due from banks (restricted cash of $13,813 and $3,593)	$	321,447	$	222,015
Interest bearing cash and temporary investments (restricted cash of $13,410 and $400)	1,232,412		2,539,606
Total cash and cash equivalents	1,553,859		2,761,621
Investment securities
Equity and other, at fair value	72,277		81,214
Available for sale, at fair value	3,136,391		3,870,435
Held to maturity, at amortized cost	2,547		2,744
Loans held for sale, at fair value	148,275		353,105
Loans and leases (at fair value: $284,900 and $345,634)	25,507,951		22,553,180
Allowance for credit losses on loans and leases	(283,065)		(248,412)
Net loans and leases	25,224,886		22,304,768
Restricted equity securities	40,993		10,916
Premises and equipment, net	165,305		171,125
Operating lease right-of-use assets	81,729		82,366

Other intangible assets, net	5,764		8,840
Residential mortgage servicing rights, at fair value	196,177		123,615
Bank owned life insurance	329,699		327,745
Deferred tax asset, net	128,120		—
Other assets	385,938		542,442
Total assets	$	31,471,960	$	30,640,936
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	11,246,358	$	11,023,724
Interest bearing	15,570,749		15,570,961
Total deposits	26,817,107		26,594,685
Securities sold under agreements to repurchase	383,569		492,247
Borrowings	756,214		6,329
Junior subordinated debentures, at fair value	325,744		293,081
Junior subordinated debentures, at amortized cost	87,870		88,041
Operating lease liabilities	95,512		95,427
Deferred tax liability, net	—		4,353
Other liabilities	588,430		317,503
Total liabilities	29,054,446		27,891,666
COMMITMENTS AND CONTINGENCIES (NOTE 6)
SHAREHOLDERS' EQUITY
Common stock, no par value, shares authorized: 400,000,000 in 2022 and 2021; issued and outstanding: 217,052,952 in 2022 and 216,625,506 in 2021	3,448,007		3,444,849
Accumulated deficit	(580,933)		(697,338)
Accumulated other comprehensive (loss) income	(449,560)		1,759
Total shareholders' equity	2,417,514		2,749,270
Total liabilities and shareholders' equity	$	31,471,960	$	30,640,936

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
INTEREST INCOME
Interest and fees on loans and leases	$	278,830	$	224,403	$	727,908	$	669,014
Interest and dividends on investment securities:
Taxable	18,175		16,102		54,156		43,833
Exempt from federal income tax	1,322		1,470		4,063		4,491
Dividends	86		213		256		1,216
Interest on temporary investments and interest bearing deposits	5,115		1,237		9,387		2,635
Total interest income	303,528		243,425		795,770		721,189
INTEREST EXPENSE
Interest on deposits	9,090		5,100		17,021		22,794
Interest on securities sold under agreement to repurchase and federal funds purchased	545		88		674		232
Interest on borrowings	798		149		897		2,787
Interest on junior subordinated debentures	5,491		3,014		12,641		9,108
Total interest expense	15,924		8,351		31,233		34,921
Net interest income	287,604		235,074		764,537		686,268
PROVISION (RECAPTURE) FOR CREDIT LOSSES	27,572		(18,919)		51,068		(41,915)
Net interest income after provision (recapture) for credit losses	260,032		253,993		713,469		728,183
NON-INTEREST INCOME
Service charges on deposits	12,632		10,941		36,226		30,898
Card-based fees	9,115		9,111		28,353		26,759
Brokerage revenue	27		31		65		5,081
Residential mortgage banking revenue, net	17,341		34,150		108,671		143,626
Gain on sale of debt securities, net	—		—		2		4
Loss on equity securities, net	(2,647)		(343)		(7,383)		(1,045)
Gain on loan and lease sales, net	1,525		4,208		5,165		10,899
Bank owned life insurance income	2,023		2,038		6,220		6,201
Other (losses) income	(10,571)		13,569		(12,670)		51,157
Total non-interest income	29,445		73,705		164,649		273,580
NON-INTEREST EXPENSE
Salaries and employee benefits	109,164		117,636		333,244		363,343
Occupancy and equipment, net	35,042		33,944		104,430		103,236
Communications	2,542		2,866		7,881		8,633
Marketing	1,505		1,651		5,552		5,077
Services	13,355		12,017		39,094		36,279
FDIC assessments	3,007		2,136		10,477		6,342
Intangible amortization	1,025		1,130		3,076		3,390
Merger related expenses	769		—		5,719		—

Other expenses	11,555		12,373		30,495		34,445
Total non-interest expense	177,964		183,753		539,968		560,745
Income before provision for income taxes	111,513		143,945		338,150		441,018
Provision for income taxes	27,473		35,879		84,362		109,072
Net income	$	84,040	$	108,066	$	253,788	$	331,946
Earnings per common share:
Basic	$0.39		$0.49		$1.17		$1.51
Diluted	$0.39		$0.49		$1.17		$1.51
Weighted average number of common shares outstanding:
Basic	217,051		218,416		216,955		219,791
Diluted	217,386		218,978		217,353		220,278

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net income	$	84,040	$	108,066	$	253,788	$	331,946
Available for sale securities:
Unrealized losses arising during the period	(186,336)		(29,009)		(575,781)		(93,533)
Income tax benefit related to unrealized losses	47,926		7,463		148,091		24,058

Reclassification adjustment for net realized gains in earnings	—		—		(2)		(4)
Income tax expense related to realized gains	—		—		1		1
Net change in unrealized losses for available for sale securities	(138,410)		(21,546)		(427,691)		(69,478)

Junior subordinated debentures, at fair value:
Unrealized losses arising during the period	(4,043)		(11,946)		(31,810)		(44,504)
Income tax benefit related to unrealized losses	1,040		3,072		8,182		11,446
Net change in unrealized losses for junior subordinated debentures, at fair value	(3,003)		(8,874)		(23,628)		(33,058)
Other comprehensive loss, net of tax	(141,413)		(30,420)		(451,319)		(102,536)
Comprehensive (loss) income	$	(57,373)	$	77,646	$	(197,531)	$	229,410

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(UNAUDITED)


	Common Stock			Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)
(in thousands, except shares)	Shares	Amount						Total
Balance at January 1, 2021	220,226,335	$	3,514,599	$	(932,767)	$	122,745	$	2,704,577
Net income				107,737				107,737
Other comprehensive loss, net of tax						(84,613)		(84,613)
Stock-based compensation		2,964						2,964
Stock repurchased and retired	(143,832)	(2,315)						(2,315)
Issuances of common stock under stock plans	408,700	—						—
Cash dividends on common stock ($0.21 per share)				(46,481)				(46,481)

Balance at March 31, 2021	220,491,203	$	3,515,248	$	(871,511)	$	38,132	$	2,681,869
Net income				116,143				116,143
Other comprehensive income, net of tax						12,497		12,497
Stock-based compensation		2,377						2,377
Stock repurchased and retired	(957)	(18)						(18)
Issuances of common stock under stock plans	136,206	34						34
Cash dividends on common stock ($0.21 per share)				(46,586)				(46,586)
Balance at June 30, 2021	220,626,452	$	3,517,641	$	(801,954)	$	50,629	$	2,766,316
Net income				108,066				108,066
Other comprehensive loss, net of tax						(30,420)		(30,420)
Stock-based compensation		2,765						2,765
Stock repurchased and retired	(4,011,808)	(78,321)						(78,321)
Issuances of common stock under stock plans	7,159	—						—
Cash dividends on common stock ($0.21 per share)				(46,027)				(46,027)
Balance at September 30, 2021	216,621,803	$	3,442,085	$	(739,915)	$	20,209	$	2,722,379
Net income				88,354				88,354
Other comprehensive loss, net of tax						(18,450)		(18,450)
Stock-based compensation		2,800						2,800
Stock repurchased and retired	(1,790)	(36)						(36)
Issuances of common stock under stock plans	5,493	—						—
Cash dividends on common stock ($0.21 per share)				(45,777)				(45,777)
Balance at December 31, 2021	216,625,506	$	3,444,849	$	(697,338)	$	1,759	$	2,749,270

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Continued)

(UNAUDITED)


	Common Stock			Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)
(in thousands, except shares)	Shares	Amount						Total
Balance at January 1, 2022	216,625,506	$	3,444,849	$	(697,338)	$	1,759	$	2,749,270
Net income				91,157				91,157
Other comprehensive loss, net of tax						(185,515)		(185,515)
Stock-based compensation		2,454						2,454
Stock repurchased and retired	(194,792)	(4,037)						(4,037)
Issuances of common stock under stock plans	536,157	—						—
Cash dividends on common stock ($0.21 per share)				(45,731)				(45,731)
Balance at March 31, 2022	216,966,871	$	3,443,266	$

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10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-28]
10-Q	[2019-11-06]
10-Q	[2019-08-06]
10-Q	[2019-05-03]
10-K	[2019-02-21]
10-Q	[2018-11-02]
10-Q	[2018-08-09]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-23]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-K	[2015-02-23]
10-Q	[2014-11-07]
10-Q	[2014-08-05]
10-Q	[2014-05-07]
10-K	[2014-02-18]
10-Q	[2013-11-06]
10-Q	[2013-08-06]
10-Q	[2013-05-02]
10-K	[2013-02-15]
10-Q	[2012-11-01]
10-Q	[2012-08-01]
10-Q	[2012-05-04]
10-K	[2012-02-17]