UMPQUA HOLDINGS CORP [UMPQ] Filings

10-Q 1 umpq-20210930.htm 10-Q umpq-20210930

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, 2021
	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 1200

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: 216,621,803 shares outstanding as of October 31, 2021

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
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	68
Part II. OTHER INFORMATION		68
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72

SIGNATURES		73

Table of Contents


GLOSSARY OF DEFINED TERMS
ACL						Allowance for credit losses
ASU						Accounting Standards Update
ATM						Automated teller machine
Bank						Umpqua Bank
Basel III						Basel capital framework (third accord)


CECL						Current Expected Credit Losses
Columbia						Columbia Banking System, Inc.
Company						Umpqua Holdings Corporation and its subsidiaries

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.


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
Merger						Merger Sub will merge with and into Umpqua, with Umpqua surviving
Merger Agreement						Agreement dated as of October 11, 2021, by and among Umpqua, Columbia, and Cascade Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia
Merger Sub						Cascade Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia
MSR						Mortgage servicing rights
NOL						Net operating loss
N/M						Not meaningful
PD						Probability of default
PPP						Paycheck Protection Program
SBA						Small Business Administration
SEC						Securities and Exchange Commission
Surviving Entity						Merger Sub will merge with and into Umpqua, with Umpqua surviving the Merger
TDR						Troubled debt restructuring
USDA						United States Department of Agriculture

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, 2021		December 31, 2020
ASSETS
Cash and due from banks (restricted cash of $89,006 and $92,955)	$	395,555	$	370,219
Interest bearing cash and temporary investments (restricted cash of $357 and $2,574)	3,349,034		2,202,962
Total cash and cash equivalents	3,744,589		2,573,181
Investment securities
Equity and other, at fair value	81,575		83,077
Available for sale, at fair value	3,723,171		2,932,558
Held to maturity, at amortized cost	2,795		3,034
Loans held for sale (at fair value: $352,466 and $688,079)	352,466		766,225
Loans and leases (at fair value: $353,912 and $0)	21,969,940		21,779,367
Allowance for credit losses on loans and leases	(257,560)		(328,401)
Net loans and leases	21,712,380		21,450,966
Restricted equity securities	10,946		41,666
Premises and equipment, net	172,624		178,050
Operating lease right-of-use assets	88,379		104,937
Goodwill	—		2,715
Other intangible assets, net	9,970		13,360
Residential mortgage servicing rights, at fair value	105,834		92,907
Bank owned life insurance	325,646		323,470
Deferred tax asset, net	8,402		—
Other assets	552,702		669,029
Total assets	$	30,891,479	$	29,235,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	11,121,127	$	9,632,773
Interest bearing	15,787,270		14,989,428
Total deposits	26,908,397		24,622,201
Securities sold under agreements to repurchase	467,760		375,384
Borrowings	6,367		771,482
Junior subordinated debentures, at fair value	299,508		255,217
Junior subordinated debentures, at amortized cost	88,098		88,268
Operating lease liabilities	100,557		113,593
Deferred tax liability, net	—		5,441
Other liabilities	298,413		299,012
Total liabilities	28,169,100		26,530,598
COMMITMENTS AND CONTINGENCIES (NOTE 6)
SHAREHOLDERS' EQUITY
Common stock, no par value, shares authorized: 400,000,000 in 2021 and 2020; issued and outstanding: 216,621,803 in 2021 and 220,226,335 in 2020	3,442,085		3,514,599
Accumulated deficit	(739,915)		(932,767)
Accumulated other comprehensive income	20,209		122,745
Total shareholders' equity	2,722,379		2,704,577
Total liabilities and shareholders' equity	$	30,891,479	$	29,235,175

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
INTEREST INCOME
Interest and fees on loans and leases	$	224,403	$	229,457	$	669,014	$	710,624
Interest and dividends on investment securities:
Taxable	16,102		10,168		43,833		35,788
Exempt from federal income tax	1,470		1,490		4,491		4,572
Dividends	213		710		1,216		1,956
Interest on temporary investments and interest bearing deposits	1,237		474		2,635		4,208
Total interest income	243,425		242,299		721,189		757,148
INTEREST EXPENSE
Interest on deposits	5,100		19,121		22,794		85,633
Interest on securities sold under agreement to repurchase and federal funds purchased	88		84		232		673
Interest on borrowings	149		3,271		2,787		11,156
Interest on junior subordinated debentures	3,014		3,249		9,108		12,074
Total interest expense	8,351		25,725		34,921		109,536
Net interest income	235,074		216,574		686,268		647,612
(RECAPTURE) PROVISION FOR CREDIT LOSSES	(18,919)		(338)		(41,915)		204,832
Net interest income after (recapture) provision for credit losses	253,993		216,912		728,183		442,780
NON-INTEREST INCOME
Service charges on deposits	10,941		10,405		30,898		30,635
Card-based fees	9,111		7,118		26,759		20,436
Brokerage revenue	31		3,686		5,081		11,506
Residential mortgage banking revenue, net	34,150		90,377		143,626		191,794
Gain on sale of debt securities, net	—		—		4		190
(Loss) gain on equity securities, net	(343)		(112)		(1,045)		942
Gain on loan and lease sales, net	4,208		1,092		10,899		3,333
Bank owned life insurance income	2,038		2,087		6,201		6,332
Other income	13,569		17,271		51,157		22,881
Total non-interest income	73,705		131,924		273,580		288,049
NON-INTEREST EXPENSE
Salaries and employee benefits	117,636		120,337		363,343		346,787
Occupancy and equipment, net	33,944		36,720		103,236		109,892
Communications	2,866		2,943		8,633		9,010
Marketing	1,651		1,859		5,077		6,148
Services	12,017		13,193		36,279		34,319
FDIC assessments	2,136		2,989		6,342		9,502
Intangible amortization	1,130		1,247		3,390		3,740

Goodwill impairment	—		—		—		1,784,936
Other expenses	12,373		10,919		34,445		30,441
Total non-interest expense	183,753		190,207		560,745		2,334,775
Income (loss) before provision for income taxes	143,945		158,629		441,018		(1,603,946)
Provision for income taxes	35,879		33,758		109,072		70,204
Net income (loss)	$	108,066	$	124,871	$	331,946	$	(1,674,150)
Earnings (loss) per common share:
Basic	$0.49		$0.57		$1.51		($7.60)
Diluted	$0.49		$0.57		$1.51		($7.60)
Weighted average number of common shares outstanding:
Basic	218,416		220,221		219,791		220,216
Diluted	218,978		220,418		220,278		220,216

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net income (loss)	$	108,066	$	124,871	$	331,946	$	(1,674,150)
Available for sale securities:
Unrealized (losses) gains arising during the period	(29,009)		2,996		(93,533)		115,327
Income tax benefit (expense) related to unrealized (losses) gains	7,463		(771)		24,058		(29,663)

Reclassification adjustment for net realized gains in earnings	—		—		(4)		(190)
Income tax expense related to realized gains	—		—		1		49
Net change in unrealized (losses) gains for available for sale securities	(21,546)		2,225		(69,478)		85,523






Junior subordinated debentures, at fair value:
Unrealized (losses) gains arising during the period	(11,946)		(14,555)		(44,504)		26,857
Income tax benefit (expense) related to unrealized gains	3,072		3,744		11,446		(6,907)
Net change in unrealized (losses) gains for junior subordinated debentures, at fair value	(8,874)		(10,811)		(33,058)		19,950
Other comprehensive (loss) income, net of tax	(30,420)		(8,586)		(102,536)		105,473
Comprehensive income (loss)	$	77,646	$	116,285	$	229,410	$	(1,568,677)

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
(in thousands, except shares)	Shares	Amount						Total
Balance at January 1, 2020	220,229,282	$	3,514,000	$	770,366	$	29,549	$	4,313,915
Net loss				(1,851,947)				(1,851,947)
Other comprehensive income, net of tax						138,722		138,722
Stock-based compensation		2,253						2,253
Stock repurchased and retired	(486,757)	(8,573)						(8,573)
Issuances of common stock under stock plans	432,595	—						—
Cash dividends on common stock ($0.21 per share)				(46,578)				(46,578)
Cumulative effect adjustment (1)				(40,181)				(40,181)
Balance at March 31, 2020	220,175,120	$	3,507,680	$	(1,168,340)	$	168,271	$	2,507,611
Net income				52,926				52,926
Other comprehensive loss, net of tax						(24,663)		(24,663)
Stock-based compensation		2,503						2,503
Stock repurchased and retired	(3,707)	(38)						(38)
Issuances of common stock under stock plans	47,694	—						—

Balance at June 30, 2020	220,219,107	$	3,510,145	$	(1,115,414)	$	143,608	$	2,538,339
Net income				124,871				124,871
Other comprehensive loss, net of tax						(8,586)		(8,586)
Stock-based compensation		2,025						2,025
Stock repurchased and retired	(1,523)	(17)						(17)
Issuances of common stock under stock plans	4,614	—						—
Cash dividends on common stock ($0.21 per share)				(46,388)				(46,388)
Balance at September 30, 2020	220,222,198	$	3,512,153	$	(1,036,931)	$	135,022	$	2,610,244
Net income				150,730				150,730
Other comprehensive loss, net of tax						(12,277)		(12,277)
Stock-based compensation		2,473						2,473
Stock repurchased and retired	(2,022)	(27)						(27)
Issuances of common stock under stock plans	6,159	—						—
Cash dividends on common stock ($0.21 per share)				(46,566)				(46,566)
Balance at December 31, 2020	220,226,335	$	3,514,599	$	(932,767)	$	122,745	$	2,704,577

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, 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

UMPQUA HOLDINGS CORP [UMPQ] Filings
10-Q	[2021-11-04]
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]