UMPQ
#It's hard to say right now.
Looking at 2016, I'd say it will be game- time decisions and we'll talk about that on a quarterly basis next year.
But what we have right now, it is just one small piece in Q4 we're looking at and that's where we're at.
Thank you.
Let me clarify one thing, too.
You're talking about contractual balances and roughly two-thirds or three-quarters of that entire portfolio came to Umpqua through acquisitions which were fair valued at the time of acquisitions.
So the actual effective yields are lower on the books.
And if you look at our margin table, the all-in cost is in the mid to high 3's.
And, yes, they are moving.
They are transitioning from Tier1 to Tier 2.
There's roughly 25% left in Tier 1 this year.
100% will be in Tier 2 next year.
We view that as a very inexpensive form of Tier 2 capital at the holding company under Basel III.
We're very comfortable with our Tier 1, including the Tier 1 common at [11.4%].
So no plans at this point in time to replace those with what would be higher costing Tier 1 instruments.
We're in good position on that front.
They are at fair value and yields were fair valued on those as well at the date of acquisition.
So if there's a 10% coupon in terms of cash coupon, the effective yield on it might be in the 7%s, right, for example.
I don't have the specific numbers off the top of my head.
But all-in cost on that is 3.89% here for the third quarter in terms of the yield.
And we view that as a very low, inexpensive and tax deductible form of Tier 2 capital under Basel III.
So no plans to replace it with a higher costing Tier 1.
We're in great shape with the common.
No need to refinance anything out of Tier 1.
We're very strong on the Tier 1 side, and actually that would be a higher cost.
Correct, yes, no plans to do that whatsoever.
It would be diluted earnings per share forecast as you look forward on that front.
We're in good shape.
You bet, thank you.
Just as I talked about, I expect that just to be in the range of what you've seen in the last couple quarters.
If you look at it on the face of the balance sheet, of course, it reflects the acquisition accounting from the second quarter of last year.
And that's why we also, in our slide deck, show that pro forma ratio if you were to include the credit discount.
But today, if we're around 80 basis points loan loss reserve, that's been inching higher over time.
And I'd expect over the course of the next ---+ call it three, four, five years, on the face of the balance sheet, that will inch up towards somewhere in the low 1% range for the reserve while the credit discount comes off, assuming no massive downturn in the economy.
But that will just probably continue to inch higher as a percentage on the balance sheet.
Okay.
Appreciate it.
This is <UNK>.
I want to thank everyone for their interest in Umpqua Holdings and the attendance on the call today.
This will conclude the call.
Goodbye.
