Umpqua Holdings Corporation

Good day and thank you for standing by. Welcome to the Umpqua Holdings Corporation first quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. If you should need assistance during the call, please press star zero and an operator will come back online to assist you. If you're required for the assistance, please press star zero. And to ask a question during the session, you will need to press star one on your telephone keypad. At this time, I would like to introduce Jackie Bolin, Investor Relations Director for Umpqua, to begin the conference call. Thank you. Please go ahead.

Thank you, Lee. Good morning and good afternoon, everyone. Thank you for joining us today on our first quarter 2022 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 first quarter 2022 results. We've also prepared a slide presentation, which we'll 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 the 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 presentation, as well as the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures alongside our discussion of GAAP results. We encourage you to review the GAAP to non-GAAP reconciliation provided in the earnings presentation appendix. I will now turn the call over to Court.

All right. Thank you, Jackie. I'll provide a brief recap of our performance, then pass to Ron to discuss financials, Frank will discuss credit, and then we'll take your questions. For the quarter, we've reported earnings available to shareholders of $91 million. This represents EPS of 42 cents per share compared to the 41 cents reported last quarter and 49 cents reported in the first quarter of last year. On an operating basis, which excludes a number of interest rate driven items and merger expenses that Ron will review, EPS of 36 cents compares to 44 cents last quarter and 46 cents in the first quarter of last year. Lower mortgage origination volume and the return of a provision for credit losses impacted the first quarter compared to the 2021 results. I'll provide an overview of actions we are taking in our mortgage banking segment later in my remarks. Non-PPP loan balances grew $630 million in the first quarter representing a quarterly growth rate of 2.8% and annual growth rate of 11%. This level of expansion during what is typically a slower growth quarter for the bank is commendable in its own right, but is particularly notable on the heels of last quarter's record loan generation. This quarter's organic generation is significantly offset. This quarter's organic significantly offset continued declines in PPP loan balances, enabling total portfolio expansion of 1.9 percent, or 7 percent annualized during the first quarter. Net expansion was centered in the commercial real estate and residential mortgage portfolios, as commercial loans contracted by 1 percent, following a 3.9 percent growth in the fourth quarter. Commercial pipelines have since rebounded, following a lower start to the year that reflected the fourth quarter's volume. The quarter's growth reflects both favorable market conditions and outstanding execution by our teams, who continue to bring new relationships to the bank. Ongoing talent acquisition remains successful. We recently added a middle market leader in the Denver, Colorado region, and will continue to hire bankers in new and existing markets throughout the West. The first quarter provided an excellent start to our net portfolio growth expectations for 2022, and we expect our brand momentum and banking teams' execution to drive net expansion throughout the year. Remaining PPP balances, which are now less than 1% of the portfolio, are no longer a headwind to growth, and any favorable movement in line utilization, which we have not yet seen to date, will provide additional tailwind. Moving on to a handful of initiatives. Our advancements in payments technology during the quarter include an announced collaboration with Visa to launch two commercial card solutions. One, the Visa Commercial Preferred Solution helps our middle market business owners streamline money movement through digital-first capabilities while meeting their rewards preferences. And two, the Umpqua Bank Commercial Pay Solution leverages Visa Commercial Pay to provide an app-based solution and real-time transaction visibility to enable businesses to virtually digitize and streamline their payment needs. This week, we launched a new collaboration with Rectangle Health, a leading healthcare technology company, to introduce an industry-specific payment solution to improve practice efficiency and optimize security for our healthcare practice customers. Our human digital initiatives remain critical to our long-term strategy to actively and personally engage with our customers through digital channels, and I'm excited to announce that an enhanced version of Umpqua Go 2 is in pilot. Initial feedback is highly complimentary. We also continue to roll out Encino through the bank in the first quarter, creating efficiencies internally while improving speed to market and the overall customer experience. As it relates to our ESG journey, we published our fourth annual report this week, which is evidence of our continued evolution in this important area. We are aware of the increased regulatory disclosure expectations, and we are positioned to meet them. We have a program, and it is continuing to mature. We have many of the elements in place already, and we are in good shape to be able to deliver on the proposed SEC disclosures. Other actionable items relate to our mortgage banking segment, which was adversely impacted by the sharp increase in mortgage rates during the quarter. In April, we adjusted our capacity and expense run rate through a headcount reduction to meet the demand that we anticipate over the foreseeable future. We are also looking at actions related to MSR, which Ron will detail later. We will continue to evaluate ways to ensure we have the optimal mix of saleable and portfolio originations in order to balance the business mix to support the bank and our investors. Regarding capital, in February, we paid our shareholders a dividend of 21 cents per share, consistent with historical payments. And as we previously communicated, we did not repurchase any shares given our pending combination with Columbia Banking System, which received shareholder approval on January 26th. We continue to project a mid-2022 closing timeframe, and the Integration Management Office, which includes senior executive leadership from both Umpqua and Columbia, enable Umpqua's bankers to have undisturbed focus on generating business and serving customers. While the IMO facilitated the completion of the post-closing organizational design and made progress on system selections and cost savings realization plans during the quarter, UMQA's bankers generated net loan and deposit growth and replenished pipelines for continued expansion. For the past two quarters, I've told you to hold us accountable for our growth. The separation of our integration planning activities from our growth objectives has enabled us to successfully drive our business forward And I remain highly enthusiastic that our operating markets and top-tier banking teams will contribute to the net expansion that delivers shareholder value through 2022 and beyond. And with that, Ron, take it away.