Umpqua Holdings Corporation

Good day, and thank you for standing by. Welcome to the Umpqua Holdings Corporation third quarter 2022 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jackie Bolin, investor relations director. Please go ahead.

Thank you, Shannon. Good morning and good afternoon, everyone. Thank you for joining us today on our third 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 third quarter 2022 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 umquabanks.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 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. 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, then we'll take your questions. For the third quarter, We reported earnings available to shareholders of $84 million. This represents EPS of $0.39 per share compared to the $0.36 reported last quarter and the $0.49 reported in the third 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 $0.47 compared to $0.37 last quarter and $0.49 in the third quarter of last year. Return of a provision for credit losses compared to 2021's recapture was a driver of the annual variance. Operating pre-provision net revenue was up 30% on the quarter and 31% for the year. Entire interest rates and loan growth have substantially offset declines in mortgage banking revenue and PPP-related fees. Loan balances grew $1.1 billion in the third quarter. representing a quarterly growth rate of 4.4%, as new generation was diversified across portfolios, business lines, and geographies. Deposit balances increased $685 million, representing a quarterly growth rate of 2.6%. While growth once again outpaced deposit balances increases, our growth rates were far more balanced than in the prior quarter, and we continued to target a balanced growth profile. Turning to other initiatives at the bank, we continue to add new digital and payment solutions to meet the evolving needs of our customers. And in the third quarter, our teams implemented enhancements to product offerings and service capabilities. These include a new integrated receivable solution for businesses and commercial clients, launched in partnership with a FinTech best-in-class provider, as well as a digital healthcare payments and practice management solution that we will market to doctors, dentists, hospitals, on all healthcare providers. We have a robust roadmap planned for Q4 and into 2023 for continuous digital innovation and payments technology deployment. And just this week, we successfully launched real-time payments. Umpqua Bank is now registered with the Clearinghouse, and the real-time payments network enables our customers access to funds and the ability to review balance information within seconds, 24 hours a day, 365 days a year. Our ongoing advancements in payments technology continue to accelerate revenue growth in our core commercial fee categories, including 43% growth in commercial card revenue during the third quarter compared to the prior year. Our pipelines across all fee-based solutions, which includes treasury management, cards, merchant, and international, remain very strong. As discussed on last quarter's call, we continue to take necessary steps within the mortgage banking segment to manage our expenses and efficiently deploy capital in light of significant headwinds in the home lending industry. To that end, we further reduced headcount during the quarter and implemented additional business model adjustments to shift production towards saleable volume, which is generally more profitable. We have put on $3 billion in loan portfolio growth through September, and $953 million of it, which is one-third of the growth, is from portfolio mortgages. Going forward, We expect our recent actions to result in lower growth in portfolio mortgages as we continue to target balanced growth profile, the balance for our balance sheet. These actions take time to work their way through the financial statements, and we will continue to update you on our progress. We remain committed to serving our customers, and we will continue to invest resources in our low to moderate income communities. We are making investments to build and expand relationships in historically underserved markets, with products and through services provided by our retail, small business, and home lending teams. Regarding capital, earlier this month, we declared a 21-cent per share dividend payable October 28th to our shareholders of record as of October 14th. We once again accelerated our dividend declaration timing compared to our usual post-earnings cadence as we continue to plan for our pending combination with Columbia Banking System. As we detail on slides six and seven of our deck, we continue to make headway with our integration planning and our scheduled Q1 of 2023 core system conversion date remains achievable at this point given our ability to separate conversion planning activities from legal close date. Since we last spoke in July, we have signed a letter of agreement with the Department of Justice and we have received required regulatory approval from the state of Oregon. We are pleased to have passed two additional milestones, and we are prepared to close the transaction after obtaining the remaining regulatory approvals and after Columbia executes purchase agreements to divest the 10 Columbia State Bank branches identified by the DOJ. Before I pass to Ron, I would like to commend our teams. OMQA's loan portfolio is up 13% through September, and while favorable market conditions contributed to that growth, It is primarily reflective of the diligent focus of our associates and our ongoing investments in talent, talent that has joined the bank since we announced our pending combination with Columbia. Our operating markets, markets, pipelines, and top tier banking teams support my expectations for continued net portfolio growth into 2023 outside significant economic deterioration, which we have not seen today. We remain acutely focused on the health of our new and existing borrowers, and our new loan production mirrors the high-quality metrics exhibited by our overall loan portfolio. I am excited about the activity at UMQA, and I am excited about our forthcoming combination with Columbia. And with that, Ron, take it away. Okay, thank you, Court.