Umpqua lines up sale of wealth management business

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Umpqua Holdings in Portland, Ore., has agreed to sell its wealth management business to Steward Partners Global Advisory.

The $29.6 billion-asset Umpqua is selling Umpqua Investments, which has $16.4 billion in client assets and generates $15 million in annual revenue. The unit's 23 financial advisers, who manage $3.4 billion in client assets, will become employees and equity partners of Steward, which offers brokerage services through Raymond James Financial.

The deal is expected to close in the first quarter. Umpqua did not disclose the price Steward will pay.

Cort O'Haver, Umpqua's CEO, said in a Monday press release that the sale “frees additional resources” to invest in the company's core banking operations.

While Umpqua will forgo the unit's revenue, it will save $14 million annually in a move that could improve its efficiency ratio by up to 300 basis points, Piper Sandler analyst Matthew Clark wrote in a note to clients.

Clark, who said Umpqua did not have necessary scale in the business, said the company could reinvest 25% to 30% of the savings into its commercial and corporate banking businesses. “The sale helps [Umpqua] simplify its platform and refocus its efforts in more profitable areas,” he added.

The sale comes at a time when many banks are cutting costs to offset headwinds imposed by the coronavirus pandemic, while allocating more resources to growth businesses.

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