Sponsored by Lane Powell

Umpqua Bank expands during recession

| Print |  Email
Articles - May 2010
Friday, April 16, 2010
img_1845
OREGON BUSINESS PHOTO

The economy may be turning around for some in 2010, but banks haven’t seen the end of the carnage yet. Nationally, 41 banks failed between January and April and were fed to stronger banks in a sort of FDIC-assisted survival of the fittest. But Roseburg-based Umpqua Bank seemed to be full of good news amid the first-quarter plague: it repaid in full its $214 million in Troubled Asset Relief Program funds, acquired two banks in a market it’s been coveting and launched a small- business lending program.

Umpqua did not escape the crisis unscathed. The bank had more than $800 million in residential development loans when the housing bubble burst in 2007 and wrote off $197 million in losses on loans in 2009. Its parent company, Umpqua Holdings, posted substantial losses last year. But Umpqua is relatively healthy despite short-term disappointments, and it’s positioning itself to emerge as a strong regional bank after the present malaise abates.

“They’re better capitalized than peer banks, their credit quality is superior to peer averages and they’re exhibiting behavior of the bank that’s more on the offensive than on defensive,” says Jeff Rulis, a research analyst at D.A. Davidson in Lake Oswego. “They are looking to grow versus other banks that are still worrying about their own internal issues.”

Umpqua’s been able to grow rapidly in its key markets thanks to FDIC-assisted acquisitions, which are basically mergers that occur over a weekend. Umpqua quadrupled its Washington presence a year after acquiring the failed Bank of Clark County in Vancouver by picking up two failed Puget Sound banks and their combined $1 billion in assets, and it’s poised to gobble more this year.

And after the crisis is over, customers will remember that it was Umpqua the FDIC trusted to smooth things over, Rulis says.

Umpqua surmounted its losses because it marked down bad residential development loans early and aggressively, says CEO Ray Davis. The TARP funds also helped by further cushioning Umpqua’s relatively healthy capital ratios and insuring them against any economic surprises.

Even with aggressive write-downs, Umpqua’s nonperforming assets, which comprise mostly delinquent loans, made up 2.38% of its assets in 2009. It’s hard to say what that number should be for regional banks in the current climate. Washington Trust’s NPAs were 1.06% of its assets for 2009; PremierWest Bancorp’s NPAs were 8.37% of its assets for 2009. PremierWest is one of 10 Oregon-based banks operating under federal orders to improve their financial positions.

umpquabigUmpqua’s problems were in residential development loans, Davis says. But many in the industry say lenders should be bracing for the impact of persistently high vacancy rates on developers who took out commercial development loans.

Davis isn’t worried about that. “The naysayers have been saying this for two years now: ‘The bottom’s going to fall out.’ They’ve been saying it for two years and nothing’s really happened,” he says. “We do not see systemic issues in our commercial loan portfolio… There will be issues that pop up but nothing widespread.”

Despite forecasts that more banks will continue to fail in 2010, Davis is confident that the worst is over for Umpqua. The bank opened a personal wealth management division in September, expanded its international banking division in December, and plans to build between six and eight new branches in Oregon and Washington this year.

“2009 to me was just the worst year ever. It was just terrible,” Davis says. “2010 is going to have challenges but it’s not going to be 2009.” 

ADRIANNE JEFFRIES
 

More Articles

The Backstory: Portland Youth Builders

The Latest
Wednesday, June 03, 2015
blog002 1BY JASON E. KAPLAN | STAFF PHOTOGRAPHER

As part of our green workplaces story, Oregon Business checked out a community service project undertaken by Portland Youth Builders, a nonprofit alternative high school. In partnership with Whole Foods, PYB built garden boxes for a Home Forward  housing site. Home Forward is a government agency that provides housing for low income residents and people with disabilities.


Read more...

Undersea Power

June 2015
Friday, May 22, 2015
BY JACOB PALMER

Mike Morrow and Mike Delos-Reyes first came up with the idea of an ocean power device 23 years ago, when they were students at Oregon State University. They realized a long-held vision last summer, when their startup, M3 Wave, successfully launched the first ocean power device that works underwater.


Read more...

Department of Self-Promotion

Linda Baker
Wednesday, June 17, 2015

061715-awards1Oregon Business wins journalism awards.


Read more...

Business partnerships: taming the three-headed monster

Contributed Blogs
Monday, July 06, 2015
070615-businessmarriagefail-thumbBY KATHERINE HEEKIN | OB GUEST COLUMNIST

Picking a business partner is not much different than choosing a spouse or life partner, and the business break-up can be as heart-wrenching and costly as divorce.


Read more...

Fixing Oregon’s broken roads

The Latest
Tuesday, June 09, 2015
RUCCostComparison rev4-30BY KIM MOORE | RESEARCH EDITOR

The technology at the center of Oregon’s road usage fee reform.


Read more...

Efficiency Boost

June 2015
Friday, May 22, 2015
BY JOE CORTRIGHT

How conservation stimulates the local economy.


Read more...

Sun set

June 2015
Friday, May 22, 2015
BY CHRIS NOBLE

The right sunglasses can protect your eyes and look cool at the same time. This being the 21st century, select shades are socially conscious, too. Portland brand Shwood uses wood and other natural materials and manufactures locally. Founded by Ann Sacks, the brand Fetch dedicates a portion of its profits to animal welfare. But whether you choose classic tortiseshell or aviator chic, please, shed the sunglasses when you walk in the door — and, of course, at night. 


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS