The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here is last week's selection.
This week, we're going to delve into relatively unchartered territory, regional banks, and highlight the CEO of Umpqua Holdings (NASDAQ:UMPQ), Raymond Davis.
Kudos to you, Mr. Davis
If you were to look at the one-year chart of Umpqua Holdings, the holding company for Umpqua Bank and Umpqua Investment, which operates in California, Oregon, Washington, and Nevada, you'd probably be disappointed. Money center banks like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) ran wild last year as they both shed billions in assets to boost capital and essentially make banking regulators happy. For Umpqua, it actually ended the year lower by a dividend-adjusted 2%.
So you're probably wondering, then, why would I praise a CEO like Davis if his stock vastly underperformed its peers last year? The answer to that question is simply that banking investors are blind as a bat!
Umpqua was recently named the top regional bank in Oregon by Forbes, listing its holding company, Umpqua Holdings, as the No. 28 bank nationally, ahead of both Columbia Banking System (NASDAQ:COLB) and Sterling Financial (NASDAQ:STSA), which ranked 30th and 50th, respectively. Going into Forbes' calculations was a mixture of metrics including capital ratios, poor loan percentages, and profitability.
According to Umpqua's latest earnings results, its tier 1 risk-based capital of 16.94% would place it among the highest I've seen for regional banks out West. From a growth perspective, net revenue advanced 4% while income jumped a robust 21% thanks to a 56% rise in mortgage banking revenue over the prior quarter. Finally, Umpqua's non-covered, non-performing assets dropped 32% to 0.86% of total assets -- its lowest level since the second quarter of 2007.
Do I think Raymond Davis is doing a great job? You bet your behind I do!
A step above his peers
The best part about Umpqua is that not only was it voted the top regional bank in Oregon by Forbes -- and by CEOs in the region for that matter -- but it keeps the best interest of shareholders, employees, and the community in mind as well.
Long-time shareholders might be bitter about Umpqua having to reduce its dividend during the height of the credit crisis, but at a payout of $0.36 annually, which is growing again, may I add, investors are receiving a not-so-shabby 2.9% yield.
From an employee perspective, Umpqua has some interesting perks. In addition to running morning "huddles," offering in-office games, and providing workers with 40 hours of paid volunteer time each year, it offers its employees a $1,000 shopping loan, which can be automatically deducted in payments from future paychecks so its staff can buy professional attire.
Umpqua is no stranger when it comes to helping out within the communities it operates in as well. In addition to encouraging its employees to volunteer, it has placed its giving emphasis on three areas: youth development and education, the arts, and community development. In 2011, Umpqua gave $1.5 million to qualified non-profit organizations.
Two thumbs up
Based on what I see, Umpqua is one of the best run regional banks on the West Coast. Period! Raymond Davis' focus on traditional banking activities and prudent acquisitions -- Umpqua recently completed the purchase of Circle Bank in San Francisco, Calif. -- has left Umpqua with a nearly pristine loan portfolio and has kept both employees and members of the community visibly happy. I can only hope that at some point in the near future, investors give Umpqua a valuation more commensurate to the results it's delivered in recent months. In the meantime, I give two well-deserved thumbs up to you, Raymond Davis.
Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, head on over to the new CEO of the Week board and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry; you can still weigh in on other members' selections.
Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. He loves giving credit when credit is due. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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