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Umpqua Bank: Buy The Ice Cream And Wait For A 4.50% Yield

Apr. 03, 2018 2:30 PM ETColumbia Banking System, Inc. (COLB)7 Comments
Herding Value profile picture
Herding Value


  • Umpqua Bank is a “tweener;” not a community bank, not a major regional, with no critical mass anywhere in its geographically widespread service area.
  • The bank is well-run; well-capitalized with excellent credit quality and a good deposit base, but hampered by lower-than-average returns to shareholders.
  • Investors will be waiting for management's new strategic plan or M&A to boost performance.
  • At $20-21 per share and a 3.8% yield, the stock is not a compelling buy.

Umpqua Holdings Corporation (NASDAQ: UMPQ), headquartered in Portland, Oregon, is the parent company of Umpqua Bank, a $25.7 billion-asset regional bank headquartered in Roseburg, Oregon with 311 bank branches in Oregon (102), Washington (99), California (89), Idaho (15) and Nevada (6). UMPQ also owns a stock brokerage subsidiary, Umpqua Investments, Inc., with 12 locations in Oregon, California and Washington, and Pivotus Ventures, a banking think-tank located in Silicon Valley.

Where Can I Cash My Paycheck?

The thriving timber industry in the Roseburg, Oregon, area in the 1950s led to the formation of South Umpqua State Bank in 1953 in Canyonville, Oregon. According to the UMPQ website, the bank was started in order to give local people working in the timber industry a place to cash their payroll checks.

(Source: Umpqua website)

Milt Herbert, one of the bank's founders, is the second from the left in the photo above.

The bank grew slowly through the ensuing years until the December 2000 purchase of VRB Bancorp, Rogue River, Oregon, parent of Valley of the Rogue Bank, for $54.0 million. The deal increased UMPQ's assets to $750.0 million with 27 branches.

Like many banks, UMPQ then began a series of acquisitions that would finally create the bank of today. The largest and most transformative of these acquisitions was the April 2014 $2.0 billion acquisition of Sterling Financial Corporation, parent of Sterling Bank, the second-largest bank in Washington, which increased the bank's assets to more than $22.0 billion and total branches to 394 before closings and consolidations.

Pictured below is UMPQ's headquarters in Portland, Oregon; the former headquarters of the Benjamin Franklin Savings & Loan, which was seized by regulators in 1990.

(Source: Wikipedia)

Corporate Culture: "The World's Greatest Bank"

UMPQ is known for a unique, almost eccentric, customer-focused corporate culture where employees answer the phone


UMPQ data by YCharts

This article was written by

Herding Value profile picture
Former corporate executive.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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