UMPQ - Umpqua: Building A Long-Term Winner But The Next Step Is A Doozy

• Umpqua posted a small core pre-provision beat in the fourth quarter, as stronger net interest income offset higher costs.
• Mortgage banking has been a major driver for Umpqua recently, and the likelihood of declining mortgage activity and normalizing margins over the next two years is a threat to growth.
• Management has been making sound long-term strategic decisions - closing branches, opportunistically hiring talent, and leveraging technology to create new commercial fee-generating opportunities.
• I'm worried that declining mortgage profits could drive negative earnings revisions (and/or downgrades) over the near term, but the long-term value here is appealing for patient investors.

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