Umpqua Bank Plaza
Umpqua Holdings Corp. is based in the Umpqua Bank Plaza in downtown Portland.
(Mark Graves/The Oregonian)
The Portland-based parent company of Umpqua Bank said Wednesday that its fourth-quarter earnings fell as revenues from mortgage banking took a hit.
Umpqua Holdings Corp. executives reported net earnings of $52.4 million, or 24 cents per diluted share, during the final three months of the year. That's down from $58.8 million, or 27 cents per diluted share, in the third quarter.
The results, reported after markets closed, were weaker than many on Wall Street had anticipated. Analysts surveyed by Thompson Financial expected Umpqua to earn 29 cents per share.
The news caps a landmark year for the largest Oregon-based bank. In April, it merged with Spokane-based Sterling Financial. The $2 billion deal was the biggest bank acquisition in Oregon history.
Umpqua's year-end balance sheet reflects the difference the year made on the holding company. It had $22.6 billion in assets at the close of 2014, compared to $11.6 billion at the end of 2013. Loans increased over the year from $7.6 billion to $15.3 billion, after allowing for losses.
At the same time, net earnings increased from $97.6 million in 2013 to $147.0 million in 2014. Earnings per diluted share declined, though, from 87 cents to 78 cents.
In a statement issued Wednesday, chief executive Ray Davis called 2014 a "highly productive" year for Umpqua and said he expects to "complete the integration" of Sterling in the coming months. The transition has not been completely painless, though. Umpqua closed 27 Sterling branches last fall following the acquisition.
Umpqua said fourth-quarter loans increased to $15.2 billion from $15.1 billion during the three months prior, after allowing for losses.
At the same time, net interest income rose from $225 million to $228 million. But non-interest income fell from $61.9 million to $49.8 million, and non-interest expenses rose from $182.6 million to $190.9 million. Net interest margin decreased from 4.75 percent to 4.69 percent.
Umpqua said revenues from residential mortgage banking dropped $9.5 million, or 37 percent, between the third and fourth quarters. The decline was caused in part by lower sales and gains on those sales. The value of its mortgage service rights also edged down.
The bank holding company also said it spent $1.9 million more on marketing "to support brand and growth campaigns." Executives also reported losing a net $3.6 million on "other real estate owned," a term that describes property often acquired by banks through foreclosure. It posted a $300,000 net loss on other real estate owned during the third quarter.
Investors have not yet reacted to the earnings results, since they were reported after trading had already ended for the day on the Nasdaq Stock Market. Shares closed at $15.44, giving it a market value of $3.4 billion. The share price topped $19 the spring of 2014, but has not traded above $18 since June.
Umpqua executives plan to hold a conference call for investors Thursday morning to discuss the results.
-- Molly Young