The board of Umpqua Holdings Corp. in Portland, Oregon, schedules its annual retreat nearly a year in advance. It's a big effort. But when pretty much the entire agenda was scrapped just weeks before last October's gathering, there was little, if any, dissent from directors. The reason was simple: Just as the date approached, the impact of the subprime mortgage crisis and related housing-price implosion was becoming clear. The board needed time to discuss and consider the implications and to plot a response.Umpqua's board is far from alone in piling on extra hours, resources, and brainpower in responding to turmoil in the financial markets. Larger banks were most affected - 25% of banks with more than $10 billion in assets reported losses. But more than half of all banks and thrifts saw an earnings decline compared to the year-earlier quarter, while the average return on assets for the industry was a meek 0.18%, versus 1.20% a year before. The biggest culprits: Net charge-offs, which almost doubled in the quarter to $16.2 billion, and loan loss provisions that ballooned to $31.3 billion, the largest gain in 20 years. With an additional 1.7 million adjustable-rate mortgages slated to reset to higher rates in the next two years, most experts agree we're not out of the housing woods yet.
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