• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Record Operating Earnings
    Company Release - 07/15/2004 08:01

    Strong Balance Sheet Growth Continues - Revenue at Record High

    PORTLAND, Ore., July 15 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced record second quarter 2004 operating earnings of $9.5 million, or $0.33 per diluted share, compared to $8.8 million, or $0.31 per diluted share for the second 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 $346,000 in merger-related expenses, after tax, recorded in the second quarter of 2004.

    Net income for the second quarter of 2004 was $9.1 million or $0.32 per diluted share compared to $8.1 million or $0.28 per diluted share for the second quarter of 2003.

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

    
        (Dollars in thousands,
         except per share data)         Q2 2004         Q1 2004       Q2 2003
    
        Net Income                       $9,131          $8,398        $8,132
        Add Back: Merger related
         expense, net of tax                346             131           672
    
          Operating Earnings             $9,477          $8,530        $8,804
    
        Earnings per diluted share:     Q2 2004         Q1 2004       Q2 2003
    
          Net Income                      $0.32           $0.29         $0.28
          Operating Earnings              $0.33           $0.30         $0.31
    
    

    "We are very pleased to report record operating earnings this quarter, both in amount and on a diluted per share basis. The Company is delivering on its plan of strong organic growth, with total loans increasing by $79 million over the first quarter," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation.

    The Bank's net interest margin was 4.74% for the second quarter of 2004, compared to 4.80% for the first quarter of 2004. Net charge-offs were $68 thousand, or 0.01% of average loans and leases for the second quarter of 2004, compared to $140 thousand, or 0.03% of average loans and leases for the first quarter of 2004.

    Total non-interest income for the second quarter of 2004 increased $0.9 million, or 11% when compared to the first quarter of 2004. This resulted from an increase in mortgage banking revenue of $0.8 million, along with continued growth in other categories of the Company of $0.1 million.

    Earnings contribution from the Company's mortgage group was $0.02 per diluted share in the second quarter of 2004, as compared to $0.01 per diluted share for the first quarter of 2004. Excluding the impact of the mortgage group, core operating earnings increased by $0.02 per diluted share, or 7% from the first quarter of 2004. The following table presents a reconciliation of core operating earnings per share to total:

    
        Operating Earnings per
         diluted share:                 Q2 2004         Q1 2004       Variance
          Core excluding mortgage group   $0.31           $0.29         $0.02
          Mortgage group                   0.02            0.01          0.01
            Total                         $0.33           $0.30         $0.03
    
    

    The Company's brokerage subsidiary, Strand, Atkinson, Williams & York, Inc., reported gross revenue of $3.1 million, an increase of 28% for the quarter compared with the second quarter of 2003.

    Total revenue, which is defined as net interest income on a tax equivalent basis plus non-interest income, reached a record $40.7 million for the second quarter of 2004, compared to $38.2 million for the previous quarter, and $38.8 million for the same quarter a year ago. This represents an increase of 7% over the first quarter of 2004, and 5% over the same period a year ago.

    Umpqua Bank, Umpqua Holdings' largest subsidiary, reports an efficiency ratio before merger-related expenses of 55.1% for the second quarter of 2004, compared to 58.2% for the previous quarter and 57.5% for the same quarter one year ago.

    Total consolidated assets of Umpqua Holdings as of June 30, 2004 were $3.15 billion, compared to $3.00 billion at March 31, 2004 and $2.75 billion at June 30, 2003. Total gross loans and leases, and deposits were $2.15 billion and $2.48 billion, respectively, as of June 30, 2004, compared to $2.07 billion and $2.43 billion, respectively, as of March 31, 2004.

        The following table presents the year to date June 2004 annualized growth
    rates:
    
    
        (Dollars in thousands)    June 30, 2004Dec. 31, 2003      Growth Rate
        Loans and Leases             $2,152,417      $2,003,587           15%
        Deposits                     $2,479,115      $2,378,192            8%
        Assets                       $3,153,291      $2,963,815           13%
    
    

    Total loans increased by $79 million during the quarter, while non-performing assets decreased by $0.4 million during the same period. The Bank's non-performing assets stand at $13.1 million at June 30, 2004, representing 0.41% of total assets, down from 0.45% as of March 31, 2004.

    During the second quarter of 2004, the Company repurchased 321,729 shares of its common stock on the open market at a weighted average price per share of $18.80. Also during the second quarter of 2004, the Company announced a dividend to shareholders of $0.06 per share, an increase of 50% over the first quarter dividend of $0.04 per share.

    On July 12, 2004, the company announced the completion of its acquisition of Humboldt Bancorp and its principal operating subsidiary Humboldt Bank. Under the terms of the merger agreement, Humboldt Bancorp shareholders will receive one share of Umpqua Holdings Corporation common stock for each share of Humboldt Bancorp common stock. Approximately 15.5 million shares of Umpqua Holdings Corporation common stock are to be issued in connection with the merger. The combined organization will have assets of approximately $4.6 billion, deposits of approximately $3.5 billion and shareholders' equity of approximately $650 million. The acquisition will be accounted for using the purchase accounting method for business combinations, and as such, will be first reflected in the Company's third quarter 2004 financial statements.

    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 91 stores throughout Oregon, Northern California and Southwest Washington. The bank was named #1 on "The 100 Best Companies to Work For in Oregon" large companies list for 2004 by Oregon Business Magazine. 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.umpquaholdingscorp.com.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, July 15, 2004, at 10:00 a.m. PDT where the Company will discuss operating results for the second quarter of 2004. 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 888-323-2711 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.umpquaholdingscorp.com. A rebroadcast can be found approximately one hour after the conference call by dialing 888-568-0664, or by visiting that website.

    Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
                                                    Quarter ended:
        Dollars in thousands,            June 30,      March 31,     June 30,
         except per share data            2004           2004          2003
        Interest income
          Loans and leases               $32,791        $31,865      $30,962
          Investments taxable              5,415          4,590        2,395
          Investments tax exempt             396            413          720
          Temporary investments               29             23          187
          Other interest and dividends        15             16           16
    
            Total interest income         38,646         36,907       34,280
    
        Interest expense
          Deposits                         5,785          5,889        6,267
          Repurchase agreements and
           fed funds purchased               185            139          106
          Trust preferred securities       1,120          1,123          914
          Other borrowings                   467            241          193
    
            Total interest expense         7,557          7,392        7,480
    
        Net interest income               31,089         29,515       26,800
    
        Provision for credit losses        1,100          1,075          950
        Non-interest income
          Service charges                  3,273          3,127        3,198
          Brokerage fees                   3,014          2,891        2,370
          Mortgage banking revenue         2,399          1,649        2,835
          Gain on sale of securities           6             --        2,136
          Other income                       716            793        1,099
    
        Total non-interest income          9,408          8,460       11,638
    
        Non-interest expense
          Salaries and benefits           13,753         13,665       13,170
          Occupancy and equipment          4,153          4,115        3,947
          Other                            6,550          5,946        6,760
          Merger related expenses            549            216        1,050
    
        Total non-interest expense        25,005         23,942       24,927
    
        Income before income taxes        14,392         12,958       12,561
        Provision for income tax           5,261          4,560        4,429
    
        Net income                        $9,131         $8,398       $8,132
    
        Weighted average shares
         outstanding                  28,339,080     28,445,316   28,283,843
        Weighted average diluted
         shares outstanding           28,664,279     28,819,200   28,667,926
    
        Basic earnings per share           $0.32          $0.30        $0.29
        Diluted earnings per share         $0.32          $0.29        $0.28
    
    
                               Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
        Dollars in thousands, except                 Six months ended:
         per share data                       June 30, 2004June 30, 2003
        Interest income
          Loans and leases                        $64,655              $62,346
          Investments taxable                      10,006                5,361
          Investments tax exempt                      809                1,523
          Temporary investments                        52                  338
          Other interest and dividends                 31                   30
    
            Total interest income                  75,553               69,598
    
        Interest expense
          Deposits                                 11,675               12,748
          Repurchase agreements and
           fed funds purchased                        323                  214
          Trust preferred securities                2,243                1,851
          Other borrowings                            708                  405
    
            Total interest expense                 14,949               15,218
    
        Net interest income                        60,604               54,380
    
        Provision for credit losses                 2,175                2,425
        Noninterest income
          Service charges                           6,400                6,112
          Brokerage fees                            5,905                4,309
          Mortgage banking revenue                  4,048                7,113
          Gain (loss) on sale of securities             6                2,143
          Other income                              1,509                2,145
    
        Total noninterest income                   17,868               21,822
    
        Noninterest expense
          Salaries and benefits                    27,419               26,070
          Occupancy and equipment                   8,268                7,529
          Other                                    12,495               12,853
          Merger related expenses                     765                1,688
    
        Total noninterest expense                  48,947               48,140
    
          Income before income taxes               27,350               25,637
        Provision for income tax                    9,821                9,124
        Net income                                $17,529              $16,513
    
        Weighted average shares outstanding    28,392,198           28,221,008
        Weighted average diluted
         shares outstanding                    28,734,859           28,600,479
    
        Basic earnings per share                    $0.62                $0.59
        Diluted earnings per share                  $0.61                $0.58
    
    
                             Umpqua Holdings Corporation
                             Consolidated Balance Sheets
                                     (unaudited)
    
        Dollars in thousands,          June 30,       March 31,      June 30,
         except per share data           2004            2004          2003
    
        Assets:
          Cash and cash equivalents    $110,804        $105,913      $184,262
          Trading account securities      1,089           1,094         1,833
          Investments available
           for sale                     559,013         502,807       351,209
          Investments held to maturity   13,908          14,594        17,836
          Loans held for sale            37,866          31,526        62,926
          Loans and leases            2,152,417       2,073,875     1,877,238
          Less:  Allowance for
           credit losses                (27,319)        (26,287)      (25,316)
            Loans and leases, net     2,125,098       2,047,588     1,851,922
          Federal Home Loan Bank stock   10,368           7,239         4,891
          Premises and equipment, net    68,526          67,504        62,853
          Other real estate owned           724           1,711         2,504
          Mortgage servicing rights,
           net                           11,391          10,959         9,274
          Goodwill and other
           intangibles                  159,575         159,661       160,547
          Other assets                   54,929          47,186        37,000
                                     $3,153,291      $2,997,782    $2,747,057
    
        Liabilities:
          Deposits                   $2,479,115       2,428,926    $2,282,909
          Securities sold under
           agreements to repurchase
           and fed funds purchased       77,615          58,906        33,581
          Borrowings                    145,618          55,620        22,105
          Notes payable for Trust
           preferred securities          97,941          97,941        75,000
          Other liabilities              30,963          26,152        28,358
            Total liabilities         2,831,252       2,667,545     2,441,953
    
        Shareholders' equity:
          Common stock                  226,774         232,118       229,780
          Retained earnings             103,754          96,317        73,724
          Accumulated other
           comprehensive
            Income (loss)               (8,489)           1,802         1,600
            Total shareholders' equity  322,039         330,237       305,104
    
        Total liabilities and
         shareholders' equity        $3,153,291      $2,997,782    $2,747,057
    
    
        Common shares outstanding
         at period end               28,219,677      28,489,267    28,331,279
        Book value per share             $11.41          $11.59        $10.77
        Tangible book value per share     $5.76           $5.99         $5.10
        Tangible equity                $162,464        $170,576      $144,557
    
    
    
                               Umpqua Holdings Corporation
                                      Loan Portfolio
    
                                       June 30,       March 31,      June 30,
        Dollars in thousands             2004            2004          2003
        Loans and leases by purpose:
    
          Commercial real estate     $1,209,975      $1,121,008      $886,543
        Residential real estate         105,003          94,479        78,578
          Construction                  196,577         230,674       265,753
            Total real estate         1,511,555       1,446,161     1,230,874
          Commercial                    592,718         578,823       596,778
          Leases                          9,439          10,214         9,082
          Consumer                       35,904          37,131        39,905
          Other                           2,801           1,546           599
        Total loans and leases       $2,152,417      $2,073,875    $1,877,238
    
                                        Quarter         Quarter       Quarter
                                         Ended           Ended         Ended
                                        June 30,       March 31,      June 30,
        Dollars in thousands              2004            2004          2003
        Allowance for credit losses
          Balance beginning of period   $26,287         $25,352       $24,538
          Provision for credit losses     1,100           1,075           950
    
        Charge-offs                        (415)           (447)         (466)
        Less:  recoveries                   347             307           294
            Net charge-offs                 (68)           (140)         (172)
    
          Balance end of period         $27,319         $26,287       $25,316
    
        Net charge-offs to average
         loans and leases (annualized)     0.01%           0.03%         0.04%
    
        Recoveries to gross charge-offs   83.61%          68.68%        63.09%
    
        Allowance for credit losses to
         loans and leases                  1.27%           1.27%         1.35%
    
        Allowance for credit losses to
         nonperforming loans and leases     221%            223%          116%
    
        Nonperforming loans and leases
         to total loans and leases         0.57%           0.57%         1.17%
    
        Nonperforming assets
          Nonperforming loans and
           leases                       $12,352         $11,800       $21,879
          Real estate owned                 724           1,711         2,504
        Total nonperforming assets      $13,076         $13,511       $24,383
    
    
                               Umpqua Holdings Corporation
                                      Loan Portfolio
    
                                               Year to date         Year to date
        Dollars in thousands                   June 30, 2004June 30, 2003
        Allowance for credit losses
          Balance beginning of period             $25,352              $24,731
            Provision for credit losses             2,175                2,425
    
        Charge-offs                                  (862)              (2,441)
        Less: recoveries                              654                  601
            Net charge-offs                          (208)              (1,840)
    
          Balance end of period                   $27,319              $25,316
    
        Net charge-offs to average
         loans and leases (annualized)               0.02%                0.20%
    
        Recoveries to gross charge-offs             75.87%               24.62%
    
    
                                     Deposits by Type
    
                         June 30, 2004March 31, 2004      June 30, 2003
        Dollars in
         thousands       Amount    Mix      Amount    Mix      Amount    Mix
        Demand, non
         interest
         bearing        $624,391  25.2%    $592,762  24.4%    $617,326  27.0%
        Demand,
         interest
         bearing       1,132,087  45.7%   1,069,064  44.0%     877,765  38.4%
        Savings          150,436   6.1%     166,481   6.9%     181,131   7.9%
        Time             572,201  23.1%     600,619  24.7%     606,687  26.6%
    
          Total
           Deposits   $2,479,115 100.0%  $2,428,926 100.0%  $2,282,909 100.0%
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
    
                                                         Quarter ended:
                                               June 30,    March 31,    June 30,
                                                 2004         2004        2003
        Net Interest Spread:
          Yield on loans and leases              6.12%        6.23%       6.65%
          Yield on taxable investments           3.95%        3.87%       3.21%
          Yield on tax-exempt investments(1)     6.76%        6.71%       6.56%
          Yield on temporary investments         0.91%        0.91%       1.18%
            Total yield on earning assets        5.68%        5.78%       6.05%
    
          Cost of interest bearing deposits      1.25%        1.31%       1.53%
          Cost of securities sold under
           agreements to repurchase and fed
           funds purchased                       0.85%        1.02%       1.43%
          Cost of borrowings                     1.91%        1.76%       3.38%
          Cost of trust preferred                4.60%        4.61%       4.89%
          Total cost of interest bearing
           liabilities                           1.42%        1.47%       1.69%
    
        Net interest spread                      4.26%        4.31%       4.36%
    
        Net interest margin                      4.57%        4.63%       4.74%
    
        Before Merger Related Expenses:
        Return on average assets                 1.23%        1.17%       1.34%
        Return on average tangible assets        1.29%        1.23%       1.43%
        Return on average equity                11.65%       10.58%      11.72%
        Return on average tangible equity       22.76%       20.84%      25.19%
    
        After Merger Related Expenses:
        Return on average assets                 1.18%        1.15%       1.24%
        Return on average tangible assets        1.25%        1.21%       1.32%
        Return on average equity                11.23%       10.42%      10.83%
        Return on average tangible equity       21.93%       20.52%      23.27%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio
         before merger expenses                 55.11%       58.16%      57.51%
        Umpqua Bank net interest margin          4.74%        4.80%       4.90%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
    
                                                           Six months ended:
                                                         June 30,       June 30,
                                                           2004           2003
        Net Interest Spread:
          Yield on loans and leases                        6.17%          6.80%
          Yield on taxable investments                     3.91%          3.80%
          Yield on tax-exempt investments (1)              6.73%          6.52%
          Yield on temporary investments                   0.91%          1.18%
            Total yield on earning assets                  5.73%          6.28%
    
          Cost of interest bearing deposits                1.28%          1.57%
          Cost of securities sold under agreements to
           repurchase and fed funds purchased              0.91%          1.43%
          Cost of borrowings                               1.86%          3.47%
          Cost of trust preferred                          4.61%          4.98%
            Total cost of interest bearing liabilities     1.44%          1.74%
    
        Net interest spread                                4.29%          4.54%
    
        Net interest margin                                4.60%          4.92%
    
        Before Merger Related Expenses:
        Return on average assets                           1.20%          1.36%
        Return on average tangible assets                  1.26%          1.45%
        Return on average equity                          11.12%         11.94%
        Return on average tangible equity                 21.81%         26.08%
    
        After Merger Related Expenses:
        Return on average assets                           1.17%          1.28%
        Return on average tangible assets                  1.23%          1.36%
        Return on average equity                          10.83%         11.21%
        Return on average tangible equity                 21.23%         24.48%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio before
         merger expenses                                  56.59%         56.25%
        Umpqua Bank net interest margin                    4.77%          5.08%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
            using a 35% tax rate.
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             07/15/2004
        /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/
        /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
    ST:  Oregon
    IN:  FIN
    SU:  ERN CCA
    
    JP-MW 
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