Safe and Sound

Umpqua Bank

Roseburg, OR
4
Star Rating
Umpqua Bank is a Roseburg, OR-based, FDIC-insured bank founded in 1953. Regulatory filings show the bank having equity of $4.30 billion on $25.71 billion in assets, as of December 31, 2017.

With 4,320 full-time employees in 311 offices in multiple states, the bank has amassed loans and leases worth $19.20 billion, including real estate loans of $14.46 billion. U.S. bank customers currently have $20.08 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Umpqua Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a breakdown of how the bank did on the three key criteria Bankrate used to grade American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a cushion against losses and affords protection for depositors during periods of economic trouble for the bank. It follows then that a bank's level of capital is an essential measurement of an institution's financial resilience. When it comes to safety and soundness, the higher the capital, the better.

Umpqua Bank received a score of 10 out of a possible 30 points on our test to measure capital adequacy, coming in below the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Umpqua Bank's Tier 1 capital ratio was 12.50 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, Umpqua Bank held equity amounting to 16.72 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by problem assets, such as unpaid mortgages.

A bank with extensive holdings of these kinds of assets may eventually be forced to use capital to absorb losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and elevating the risk of a failure in the future.

Umpqua Bank scored above the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.53 percent of Umpqua Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problematic loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Umpqua Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, increasing its capital cushion, or be used to address problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money are less able to do those things.

On Bankrate's earnings test, Umpqua Bank scored 12 out of a possible 30, less than the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. Umpqua Bank's most recent annualized quarterly return on equity was 6.02 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank recorded net income of $255.6 million on total equity of $4.30 billion. The bank had an annualized return on average assets, or ROA, of 1.01 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.