Innovation Update

Return to Article

Umpqua Holdings Reports 1Q Loss On Credit Costs

The Associated Press

PORTLAND, Ore. (AP) — Regional bank Umpqua Holdings Corp. on Thursday reported a loss for the first quarter — falling short of Wall Street's estimates — as credit costs more than tripled.

Shares dropped 68 cents, or 6.7 percent, to $9.47 in morning trading.

After paying preferred dividends, the bank reported a net loss of $13.8 million, or 23 cents per share, compared with a profit of $24.7 million, or 41 cents per share, a year earlier.

Analysts polled by Thomson Reuters, on average, had expected the bank to break even in the first quarter.

The company set aside $51.4 million to cover potential loan losses, up 61 percent from the fourth quarter and more than three times the amount set aside in the first quarter of last year.

The amount of loans which the bank determined it is unlikely to collect on, known as net chargeoffs, soared to $55.2 million from $13.5 million in the prior-year quarter. The rate of net chargeoffs to average loans and leases jumped to 3.65 percent from 1.94 percent in the fourth quarter and 0.89 percent in the first quarter of 2008.

Total nonperforming assets rose 86 percent to $164.2 million, or 2.16 percent of total loans and leases.

Despite the higher credit costs, President and Chief Executive Ray Davis said in a statement he is "beginning to see a light at the end of the tunnel."

The bank said it expects the second-quarter provision for loan losses and chargeoffs to be much lower than in the first quarter.

Net interest income, or earnings generated from loans and deposits, rose 8 percent to $75.4 million, boosted by a decline in interest expense.

Non-interest income, or income from fees and other charges, fell 48 percent to $15.5 million. While service charges and brokerage fees declined, mortgage banking revenue jumped significantly to $4.1 million, as mortgage interest rates dropped and refinance activity picked up.

Umpqua Holdings is the parent company of Umpqua Bank, which operates 150 locations throughout the Northwest.