Umpqua Holdings Corporation

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Thank you. Good day and welcome to the Umpqua Holdings Corporation Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. If you would like to ask a question, you may press star 1 on your telephone keypad. Thank you. I would now like to introduce the call. I would now like to introduce Jackie Bolin, Investor Relations Director for Umpqua, to begin the conference call. Jackie, the floor is yours.

Thank you, Joanna. Good morning and good afternoon, everyone. Thank you for joining us today on our third quarter 2021 earnings call. With me this morning are Kurt Urheber, the President and CEO of Umpqua Holdings Corporation, Tori Nixon, President of Umpqua Bank, Ron Farnsworth, our Chief Financial Officer, and Frank Namdar, our Chief Credit Officer. After our prepared remarks, we will take your questions. Yesterday afternoon, we issued an earnings release discussing our third quarter 2021 results. We have also prepared a slide presentation, which we will refer to during our remarks this morning. Both these materials can be found on our website at umquabank.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 provision of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to slide two of our earnings conference call presentation, as well as the disclosures contained within our SEC filings. We'll now turn the call over to court.

Okay. Thank you, Jackie. I'll provide a brief recap of our performance and then pass to Ron to discuss financials. Frank will discuss credit, and then we'll take your questions. For the third quarter, we reported earnings available to shareholders of $108 million. This represents EPS of 49 cents per share compared to the 53 cents reported last quarter and 57 cents reported in the third quarter of last year, with the decline due primarily to lower mortgage banking income as volume and margins normalized from historically high levels. The focal point of an all-around strong quarter was non-PPP organic loan growth, which contributed to increased net interest income from the prior quarter and highlights continued momentum at the bank. The strong growth momentum we experienced in the second quarter continued into the third quarter as non-PPP organic loan balances grew $480 million, representing a quarterly growth rate of 2.3% and over 9% annualized. The quarter's expansion is all the more noteworthy as it comes on the heels of record quarterly loan growth for the company in the second quarter and continued to be balanced across all categories. We continued to process the forgiveness of PPP loans, which declined $653 million, or 47% from June 30th. While this expected runoff drove a net reduction in loans and leases of $174 million, the headwind is winding down as remaining PPP balances are only 3% of the loan portfolio. We are very pleased with the growth in our non-PPP loan book, which reflects successful talent acquisition, brand momentum in our markets, and the resulting healthy customer pipelines. Regarding capital, in August, we paid our shareholders a dividend of 21 cents per share, consistent with historical payments, and we repurchased 4 million shares at an average price of $19.50 in the quarter as part of our previously announced stock repurchase authorization. In total, during the quarter, we returned $124 million to our shareholders through dividends and buybacks. Our capital levels remained very healthy. However, we no longer intend to repurchase shares in the near term given our pending combination with Columbia Banking System, which we announced last week. Now for a quick update on NextGen 2.0. First, balanced growth. We continue to leverage the positive brand awareness of our PPP work and the market disruptions that provided us opportunities to attract both customers and talent, and our results demonstrate the strong momentum we've talked about for the past few quarters. Elevated customer pipelines drove strong, balanced growth, and the momentum continues into the early days of this quarter as our pipelines remain strong. Recently onboarded bankers and new teams continue to generate new business as they hit their stride, and we continue to expand our relationships with PPP customers who are now new to the bank. Our human digital initiatives remain critical to our long-term strategy as our customers continue to engage with us through digital channels at an accelerated pace. We experienced increases of 3% more mobile deposit transactions, 39% more Zelle transactions, and 10% more daily sessions within our mobile banking app in the third quarter compared to the year-ago period. Notably, go-to enrollments continue to increase, and we are getting close to 100,000 marks. to the 100,000 mark. Our human digital initiatives also support our commercial customer acquisition efforts. This past quarter, we finalized a partnership with Visa to be the first FI in North America to launch Visa Commercial Pay, a mobile app-based solution to offer instant-issue virtual commercial cards for T&E, point-of-sale, and supplier payments. Additionally, we launched our pilot of consolidated payments, This will allow commercial and business clients to fully outsource their payments to Umpqua in a variety of formats, including checks, ACH, wires, and commercial card, complete with APIs to over 160 different accounting platforms. With regards to operational excellence, we continue to build on the progress achieved since announcing our initiatives a year ago. The third quarter run rate benefited from a mid Q2 sale of Umpqua investments to Stewart Partners, We are on track to consolidate an additional 15 stores by year end, which will bring the total rationalizations under Next Gen 2.0 to 34. This moves us into our 30 to 50 store consolidation goal, which we originally laid out a year ago. During the quarter, we also recorded some exit and disposal costs related to the exit of certain leases as we continue to rationalize other office space. On slide three of the earnings presentation, We show that cumulative saves accomplished so far under the NextGen 2.0 program, and we expect to accomplish by mid-next year. One final comment before passing to Ron. I want to reiterate remarks I made on last quarter's call regarding the growth opportunities ahead for UMCA, which are further supported by our strong performance in the third quarter. I remain highly enthusiastic that our growth prospects within our markets and the momentum from our banking teams will continue to spur growth and will enable us to deliver shareholder value over the long term. While we are clearly focused on fine-tuning our integration plans with Columbia, our bankers' activities are not impacted, and they will remain focused on delivering top-notch service as we meet the needs of our current and prospective customers. We expect a strong finish here in 2021, which will carry us into 2022. And with that, I'll turn it over to you, Ron.