• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports 12% Increase in Full Year 2003 Operating Earnings Per Share
    Company Release - 01/20/2004 05:00
                   Nonperforming Loans Drop by Thirty-Eight Percent

    PORTLAND, Ore., Jan. 20 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced fiscal 2003 operating earnings of $35.5 million, or $1.24 per diluted share, compared to $23.7 million, or $1.11 per diluted share in the previous year, representing an annual increase of 12%. For the fourth quarter of 2003, operating earnings were $8.59 million, or $0.30 per diluted share, down from $9.27 million, 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. There were no merger-related expenses recorded in the fourth quarter of 2003.

    Net income for the full year was $34.12 million or $1.19 per diluted share compared to $21.97 million or $1.03 per diluted share for 2002.

    Total loans increased by $68.1 million during the quarter, while nonperforming loans decreased by $2.0 million, or 15%, during the same period. The Bank's non-performing loans stand at $11.4 million at December 31, 2003, representing 0.57% of total loans, compared to 1.03% at December 31, 2002.

    "Given the state of the economy, we believe the Company's earnings per share growth for 2003 of 12% was outstanding," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation. "During this past year we were also able to strengthen and prepare our infrastructure for continued growth in 2004, while improving our loan quality to high performance levels."

    The Company's brokerage subsidiary, Strand, Atkinson, Williams & York, Inc., also reported that gross revenue was up 16% for the quarter compared with the fourth 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 thousands, except per                        Total     Total
         share data)                         Q4 2003  Q3 2003    2003      2002
    
        Net Income                            $8,591   $9,015   $34,119   $21,968
        Add Back: Merger related expense,
         net of tax                               --      252     1,332     1,721
          Operating Earnings                  $8,591   $9,267   $35,451   $23,689
    
                                                                  Total     Total
        Earnings per diluted share:           Q4 2003  Q3 2003    2003      2002
          Net Income                           $0.30    $0.31     $1.19     $1.03
          Operating Earnings                   $0.30    $0.32     $1.24     $1.11
    
    

    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.

    Total consolidated assets of Umpqua Holdings as of December 31, 2003 were $2.96 billion, compared to $2.56 billion at December 31, 2002. Total gross loans and leases, and deposits were $2.00 billion and $2.38 billion, respectively, as of December 31, 2003, compared to $1.78 billion and $2.10 billion, respectively, as of December 31, 2002.

        The following table presents 2003 growth rates:
    
        (Dollars in thousands)     Dec 31, 2003Dec 31, 2002   Growth Rate
         Loans and Leases           $2,003,587    $1,778,315        13%
         Deposits                   $2,378,192    $2,103,790        13%
         Assets                     $2,963,815    $2,555,964        16%
    

    Non-interest income for the fourth quarter of 2003 decreased to $7.70 million, due to a decline in mortgage banking revenue. Mortgage banking revenue was $1.20 million in the fourth quarter of 2003, a decline of $1.96 million from the $3.16 million reported in the third quarter of 2003.

    Umpqua Bank, Umpqua Holdings largest subsidiary, reports an efficiency ratio before merger-related expenses of 56.89% for the quarter ended December 31, 2003 compared to 55.94% for the quarter ended September 30, 2003 and 52.88% for the quarter ended December 31, 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, Oregon. For more information, visit www.umpquabank.com/investor.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Tuesday, January 20, 2004, at 10:00 a.m. PST where the Company will discuss operating results for 2003. 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 888-373-3590 a few minutes before 10:00 a.m. The password is "UMPQUA." Information to be discussed in the teleconference will be available on the Company's website prior to the call at www.umpquabank.com/investor. A rebroadcast can be found approximately one hour after the conference call by dialing 800-876-6785, or by visiting that website.

    This press release includes forward-looking statement within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including those set forth from time to time in the company's filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Specific risks in this press release include the company's expected continued growth in 2004.

    Umpqua Holdings Corporation
                          Consolidated Statements of Income
                                     (unaudited)
    
        Dollars in thousands,                         Quarter ended:
         except per share data              Dec. 31,     Sept. 30,  Dec. 31,
                                              2003         2003       2002
        Interest income
          Loans and leases                  $31,940      $32,615    $26,340
          Investments taxable                 4,166        2,720      2,659
          Investments tax exempt                442          486        790
          Temporary investments                  45           82        247
          Other interest and dividends           15           24         22
            Total interest income            36,608       35,927     30,058
    
        Interest expense
          Deposits                            5,405        5,455      5,769
          Repurchase agreements and fed
           funds purchased                      130          154        114
          Trust preferred securities            929          936        839
          Other borrowings                      340          294        213
            Total interest expense            6,804        6,839      6,935
        Net interest income                  29,804       29,088     23,123
        Provision for credit losses           1,075        1,050      1,384
    
        Noninterest income
          Service charges                     3,188        3,256      2,541
          Brokerage fees                      2,554        2,635      2,208
          Mortgage banking revenue            1,200        3,160      3,989
          Gain on sale of securities              2           10          6
          Other income                          760          455        412
        Total noninterest income              7,704        9,516      9,156
    
        Noninterest expense
          Salaries and benefits              13,583       13,438     10,877
          Occupancy and equipment             3,770        3,534      2,936
          Other                               6,077        6,333      5,221
          Merger related expenses                --          393      1,231
        Total noninterest expense            23,430       23,698     20,265
        Income before income taxes           13,003       13,856     10,630
        Provision for income tax              4,412        4,841      3,915
        Net income                           $8,591       $9,015     $6,715
    
        Weighted average shares
         outstanding                     28,389,064   28,343,696 24,054,398
    
        Weighted average diluted
         shares outstanding              28,802,165   28,702,888 24,364,161
    
        Basic earnings per share              $0.30        $0.32      $0.28
        Diluted earnings per share            $0.30        $0.31      $0.28
    
    
                             Umpqua Holdings Corporation
                          Consolidated Statements of Income
                                     (unaudited)
    
        Dollars in thousands,                        Twelve months ended:
         except per share data                       Dec. 31,     Dec. 31,
                                                      2003          2002
        Interest income
          Loans and leases                          $126,900     $86,967
          Investments taxable                         12,255       9,493
          Investments tax exempt                       2,443       2,946
          Temporary investments                          465         837
          Other interest and dividends                    69          82
            Total interest income                    142,132     100,325
    
        Interest expense
          Deposits                                    23,608      21,545
          Repurchase agreements and fed funds
           purchased                                     416         372
          Trust preferred securities                   3,715         856
          Other borrowings                             1,121       1,024
            Total interest expense                    28,860      23,797
        Net interest income                          113,272      76,528
        Provision for credit losses                    4,550       3,888
    
        Noninterest income
          Service charges                             12,556       8,640
          Brokerage fees                               9,498       9,012
          Mortgage banking revenue                    11,473       9,075
          Gain (loss) on sale of securities            2,155       (497)
          Other income                                 3,361       2,113
        Total noninterest income                      39,043      28,343
    
        Noninterest expense
          Salaries and benefits                       53,090      37,117
          Occupancy and equipment                     14,834       9,596
          Other                                       25,263      17,249
          Merger related expenses                      2,082       2,752
        Total noninterest expense                     95,269      66,714
          Income before income taxes                  52,496      34,269
        Provision for income tax                      18,377      12,301
        Net income                                   $34,119     $21,968
    
        Weighted average shares outstanding       28,294,291  21,054,351
    
        Weighted average diluted shares
         outstanding                              28,666,070  21,306,036
    
        Basic earnings per share                       $1.21       $1.04
        Diluted earnings per share                     $1.19       $1.03
    
    
                             Umpqua Holdings Corporation
                             Consolidated Balance Sheets
                                     (unaudited)
    
        Dollars in thousands,
         except per share data              Dec. 31,    Sept. 30,   Dec. 31,
                                             2003         2003        2002
        Assets:
          Cash and cash equivalents        $134,006     $130,747   $120,542
          Trading account securities          1,265        1,561      1,905
          Investments available for sale    501,904      404,771    331,160
          Investments held to maturity       14,612       16,641     18,455
          Loans held for sale                37,798       51,620     62,349
          Loans and leases                2,003,587    1,935,482  1,778,315
          Less:  Allowance for credit
           losses                          (25,352)     (25,312)   (24,731)
            Loans and leases, net         1,978,235    1,910,170  1,753,584
          Federal Home Loan Bank stock        7,168        6,703      6,589
          Premises and equipment, net        63,328       63,560     58,585
          Other real estate owned             2,529        2,452      2,209
          Mortgage servicing rights, net     10,608       10,732      9,316
          Goodwill and other intangibles    159,585      160,012    160,967
          Other assets                       52,777       52,226     30,303
                                         $2,963,815   $2,811,195 $2,555,964
    
        Liabilities:
          Deposits                       $2,378,192   $2,263,211 $2,103,790
          Securities sold under
           agreements to repurchase
           and fed funds purchased           83,531       63,553     36,232
          Borrowings                         55,000       72,047     24,219
          Notes payable for Trust
           preferred securities              97,941       77,321     75,000
          Other liabilities                  30,182       23,076     28,564
            Total liabilities             2,644,846    2,499,208  2,267,805
    
        Shareholders' equity:
          Common stock                      230,773      230,174    225,380
          Retained earnings                  89,058       81,605     59,475
          Accumulated other comprehensive
           (loss) income                      (862)          208      3,304
            Total shareholders' equity      318,969      311,987    288,159
        Total liabilities and
         shareholders' equity            $2,963,815   $2,811,195 $2,555,964
    
    
        Common shares outstanding at
         period end                      28,411,816   28,365,814 27,980,591
        Book value per share                 $11.23       $11.00     $10.30
        Tangible book value per share         $5.61        $5.36      $4.55
        Tangible equity                    $159,384     $151,975   $127,192
    
    
                             Umpqua Holdings Corporation
                                    Loan Portfolio
    
        Dollars in thousands               Dec. 31,     Sept. 30,   Dec. 31,
                                            2003          2003        2002
        Loans and leases by purpose:
          Commercial real estate         $1,072,191     $971,775   $817,691
          Residential real estate            84,423       84,317     79,708
          Construction                      232,849      247,629    270,116
            Total real estate             1,389,463    1,303,721  1,167,515
          Commercial                        565,652      585,406    551,852
          Leases                             10,918        8,612      9,594
          Consumer                           36,790       37,131     48,647
          Other                                 764          612        707
        Total loans and leases           $2,003,587   $1,935,482 $1,778,315
    
                                            Quarter      Quarter     Quarter
                                             Ended        Ended       Ended
        Dollars in thousands                Dec. 31,     Sept. 30,   Dec. 31,
                                             2003          2003       2002
        Allowance for credit losses
          Balance beginning of period       $25,312      $25,316    $15,039
            Provision for credit losses       1,075        1,050      1,384
    
        Charge-offs                         (1,591)      (2,045)    (1,760)
        Less:  recoveries                       556          991        212
            Net charge-offs                 (1,035)      (1,054)    (1,548)
    
          Acquisitions                           --           --      9,856
        Balance end of period               $25,352      $25,312    $24,731
    
        Net charge-offs to average loans
         and leases (annualized)              0.21%        0.22%      0.44%
    
        Recoveries to gross charge-offs      34.95%       48.46%     12.05%
    
        Allowance for credit losses to
         loans and leases                     1.27%        1.31%      1.39%
    
        Allowance for credit losses to
         nonperforming loans and leases        222%         189%       134%
    
        Nonperforming loans and leases
         to total loans and leases            0.57%        0.69%      1.03%
    
        Nonperforming assets
          Nonperforming loans and leases    $11,425      $13,394    $18,395
          Real estate owned                   2,529        2,452      2,209
        Total nonperforming assets          $13,954      $15,846    $20,604
    
    
                             Umpqua Holdings Corporation
                                    Loan Portfolio
    
                                                   Year to date Year to date
        Dollars in thousands                         Dec. 31,     Dec. 31,
                                                       2003         2002
        Allowance for credit losses
          Balance beginning of period                $24,731      $13,221
            Provision for credit losses                4,550        3,888
    
        Charge-offs                                  (6,077)      (2,792)
        Less:  recoveries                              2,148          558
            Net charge-offs                          (3,929)      (2,234)
    
        Acquisitions                                      --        9,856
        Balance end of period                        $25,352      $24,731
    
        Net charge-offs to average loans and
         leases (annualized)                           0.21%        0.20%
    
        Recoveries to gross charge-offs               35.35%       19.99%
    
        Allowance for credit losses to loans
         and leases                                    1.27%        1.39%
    
        Allowance for credit losses to
         nonperforming loans and leases                 222%         134%
    
        Nonperforming loans and leases
         to total loans and leases                     0.57%        1.03%
    
        Nonperforming assets
          Nonperforming loans and leases             $11,425      $18,395
          Real estate owned                            2,529        2,209
        Total nonperforming assets                   $13,954      $20,604
    
                           Deposits by Type
                         December 31,       September 30,        December 31,
        Dollars in           2003                2003                 2002
         thousands     Amount     Mix      Amount      Mix      Amount     Mix
         Demand, non
          interest
          bearing     $589,901   24.8%    $599,939    26.5%    $494,810    23.5%
         Demand,
          interest
          bearing    1,048,733   44.1%     937,606    41.4%     814,494    38.7%
         Savings       145,960    6.1%     147,849     6.5%     162,043     7.7%
         Time          593,598   25.0%     577,817    25.5%     632,443    30.1%
         Total
          Deposits  $2,378,192  100.0%  $2,263,211   100.0%  $2,103,790   100.0%
    
    
                             Umpqua Holdings Corporation
                                   Selected Ratios
                                                       Quarter ended:
                                             Dec. 31,     Sept. 30,   Dec. 31,
                                              2003          2003       2002
        Net Interest Spread:
          Yield on loans and leases           6.38%        6.56%      7.21%
          Yield on investments (1)            3.92%        3.36%      4.91%
          Yield on temporary investments      0.77%        1.13%      1.44%
            Total yield on earning assets     5.85%        5.95%      6.61%
    
          Cost of interest bearing deposits   1.23%        1.31%      1.74%
          Cost of securities sold under
           agreements to repurchase and
           fed funds purchased                1.01%        1.03%      1.44%
          Cost of borrowings                  1.90%        2.40%      3.76%
          Cost of trust preferred             4.70%        4.80%      5.33%
            Total cost of interest bearing
             liabilities                      1.39%        1.47%      1.92%
    
        Net interest spread                   4.45%        4.48%      4.69%
    
        Net interest margin                   4.77%        4.82%      5.10%
    
        Before Merger Related Expenses:
        Return on average assets              1.19%        1.33%      1.43%
        Return on average equity             10.85%       12.02%     13.75%
        Return on average tangible equity    22.10%       25.31%     23.76%
    
        After Merger Related Expenses:
        Return on average assets              1.19%        1.30%      1.29%
        Return on average equity             10.85%       11.70%     12.36%
        Return on average tangible equity    22.10%       24.62%     21.38%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio before
         merger expenses                     56.89%       55.94%     52.88%
        Umpqua Bank net interest margin       4.91%        4.98%      5.28%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
    
    
                             Umpqua Holdings Corporation
                                   Selected Ratios
    
                                                       Twelve months ended:
                                                      Dec. 31,     Dec. 31,
                                                        2003         2002
        Net Interest Spread:
          Yield on loans and leases                    6.63%        7.51%
          Yield on investments (1)                     3.98%        5.86%
          Yield on temporary investments               1.11%        1.58%
            Total yield on earning assets              6.08%        7.02%
    
          Cost of interest bearing deposits            1.42%        2.04%
          Cost of securities sold under agreements
           to repurchase and fed funds purchased       1.17%        1.43%
          Cost of borrowings                           2.48%        3.77%
          Cost of trust preferred                      4.86%        5.33%
            Total cost of interest bearing
             liabilities                               1.58%        2.12%
    
        Net interest spread                            4.50%        4.91%
    
        Net interest margin                            4.85%        5.38%
    
        Before Merger Related Expenses:
        Return on average assets                       1.31%        1.47%
        Return on average equity                      11.68%       14.64%
        Return on average tangible equity             24.80%       19.76%
    
        After Merger Related Expenses:
        Return on average assets                       1.26%        1.36%
        Return on average equity                      11.24%       13.58%
        Return on average tangible equity             23.87%       18.33%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio before merger
         expenses                                     56.32%       55.58%
        Umpqua Bank net interest margin                5.01%        5.44%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             01/20/2004
        /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/
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        /Web site:  http://www.umpquaholdingscorp.com /
        (UMPQ)
    
    CO:  Umpqua Holdings Corporation
    ST:  Oregon
    IN:  FIN
    SU:  ERN CCA ERP
    
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