• Umpqua Holdings Corporation
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  • Umpqua Holdings Continues Strong Earnings Growth
    Company Release - 10/14/2003 05:00
                   Nonperforming Loans Drop by Thirty-Nine Percent

    PORTLAND, Ore., Oct. 14 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and of Strand, Atkinson, Williams & York, Inc., today announced operating earnings of $9.27 million, a 54% increase over the same period one-year ago, or $0.32 per diluted share for the third quarter of 2003.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20030917/SFW078LOGO )

    Operating earnings are defined as the Company's earnings before deduction of merger-related expenses, which are reported in periods with merger-related costs. Net income is operating earnings minus merger-related expenses.

    Total loans increased by $58.2 million during the quarter, while nonperforming loans decreased by $8.5 million, or 39%, during the same period. The Bank's non-performing loans stand at $13.39 million at September 30, 2003, representing 0.69% of total loans compared to 1.17% at June 30, 2003 and 0.49% at September 30, 2002.

    "Management is very satisfied with the Company's results for the third quarter, especially with the significant reduction of nonperforming loans," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation. "We are also pleased that, on a sequential quarter basis, our net-interest margin and net-interest income increased, while non- interest expense decreased, lowering the bank's efficiency ratio to 55.9%."

    Net income for the third quarter of 2003 was $9.02 million or $0.31 per diluted share compared to $8.13 million or $0.28 for the second quarter of 2003.

    The company's brokerage subsidiary, Strand, Atkinson, Williams & York, also reported that gross revenue was up 11% for the quarter compared with the second quarter of 2003, and 15% over the third quarter of 2002.

    The following table presents a reconciliation of net income to operating earnings, with merger-related expenses displayed for each period presented:

         (Dollars in 000's,
          except per share data)       Q3 2003      Q2 2003        Q3 2002
    
          Net Income                    $9,015$8,132$6,010
    
          Add Back:  Merger related
           expense, net of tax             252          672             --
             Operating Earnings         $9,267$8,804$6,010
    
          Earnings per diluted share:  Q3 2003      Q2 2003        Q3 2002
            Net Income                   $0.31$0.28$0.29
            Operating Earnings           $0.32$0.31$0.29

    The acquisition of Centennial Bancorp, which closed on November 15, 2002, was accounted for under the purchase accounting method, and Centennial Bancorp's results are included from the date of closing. Merger expenses for the third quarter of 2003 represent the conclusion of merger costs from the Centennial acquisition and are primarily excess property settlement costs.

    Total consolidated assets of Umpqua Holdings as of September 30, 2003 were $2.81 billion, compared to $2.56 billion at December 31, 2002. Total gross loans and leases, and deposits were $1.94 billion and $2.26 billion, respectively, as of September 30, 2003, compared to $1.78 billion and $2.10 billion, respectively, as of December 31, 2002.

    The following table presents annualized 2003 growth rates, based on growth achievements through September 2003:

                                                                     Annualized
         (dollars in thousands)    Sep 30, 2003Dec 31, 2002     Growth Rate
         Loans and Leases            $1,935,482$1,778,315           12%
         Deposits                    $2,263,211$2,103,790           10%
         Assets                      $2,811,195$2,555,964           13%
    

    Non-interest income for the third quarter of 2003 grew to $9.52 million, an increase of 42% over the third quarter of 2002. Mortgage banking revenue was $3.16 million in the third quarter of 2003, compared to $2.84 million in the second quarter of 2003 and $1.19 million in the third quarter of 2002. Improvement in the market value of the mortgage servicing portfolio was primarily responsible for the increase in sequential quarter revenue.

    Umpqua Bank, Umpqua Holdings largest subsidiary, reports an efficiency ratio before merger-related expenses of 55.94% for the quarter ended September 30, 2003 compared to 57.51% for the quarter ended June 30, 2003 and 55.08% for the quarter ended September 30, 2002.

    Certain amounts reported in prior quarters' financial statements have been reclassified to conform to the current presentation. The effects of the reclassifications are not considered material.

    About Umpqua Holdings Corporation

    Umpqua Holdings Corporation is the parent company of Umpqua Bank, an Oregon state-chartered bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has 64 stores throughout Oregon and Southwest Washington. Umpqua Holdings also owns a retail brokerage subsidiary, Strand, Atkinson, Williams & York, Inc. which has 14 locations throughout Oregon and Southwest Washington and offers brokerage services within Umpqua Bank stores. Additionally, Umpqua Holdings' Private Client Services Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquabank.com/investor.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Tuesday, October 14, 2003, at 10:00 a.m. PDT where the Company will discuss third-quarter results and plans for the remainder of the year. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 888-399-7388 a few minutes before 10:00 a.m. The password is "UMPQUA." A rebroadcast can be found approximately one hour after the conference call by dialing 888-562-2900, or by visiting www.umpquabank.com/investor.

    This press release includes forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that expressly or implicitly predict future results, performance or events are forward-looking statements. The words "anticipate," "believe," "expect," "estimate," "intend" and words or phrases of similar meaning are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause or contribute to those differences include, but are not limited to, general economic conditions, either nationally or regionally that could result in increased loan losses, interest rate fluctuations, pricing pressure and other competitive factors, potential delays or problems with integrating prior acquisitions, the ability to attract new deposits and loans, changes in legal or regulatory requirements, competition in the retail brokerage industry, general stock market conditions and changes in technology. Readers are encouraged to review the risk factors stated in the Company's 10-K and other reports filed with the SEC and are cautioned not to place undue reliance on forward-looking statements. The Company does not intend to update these forward-looking statements. All written and oral forward-looking statements attributable to the Company and/or persons acting on its behalf are expressly qualified by this disclosure.

    Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
         Dollars in thousands,                     Quarter ended:
          except-per share data   Sept. 30, 2003June 30, 2003Sept. 30, 2002
             Interest income
              Loans and leases          $32,615$30,962$20,435
              Investments taxable         2,720           2,395         2,557
              Investments tax exempt        486             720           714
              Temporary investments          82             187           318
              Other interest and
               dividends                     24              16            28
                Total interest income    35,927          34,280        24,052
             Interest expense
              Deposits                    5,455           6,267         5,394
              Repurchase agreements and
               fed funds purchased          154             106           101
              Trust preferred securities    936             914            18
              Other borrowings              294             193           226
                Total interest expense    6,839           7,480         5,739
             Net interest income         29,088          26,800        18,313
             Provision for credit losses  1,050             950           900
             Noninterest income
              Service charges             3,256           3,198         2,138
              Brokerage fees              2,635           2,370         2,299
              Mortgage banking revenue    3,160           2,835         1,190
              Gain on sale of securities     10           2,136           396
              Other income                  455           1,099           682
             Total noninterest income     9,516          11,638         6,705
             Noninterest expense
              Salaries and benefits      13,438          13,170         8,963
              Occupancy and equipment     3,534           3,947         2,348
              Other                       6,333           6,760         3,810
              Merger related expenses       393           1,050            --
             Total noninterest expense   23,698          24,927        15,121
              Income before income
               taxes                     13,856          12,561         8,997
             Income taxes                 4,841           4,429         2,987
             Net income                  $9,015$8,132$6,010
             Weighted average shares
              outstanding            28,343,696      28,283,843    20,125,583
             Weighted average diluted
             shares outstanding      28,702,888      28,667,926    20,398,796
             Basic earnings per share     $0.32$0.29$0.30
             Diluted earnings per share   $0.31$0.28$0.29Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
        Dollars in thousands,               Nine months ended:
         except-per share data   September 30, 2003September 30, 2002
             Interest income
              Loans and leases              $94,96                $60,626
              Investments taxable            8,088                 6,828
              Investments tax exempt         2,002                 2,164
              Temporary investments            420                   588
              Other interest and dividends      54                    60
               Total interest income       105,525                70,266
             Interest expense
              Deposits                      18,202                15,776
              Repurchase agreements and
               fed funds purchased             313                   258
              Trust preferred securities     2,787                    18
              Other borrowings                 754                   809
               Total interest expense       22,056                16,861
             Net interest income            83,469                53,405
             Provision for credit losses     3,475                 2,504
             Noninterest income
              Service charges                9,368                 6,098
              Brokerage fees                 6,944                 6,805
              Mortgage banking revenue      10,273                 5,085
              Gain (loss) on sale of
                securities                   2,153                  (503)
              Other income                   2,601                 1,701
             Total noninterest income       31,339                19,186
             Noninterest expense
              Salaries and benefits         39,507                26,240
              Occupancy and equipment       11,064                 6,660
              Other                         19,187                12,028
              Merger related expenses        2,082                 1,520
              Total noninterest expens      71,840                46,448
               Income before income taxes   39,493                23,639
             Income taxes                   13,965                 8,386
             Net income                    $25,528$15,253
             Weighted average shares
              outstanding               28,262,353            20,043,346
             Weighted average diluted
              shares outstanding        28,622,155            20,303,556
             Basic earnings per share        $0.90$0.76
             Diluted earnings per share      $0.89$0.75Umpqua Holdings Corporation
                               Consolidated Balance Sheets
                                       (unaudited)
    
           Dollars in thousands,
            except-per share data   Sept. 30, 2003June 30, 2003Sept. 30, 2002
            Assets:
             Cash and cash
              equivalents              $130,747$184,262$128,022
             Trading account securities   1,561           1,833         1,534
             Investments available
              for sale                  404,771         351,209       251,996
             Investments held to
              maturity                   16,641          17,836        20,011
             Loans held for sale         51,620          62,926        32,959
             Loans and leases         1,935,482       1,877,238     1,076,521
              Less:  Allowance for
               credit losses           (25,312)        (25,316)      (15,038)
               Loans and leases, net  1,910,170       1,851,922     1,061,483
             Federal Home Loan Bank
              stock                       6,703           4,891         4,973
             Premises and equipment,
              net                        63,560          62,853        40,623
             Other real estate owned      2,452           2,504           756
             Mortgage servicing rights,
              net                        10,732           9,274         7,043
             Goodwill and other
              intangibles               160,012         160,547        26,105
             Other assets                52,226          37,000        11,450
                                     $2,811,195$2,747,057$1,586,955
    
            Liabilities:
             Deposits                $2,263,211$2,282,909$1,347,494
             Securities sold under
              agreements to repurchase
              and fed funds purchased    63,553          33,581        28,771
             Borrowings                  72,047          22,105        24,048
             Trust preferred securities  77,321          75,000        25,000
             Other liabilities           23,076          28,358        10,428
              Total liabilities       2,499,208       2,441,953     1,435,741
    
             Shareholders' equity:
              Common stock              230,174         229,780        94,116
              Retained earnings          81,605          73,724        53,880
              Accumulated other
               comprehensive income         208           1,600         3,218
                Total shareholders'
                 equity                 311,987         305,104       151,214
             Total liabilities and
              shareholders' equity   $2,811,195$ 2,747,057$1,586,955
             Common shares outstanding
             at period end           28,365,814      28,331,279    20,137,343
             Book value per share        $11.00$10.77$7.51
             Tangible book value per
              share                       $5.36$5.10$6.21
             Tangible equity           $151,975$144,557$125,109Umpqua Holdings Corporation
                                    Loan Portfolio
    
        Dollars in thousands     Sept. 30, 2003June 30, 2003Dec. 31, 2002
        Loans and leases by
         purpose:
          Commercial real estate      $971,775$886,543$817,691
          Residential real estate      84,317           78,578          79,708
          Construction                247,629          265,753         270,116
           Total real estate        1,303,721        1,230,874       1,167,515
          Commercial                  585,406          596,778         551,852
          Leases                        8,612            9,082           9,594
          Consumer                     37,131           39,905          48,647
          Other                           612              599             707
         Total loans and leases    $1,935,482$1,877,238$1,778,315
    
    
                                Quarter Ended     Quarter Ended     Year to date
                                Sept. 30, 2003June 30, 2003Dec. 31, 2002
         Allowance for credit
          losses
          Balance beginning of
           period                  $25,316$24,538$13,221
          Provision for credit
           losses                    1,050               950            3,888
          Net charge-offs           (1,054)             (172)          (2,234)
          Acquisitions                  --                --            9,856
         Balance end of period     $25,312$25,316$24,731
         Net charge-offs to average
          loans and leases
          (annualized)               0.22%             0.04%            0.20%
         Allowance for credit
          losses to loans and
          leases                     1.31%             1.35%            1.39%
         Allowance for credit losses
          to nonperforming loans and
          leases                      189%              116%             134%
         Nonperforming loans and
          leases to total loans and
          leases                     0.69%             1.17%            1.03%
         Nonperforming assets
          Nonperforming loans and
           leases                  $13,394$21,879$18,395
          Real estate owned          2,452             2,504            2,209
         Total nonperforming
          assets                   $15,846$24,383$20,604
    
    
                                     Deposits by Type
    
                                 September 30, 2003June 30, 2003
                                Amount         Mix          Amount          Mix
             Demand, non interest
              bearing         $599,939         26.6%     $617,326         27.1%
             Demand, interest
              bearing          937,606         41.4%      877,765         38.4%
             Savings           147,849          6.5%      181,131          7.9%
             Time              577,817         25.5%      606,687         26.6%
              Total
               Deposits     $2,263,211        100.0%   $2,282,909        100.0%
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
    
                                                 Quarter ended:
                                   Sept. 30, 2003June 30, 2003Sept. 30, 2002
             Net Interest Spread:
              Yield on loans and leases   6.56%           6.65%         7.47%
              Yield on investments (A)    3.36%           3.83%         6.01%
              Yield on temporary
               investments                1.13%           1.18%         1.61%
               Total yield on
                earning assets            5.95%           6.05%         6.89%
              Cost of interest bearing
               deposits                   1.31%           1.53%         2.09%
              Cost of securities sold under
               agreements to repurchase
               and fed funds purchased    1.03%           1.43%         1.53%
              Cost of borrowings          2.40%           3.38%         3.73%
              Cost of trust preferred     4.80%           4.89%         5.22%
               Total cost of interest
                bearing liabilities       1.47%           1.69%         2.12%
             Net interest spread          4.48%           4.36%         4.77%
             Net interest margin          4.82%           4.74%         5.27%
    
             Before Merger Related Expenses:
             Return on average assets     1.33%           1.34%         1.55%
             Return on average equity    12.02%          11.72%        15.97%
             Return on average tangible
              equity                     25.31%          25.19%        19.35%
    
             After Merger Related Expenses:
             Return on average assets     1.30%           1.24%         1.55%
             Return on average equity    11.70%          10.83%        15.97%
             Return on average tangible
              equity                     24.62%          23.27%        19.35%
    
             Bank Only Ratios:
             Umpqua Bank efficiency
              ratio before merger
              expenses                   55.94%          57.51%        55.08%
             Umpqua Bank net interest
              margin                      4.98%           4.90%         5.27%
    
             (A) Tax exempt interest has been adjusted to a taxable equivalent
                 basis using a 35% tax rate.
    
    
                             Umpqua Holdings Corporation
                                   Selected Ratios
    
                                    Nine months ended:
                                                   Sept. 30, 2003Sept. 30, 2002
             Net Interest Spread:
              Yield on loans and leases                    6.71%          7.65%
              Yield on investments (A)                     4.00%          6.33%
              Yield on temporary investments               1.17%          1.62%
               Total yield on earning assets               6.16%          7.22%
             Cost of interest bearing deposits             1.48%          2.18%
             Cost of securities sold under
              agreements to repurchase and fed funds
              purchased                                    1.23%          1.38%
             Cost of borrowings                            2.92%          3.78%
             Cost of trust preferred                       4.92%          5.22%
              Total cost of interest bearing liabilities   1.64%          2.21%
             Net interest spread                           4.52%          5.01%
             Net interest margin                           4.89%          5.51%
    
             Before Merger Related Expenses:
             Return on average assets                      1.35%          1.49%
             Return on average equity                     11.97%         15.10%
             Return on average tangible equity            25.81%         18.34%
    
             After Merger Related Expenses:
             Return on average assets                      1.28%          1.40%
             Return on average equity                     11.38%         14.20%
             Return on average tangible equity            24.53%         17.24%
    
             Bank Only Ratios:
             Umpqua Bank efficiency ratio before
              merger expenses                             56.14%         56.84%
             Umpqua Bank net interest margin               5.05%          5.51%
    
             (A) Tax exempt interest has been adjusted to a taxable equivalent
                 basis using a 35% tax rate.
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             10/14/2003
        /CONTACT:  Ray Davis, President/CEO, +1-503-546-2490, or
    raydavis@umpquabank.com, or Dan Sullivan, EVP/CFO, +1-503-546-2492, or
    dansullivan@umpquabank.com, both of Umpqua Holdings Corporation/
        /Photo:  http://www.newscom.com/cgi-bin/prnh/20030917/SFW078LOGO
                 AP Archive:  http://photoarchive.ap.org
                 PRN Photo Desk, 888-776-6555 or 212-782-2840/
        /Web site:  http://www.umpquaholdingscorp.com /
        (UMPQ)
    
    CO:  Umpqua Holdings Corporation; Umpqua Bank
    ST:  Oregon
    IN:  FIN
    SU:  ERN CCA
    
    
    
    RN-GF 
    -- SFTU036 --
    3870 10/14/200305:00 EDThttp://www.prnewswire.com