Umpqua Holdings Corporation

Good morning and welcome to the Umpqua Holdings Corporation 4th Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. At this time, I would like to introduce Ms. Jackie Bolin, Investor Relations Director for Umpqua, to begin the conference call. Ms. Bolin, please go ahead.

Thank you, Renz. Good morning and good afternoon, everyone. Thank you for joining us today on our fourth quarter 2021 earnings call. With me this morning are Court O'Haver, 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 fourth quarter 2021 results. We've 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 provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to slides two and three of our earnings conference call presentation, as well as the disclosures contained within our SEC filings. I will now turn the call over to Court.

All right. 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. Excuse me. For the fourth quarter, we reported earnings available to shareholders of $88 million. This represents EPS of 41 cents per share compared to the 49 cents reported last quarter and the 68 cents reported in the fourth quarter of last year, with this linked quarter decline due primarily to $15 million in merger-related expenses and last quarter's sizable provision recapture. The decline from the prior year period reflects a more sustainable level of mortgage banking income in the current quarter as volume and margins normalize from the 2020s historical high levels as well as the previously mentioned merger-related expenses. Once again, the focal point of the quarter was organic loan growth, which contributed to increased net interest income from the prior quarter when PPP-related fees are removed. Non-PPP loan balances grew $930 million in the fourth quarter, representing a quarterly growth rate of 4.4 percent and an annualized growth rate of 18 percent. Notably, the quarter's organic generation significantly offset continued declines in PPP loan balances, enabling total portfolio expansion of 2.7 percent or 11 percent annualized during the fourth quarter. Expansion during the quarter For the year, it was balanced across categories, and though pipelines are lower today than when we spoke in October, given the fourth quarter's heightened production and seasonal trends, we expect continued loan growth through 2022 as our multi-year initiatives, which include successful ongoing talent acquisition and brand momentum in our markets, enabling us to take market share and drive value for our customers. With PPP, Remaining balances at only $380 million, or 1.7 percent of the portfolio, the majority of our anticipated net organic growth in 2022 will result in net portfolio growth for the year, and any favorable movement in line utilization, which we have not seen to date, would provide additional tailwind. Regarding capital, in November, we paid our shareholders a dividend of 21 cents per share consistent with historical payments, and as we previously discussed, we did not repurchase any shares given our pending combination with Columbia Banking System, which we announced on October 12th. While our usual NextGen slide has been replaced with the information and updates related to our pending combination, we continue to make strides as a standalone entity, and I'm going to provide a quick update on a few notable items. As planned, we consolidated 15 stores early in the fourth quarter, bringing our total rationalizations under NextGen 2.0 to 34, moving us within our original 30 to 50 store consolidation goal. We consolidated in 99 stores under Next Gen 1 and Next Gen 2.0, which represents the rationalization of one-third of our footprint over the past four years. During that period, the number of non-CD accounts has grown by 2.7 percent, as the number of demand accounts has grown by 4.1 percent. Since we launched our original next-gen plans in late 2017, our deposit balances are up 6.7 billion, or 34 percent, and non-CD balances are up 7.7 billion, or 45 percent, driving efficiency improvement in our core banking segment. 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. Notable achievements here include a steady pace of increase in Zelle transactions, which were up 7 percent for the quarter and up 48 percent for the year. Additionally, we crossed a new milestone with go-to users as we passed the 100,000 mark in the quarter. One final comment before passing to Ron. I've been talking about the growth opportunities ahead for OMCOF for a number of quarters, and our strong performance in the fourth quarter provides continued support for these remarks. The past few months' production is a tremendous accomplishment in its own right, but it is all the more noteworthy as it demonstrates the intentional and successful separation of our growth initiatives from our integration planning activities related to our pending combination with Columbia. As we have previously disclosed, the Integration Management Office was established to lead our integration, and the IMO leadership team includes senior executive leadership from both Umpqua and Columbia. The IMO enables UMQAS bankers to have undisturbed focus on generating business and serving customers, and I remain highly enthusiastic that the growth prospects within our markets and the momentum from our banking teams will drive continued growth in 2022 that enables us to deliver shareholder value over the long term. And with that, Ron, take it away.