Umpqua Holdings (UMPQ) in Portland, Ore., reported a steep dip in quarterly profits because of merger-related expenses and lower mortgage banking revenue.
The company earned $18.7 million in the first quarter, down 20% from the same period a year ago. Earnings per share of 17 cents came in 5 cents lower than the estimates of analysts polled by Bloomberg.
The company's net interest income rose 14%, to $107.8 million, as its loan and lease portfolio grew by 11%. The growth in Umpqua's $7.4 billion loan and lease portfolio was propelled by expansion in residential mortgage, lease financing, owner-occupied commercial real estate and commercial lines of credit lending. Its net interest margin climbed 51 basis points, to 4.28%, because of higher yields on loans and investments, a decline in average interest-bearing liabilities and an increase in outstanding loans.
A softening mortgage origination market lowered Umpqua's noninterest income to $23 million &mdash ;a 32% decline from the previous year. The company's mortgage banking revenue fell 56%, to $10.4 million, continuing the previous two quarters' downward trend.
Merger-related costs drove a 13% increase in Umpqua's noninterest expenses, which rose to $96.5 million. Umpqua closed its $2 billion merger with the Spokane, Wash.-based Sterling Financial (STSA) on April 18. That deal roughly doubled Umpqua's assets, to $22 billion.
Strengthening credit quality allowed Umpqua to lower its loan-loss provision by 23%, to $5.4 million. The company recovered $5.6 million in net charge-offs, compared to an $8.7 million recovery during the same period a year ago.