Umpqua Holdings Corporation

Good morning and welcome to Umpqua Holdings Corporation fourth quarter earnings call. I will now turn the call over to Ron Farnsworth, Chief Financial Officer.

Okay, thank you, Chris. Good morning and thank you for joining us today on our fourth quarter 2020 earnings call. With me this morning are Colt O'Haver, the President and CEO of Umpqua Holdings Corporation, Tori Nixon, President of Umpqua Bank, and Frank Mandar, our Chief Credit Officer. After our prepared remarks, we will then take questions. Yesterday afternoon, we issued an earnings release discussing our fourth quarter and full year 2020 results. We have also prepared a slide presentation, which we will refer to during our remarks this morning. Both of these materials can be found on our website at omcobank.com in the investor relations section. During today's call, we will make forward-looking statements, which are subject to risks and uncertainties, and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to page two of our earnings conference call presentation, as well as the disclosures contained within our SEC filings. May I now turn the call over to court?

Okay, thanks, Ron. I will provide a brief recap of our performance, and then pass to Ron to discuss financials. Frank Namdar will discuss credit, and then we'll take your questions. For Q4, we reported earnings per share of 68 cents, setting a company record for the second consecutive quarter. This was an increase of 11 cents, or 19%, from the 57 cents we earned in the prior quarter, and an increase of 32 cents, or 89%, from the 36 cents we reported in the fourth quarter of 2019. These earnings were driven by another quarter of incredible production in our home lending division, PPP fee accretion, as nearly 15 percent of PPP loans were forgiven by the SBA during the quarter, and for the fourth consecutive quarter, a healthy decline in the cost of our interest-bearing deposits. Turning to the balance sheet items, loan balances in Q4 were down 647 million, or 3 percent, due largely to process PPP loan forgiveness. The transfer of $78 million in indirect auto loans to loans held for sale and anticipated payoffs in the residential real estate portfolio. Regarding deposits, we generated strong growth in non-interest-bearing DDA this quarter of 158 million or 2 percent, which once again afforded us the opportunity to reduce higher-cost time deposits, which reduced by 402 million or 12 percent. On a net basis, deposits were down 46 million and essentially flat with the totals from the prior quarter. In addition, our cost of interest-bearing deposits improved from 49 basis points to 38 basis points, a reduction of 11 basis points from the prior quarter amount. For the year, loan balances increased $584 million, or 3%, driven by PPP production, which is partially offset by line of credit paydowns. Year over year, commercial line of credit outstanding balances were down 29%, not as a result of customer attrition, but due to customers using available liquidity to pay down lines. Also for the annual period, deposit balances increased significantly by $2.1 billion or 10%. This was attributable to growth of $2.7 billion in non-interest-bearing DDA, $500 million in interest-bearing DDA, $240 million in money market, and $440 million in savings. The planned runoff of $1.8 billion in higher cost time deposits was primarily a driver in the substantial reduction in interest expense year over year. Regarding capital, we are pleased to announce to our shareholders in November a dividend of $0.21 per share remaining consistent with historical payments. We'll announce the timing of our next dividend soon. Before passing to Ron, I want to give a quick update on NextGen 2.0 initiatives. With Imbalanced Growth, we have a unique opportunity to take advantage of the positive brand awareness of our PPP work and the results generated to attract both customers and talent. UMQA's high-touch, client-centric approach is highly attractive to customers, as we're seeing in the robust new relationships we're attracting. In addition, as I said many times before, because of this approach, Umpqua provides a unique opportunity for bankers to be supported by a platform with all the products and services of much larger institutions while being supported by our relationship-focused culture. As a result, we've initiated an ambitious talent acquisition plan to attract top talent in key markets across our footprint and look forward to augmenting the terrific bench we've built over the last several years. We're also seeing positive trends emerge in our fee income products including a growing pipeline, strong price optimization, and this past month, the highest amount of customer spend transacted through our commercial card product in the company's history. Finally, on balanced growth, we feel optimistic regarding loan growth in 2021. Economic activity within our footprint is picking up, and recent prospecting efforts has resulted in significant increases to our pipelines, which has returned us to pre-pandemic levels. Our human digital technology initiatives continue at full steam ahead. In Q1, we will be leveraging the Encino platform to execute the new round of PPP that was just introduced. And in fact, we started taking applications just this week. It's early, but our technology platform is already allowing us to meet PPP demands with less human involvement compared to last year. This is important. as it allows our bankers more time to continue their focus on organic customer growth. Also worth noting, we're preparing to launch our integrated receivables product for commercial customers. We're working with our FinTech partners to add additional APIs to our catalog. And finally, we'll be upgrading our online banking user experience for commercial customers later this quarter. With regards to operational excellence, We remain on track to meet the cost save guidance that was provided last quarter. Specifically, the sale of UMQA investments is scheduled to close late this quarter, and I'm excited to formally begin the strategic partnership with Stewart Partners. We also completed the sale of three store locations in December, in addition to the four store sale that was completed earlier in the fall, bringing the total store rationalizations in the second half of 2020 to seven. On January 12th of this year, we announced plans to consolidate another 12 locations by the end of Q2 of 2021. We remain on track to hit our goal of 30 to 50 store rationalizations by the end of 2022. As previously mentioned, we are addressing the consolidation of back office space to fit both the new working habits of our associates and reduce non-interest expenses. This past quarter, We reduced back office real estate footprint by four properties totaling 45,000 square feet and 1.8 million in savings that started on January 1st of this year. Each quarter we will provide updates on all NextGen 2.0 strategic levers as we continue to modernize the bank, advance customer experience and technology initiatives, and improve operating leverage. In summary, and as I mentioned in our earnings release yesterday, UMQA's results in 2020 are a testament to the tremendous strength of this company. Despite significant disruption and numerous challenges last year, our associates rose to the occasion time and time again. Their incredible adaptability, resilience, and passion has made a profound difference for our customers and communities, and I couldn't be more proud of each and every one of them. I believe reputations are built in times like these, and I am confident the work we did this past year will set us up for future success. And now, Ron, take it away to the financials.