Umpqua to close branches, reduce office space over next two years

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Umpqua Holdings in Portland, Ore., is planning to cut up to $56 million in annual expenses over the next two years.

The $29.4 billion-asset company said the effort will include branch closures, reducing back-office space and automating more processes, among other things. Umpqua had already announced the sale of its wealth management business as part of the initiative.

Umpqua plans to shutter 30 to 50 branches over the next two years, including seven by the end of 2020. The closures, which would reduce the size of its network by 13% to 22%, would lower annual expenses by as much as $20 million.

Branch transactions at Umpqua are down 27% from a year earlier, Cort O'Haver, the company's CEO, said during a conference call to discuss quarterly results. Mobile banking daily usage is up 9% while use of the company's Go-To platform has increased by 38%.

Umpqua also plans to allow for more remote work with a plan to halve its back-office space by 2023. The move could save Umpqua up to $7 million each year.

An effort to automate processes and exit noncore business lines could add $10 million to $15 million in annual cost savings.

Umpqua eliminated its specialty deposit group, which focused on higher-cost institutional type deposits, O'Haver said. The company also combined the leadership of its marketing and communication teams and outsourced its merchant sales teams.

"No stone is left unturned," O'Haver said on the call.

Umpqua said the initiative would also include a number of technology projects. The company is working with nCino to implement a new commercial loan origination and treasury management onboarding system.

The company said it is planning to upgrade its digital business platform so that customers can be served by teams of bankers. It is also looking at enhancing cloud use and improved data and analytics.

Umpqua’s third-quarter net income more than doubled from a quarter earlier to $124.8 million.

The company reported a $338,000 recapture of its loan-loss provision after setting aside $87.1 million a quarter earlier. Net interest income rose by 2% to $216 million, while noninterest income increased by 14% to $132 million.

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