With chargeoffs spiking, Umpqua Holdings Corp. in Portland, Ore., lost $10.4 million in the third quarter, disappointing analysts who expected a profit and causing its stock to slip Thursday.
The loss of 14 cents a share includes the $3.2 million it paid in dividends on the government's preferred stock. On average analysts had anticipated the $9.2 billion-asset Umpqua would earn a penny a share.
Because of the higher-than-expected chargeoffs, the provision for loan losses rose 78% from the second quarter and 47% from the year earlier, to $52.1 million.
Net chargeoffs jumped to $47.3 million, an increase of 83% from the second quarter and 183% from a year earlier. The company said it aggressively wrote down impaired assets and, absent further declines in market prices, should be done with losses on those.
But despite the chargeoffs, nonperforming assets hovered at $156 million, or 1.70% of total assets, as of Sept. 30, compared with $150 million, or 1.73% of total assets as of June 30. The ratio of nonperforming loans to total loans climbed 26 basis points, to 2.13%.
"Until the national economy is on solid footing, we realize we will still have work to accomplish in leading Umpqua through the end of this recession," Ray Davis, the company's president and chief executive officer, said in a press release.
Still, Davis said he is "confident" the company will remain strong enough to take advantage of growth opportunities. It raised $259 million of capital in August, saying it would look to buy failed banks with assets of $500 million to $3 billion from the Federal Deposit Insurance Corp. It also has $214.2 million of capital from the Treasury Department's Troubled Asset Relief Program.
Umpqua estimated its total risk-based capital ratio at 17.52% as of Sept. 30, significantly above the minimum required to be well capitalized.
This is the third consecutive quarterly loss for Umpqua, which has been contending with troubled residential development loans.
Though initially Umpqua reported a profit in the second quarter, it later added a $112 million goodwill impairment charge to those results. So it ended up with a net loss available to common shareholders of $107.5 million for that quarter.
In the third quarter of 2008 it had a $12.4 million profit.
Umpqua's stock fell as much as 7% Thursday morning on the wide earnings miss, but rebounded later in the day. The shares were trading at $10.50 in the early afternoon, down 1.5% from Wednesday's closing price.