• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Record Operating Earnings
    Company Release - 10/21/2004 08:03
                    Strong Organic Balance Sheet Growth Continues

    PORTLAND, Ore., Oct. 21 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced record third quarter 2004 operating earnings of $14.8 million, or $0.34 per diluted share, compared to $9.3 million, or $0.32 per diluted share, for the third quarter of 2003. For the nine months ended September 30, 2004, operating earnings were $32.8 million, or $0.98 per diluted share compared to $26.9 million, or $0.94 per diluted share for the same period in 2003.

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

    Operating earnings are defined as the Company's net income before deduction of merger-related expenses, net of tax, which are reported in periods with merger-related costs. There were $1.4 million in merger-related expenses, net of tax, recorded in the third quarter of 2004.

    Net income for the third quarter of 2004 was $13.4 million, or $0.31 per diluted share, compared to $9.0 million, or $0.31 per diluted share, for the third quarter of 2003. For the nine months ended September 30, 2004, net income was $30.9 million, or $0.92 per diluted share compared to $25.5 million, or $0.89 per diluted share for the same period in 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:

                                          Three months ended     Nine months ended
        (Dollars in thousands, except     9/30     6/30    9/30     9/30    9/30
        per share data)                   2004     2004    2003     2004    2003
    
        Net Income                     $13,368   $9,131  $9,015  $30,897 $25,528
        Add Back: Merger related
        expenses, net of tax             1,411      346     252    1,888   1,33
             Operating Earnings        $14,779   $9,477  $9,267  $32,785 $26,860
    
                                          9/30     6/30    9/30     9/30    9/30
        Earnings per diluted share:       2004     2004    2003     2004    2003
    
             Net Income                  $0.31    $0.32   $0.31    $0.92   $0.89
             Operating Earnings          $0.34    $0.33   $0.32    $0.98   $0.94
    

    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 received 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 were issued in connection with the merger. The acquisition was accounted for using the purchase accounting method for business combinations, and accordingly, is first reflected in the Company's third quarter 2004 financial statements.

    "It was another quarter of strong financial performance, both in amount and on a diluted per share basis. Organic growth in loans and deposits was $111 million and $248 million, respectively, over the second quarter. With the integration of Humboldt Bancorp exceeding our expectations, we continue to strengthen our foundation for future growth," said Ray Davis, President and Chief Executive Officer of Umpqua Holdings Corporation.

    Umpqua Bank's net interest margin was 4.92% for the third quarter of 2004, compared to 4.74% for the second quarter of 2004. Net charge-offs were $1.5 million, or 0.18% of average loans and leases for the third quarter of 2004, compared to $68 thousand, or 0.01% of average loans and leases for the second quarter of 2004. Non-performing assets were 0.58% of total assets for the third quarter of 2004, up from 0.41% for the second quarter of 2004.

    Earnings contribution from the Company's mortgage group was $0.01 per diluted share in the third quarter of 2004, compared to $0.02 per diluted share for the second quarter of 2004. For the nine months ended September 30, 2004, the earnings contribution from the mortgage group was $0.04 per diluted share compared to $0.13 per diluted share for the same period in 2003. Excluding the impact of the mortgage group, operating earnings increased $0.13 per diluted share, or 16% for the nine months ended September 30, 2004, compared to the same period in 2003. It is important to note that during the third quarter of 2004, the Company's mortgage group made a strategic decision to terminate its wholesale production operations. The following table presents a reconciliation of operating earnings per share to total:

                                           Nine months
                                         ended September 30  Increase   (Decrease)
                                          2004       2003
        Operating Earnings per
         diluted share:                                     Variance $  Variance %
             Excluding mortgage group    $0.94       $0.81      $0.13        16%
             Mortgage group               0.04        0.13     ($0.09)      (69%)
    
        Total                            $0.98       $0.94      $0.04
    

    Umpqua Bank, Umpqua Holdings' largest subsidiary, reported an efficiency ratio before merger-related expenses of 55.4% for the third quarter of 2004, compared to 55.1% for the previous quarter and 55.9% for the same quarter one year ago.

    "We track the success of acquisitions on two fronts," remarked Davis, "first is organic growth after the deal is completed, and second is achievement of targeted synergies." Since closing the Humboldt Bancorp acquisition on July 9, 2004, the California division's annualized deposit growth has more than doubled, from 5% to 11%. In addition, the combined Bank's efficiency ratio in the third quarter of 2004 of 55.4% is consistent with that reported by Umpqua Bank in the second quarter prior to the acquisition.

    Total consolidated assets of Umpqua Holdings as of September 30, 2004 were $4.9 billion, compared to $3.2 billion at June 30, 2004 and $2.8 billion at September 30, 2003. Total gross loans and deposits were $3.3 billion and $3.9 billion, respectively, as of September 30, 2004, compared to $2.2 billion and $2.5 billion, respectively, as of June 30, 2004.

    The following table presents the year-to-date September 2004 annualized organic growth rates, excluding the impact of acquisitions:

    July 2004                    Organic
        (Dollars in             Sep 30,       Acquired       Dec 31,       Growth
        thousands)               2004          Growth         2003          Rate
        Loans                  $3,323,137     $1,059,760     $2,003,587     17%
        Deposits               $3,919,271     $1,192,258     $2,378,192     20%
        Assets                 $4,944,340     $1,645,908     $2,963,815     15%
    
        About Umpqua Holdings Corporation

    Umpqua Holdings Corporation is the parent company of Umpqua Bank, an Oregon based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions. Umpqua Bank has 92 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 Bank's 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, October 21, 2004, at 10:00 a.m. PDT where management will discuss operating results for the third 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 888-791-5525 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 888-562-6192, or by visiting that website.

    Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
                                                   Quarter ended:
        Dollars in thousands,           September 30,    June 30,    September 30,
        except per share data              2004            2004           2003
    
        Interest income
          Loans and leases                $50,718         $32,791        $32,615
          Investments taxable               7,433           5,415          2,720
          Investments tax exempt              749             396            486
          Temporary investments               194              29             82
          Other interest and
           dividends                           14              15             24
    
            Total interest income
                                           59,108          38,646         35,927
    
        Interest expense
          Deposits                          8,927           5,785          5,455
          Repurchase agreements
           and fed funds purchased            207             185            154
          Trust preferred
           securities                       1,979           1,120            936
          Other borrowings                    731             467            294
    
           Total interest expense          11,844           7,557          6,839
    
        Net interest income                47,264          31,089         29,088
    
        Provision for loan losses           1,479           1,100          1,050
        Non-interest income
          Service charges                   5,323           3,273          3,256
          Brokerage fees                    2,787           3,014          2,635
          Mortgage banking
           revenue                          1,836           2,399          3,160
          Gain on sale of
           securities                          13               6             10
          Other income                      1,863             716            455
    
        Total non-interest income          11,822           9,408          9,516
    
        Non-interest expense
          Salaries and benefits            19,744          13,753         13,438
          Occupancy and
           equipment                        5,746           4,153          3,534
          Other                            10,037           6,550          6,333
          Merger related expenses           2,176             549            393
    
        Total non-interest expense         37,703          25,005         23,698
    
        Income before income
         taxes                             19,904          14,392         13,856
        Provision for income tax            6,536           5,261          4,841
    
        Net income                        $13,368          $9,131         $9,015
    
        Weighted average shares
         outstanding                   42,149,082      28,339,080     28,343,696
        Weighted average diluted
         shares outstanding            42,889,713      28,664,279     28,702,888
    
        Basic earnings per share            $0.32           $0.32          $0.32
        Diluted earnings per share          $0.31           $0.32          $0.31
    
    
                               Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (unaudited)
    
                                                    Nine months ended:
        Dollars in thousands, except               September 30,     September 30,
         per share data                               2004              2003
    
        Interest income
          Loans and leases                           $115,373            $94,961
          Investments taxable                          17,438              8,088
          Investments tax exempt                        1,558              2,002
          Temporary investments                           247                420
          Other interest and dividends                     45                 54
    
            Total interest income                     134,661            105,525
    
        Interest expense
          Deposits                                     20,601             18,202
          Repurchase agreements and
           fed funds purchased                            529                313
          Trust preferred securities                    4,222              2,787
          Other borrowings                              1,440                754
    
            Total interest expense                     26,792             22,056
    
        Net interest income                           107,869             83,469
    
        Provision for loan losses                       3,654              3,475
        Noninterest income
          Service charges                              11,723              9,368
          Brokerage fees                                8,692              6,944
          Mortgage banking revenue                      5,884             10,273
          Gain on sale of securities                       19              2,153
          Other income                                  3,372              2,601
    
        Total noninterest income                       29,690             31,339
    
        Noninterest expense
          Salaries and benefits                        47,162             39,507
          Occupancy and equipment                      14,014             11,064
          Other                                        22,534             19,187
          Merger related expenses                       2,941              2,082
    
        Total noninterest expense                      86,651             71,840
    
          Income before income taxes                   47,254             39,493
        Provision for income tax                       16,357             13,965
        Net income                                    $30,897            $25,528
    
        Weighted average shares
         outstanding                               33,011,298         28,262,353
        Weighted average diluted
         shares outstanding                        33,515,613         28,622,155
    
        Basic earnings per share                        $0.94              $0.90
        Diluted earnings per share                      $0.92              $0.89
    
    
                               Umpqua Holdings Corporation
                               Consolidated Balance Sheets
                                       (unaudited)
    
        Dollars in thousands,          September 30,      June 30,   September 30,
         except per share data            2004             2004          2003
    
        Assets:
          Cash and cash equivalents       $245,557       $110,804       $130,747
          Trading account securities         1,539          1,089          1,561
          Investments available for
           sale                            738,538        559,013        404,771
          Investments held to
           maturity                         12,340         13,908         16,641
          Loans held for sale               29,632         37,866         51,620
          Loans and leases               3,323,137      2,152,417      1,935,482
          Less:  Allowance for loan
           losses                          (43,374)       (27,319)       (25,312)
            Loans and leases, net        3,279,763      2,125,098      1,910,170
          Federal Home Loan Bank
           stock                            14,840         10,368          6,703
          Premises and equipment,
           net                              94,928         68,526         63,560
          Other real estate owned              641            724          2,452
          Mortgage servicing rights,
           net                              11,140         11,391         10,732
          Goodwill and other
           intangibles                     409,516        159,575        160,012
          Other assets                     105,906         54,929         52,226
    
                                        $4,944,340     $3,153,291     $2,811,195
    
        Liabilities:
          Deposits                      $3,919,271     $2,479,115     $2,263,211
          Securities sold under
           agreements to repurchase
           and fed funds purchased          47,752         77,615         63,553
          Borrowings                        88,521        145,618         72,047
          Notes payable for Trust
           preferred securities            166,280         97,941         77,321
          Other liabilities                 50,539         30,963         23,076
            Total liabilities            4,272,363      2,831,252      2,499,208
    
        Shareholders' equity:
          Common stock                     556,995        226,774        230,174
          Retained earnings                114,494        103,754         81,605
          Accumulated other
           comprehensive
            Income (loss)                      488         (8,489)           208
            Total shareholders'
             equity                        671,977        322,039        311,987
    
        Total liabilities and
         shareholders' equity           $4,944,340     $3,153,291     $2,811,195
    
        Common shares outstanding at
         period end                     43,979,674     28,219,677     28,365,814
        Book value per share                $15.28         $11.41         $11.00
        Tangible book value per
         share                               $5.97          $5.76          $5.36
        Tangible equity                   $262,461       $162,464       $151,975
    
    
                               Umpqua Holdings Corporation
                                     Loan Portfolio
                                       (unaudited)
    
                                 September 30,       June 30,        September 30,
        Dollars in thousands         2004             2004               2003
    
        Loans and leases by
         purpose:
    
          Commercial real
           estate                 $1,777,832        $1,209,975          $971,775
          Residential real
           estate                    214,518           105,003            84,317
          Construction               427,863           196,577           247,629
            Total real estate      2,420,213         1,511,555         1,303,721
          Commercial                 766,274           592,718           585,406
          Leases                      19,552             9,439             8,612
          Consumer                    81,592            35,904            37,131
          Other                       35,506             2,801               612
          Total loans and
           leases                 $3,323,137        $2,152,417        $1,935,482
    
                                 Quarter Ended      Quarter Ended    Quarter Ended
                                 September 30,         June 30,      September 30,
        Dollars in thousands         2004               2004             2003
    
        Allowance for credit
          losses
          Balance beginning
           of period                 $27,319           $26,287           $25,316
             Provision for
              credit losses            1,479             1,100             1,050
             Acquisitions             17,257                --                --
             Reclassification         (1,216)               --                --
    
        Charge-offs                   (2,124)             (415)           (2,045)
        Less: recoveries                 659               347               991
             Net charge-offs          (1,465)              (68)           (1,054)
    
          Total Allowance
           for loan losses           $43,374           $27,319           $25,312
    
        Reserve for unfunded
         commitments                   1,216                --                --
           Total Allowance
            for credit losses        $44,590           $27,319           $25,312
    
        Net charge-offs to
         average loans and leases
         (annualized)                   0.18%             0.01%             0.22%
        Recoveries to gross
         charge-offs                   31.03%            83.61%            48.46%
        Allowance for credit
         losses to
          loans and leases              1.34%             1.27%             1.31%
        Allowance for credit
         losses to nonperforming
         loans and leases                160%              221%              189%
        Nonperforming loans
         and leases
        To total loans an leases        0.84%             0.57%             0.69%
    
        Nonperforming assets
          Nonperforming loans and
           leases                    $27,796           $12,352           $13,394
          Real estate owned              641               724             2,452
        Total nonperforming
         assets                      $28,437           $13,076           $15,846
    
    
                             Umpqua Holdings Corporation
                                    Loan Portfolio
                                       (unaudited)
    
    
                                                  Year to date        Year to date
                                                 September 30,       September 30,
        Dollars in thousands                          2004                2003
    
        Allowance for credit losses
          Balance beginning of period                $25,352             $24,731
            Provision for credit losses                3,654               3,475
            Acquisitions                              17,257                  --
            Reclassification                          (1,216)                 --
    
        Charge-offs                                   (2,986)             (4,486)
        Less: recoveries                               1,313               1,592
            Net charge-offs                           (1,673)             (2,894)
    
          Total Allowance for loan loss              $43,374             $25,312
    
        Reserve for unfunded commitments               1,216                  --
           Total Allowance for
            credit loss                              $44,590             $25,312
    
        Net charge-offs to average
          loans and leases (annualized)                 0.09%               0.21%
    
        Recoveries to gross charge-offs                43.97%              35.49%
    
    
                                    Deposits by Type
                                       (unaudited)
    
                              September 30,        June 30,       September 30,
                                  2004              2004              2003
        Dollars in
         thousands             Amount    Mix     Amount   Mix     Amount    Mix
    
        Demand, non
         interest bearing    $935,206  23.9%   $624,391  25.2%  $599,939    26.5%
        Demand, interest
         bearing            1,502,899  38.3%  1,132,087  45.7%   937,606    41.4%
        Savings               531,466  13.6%    150,436   6.1%   147,849     6.5%
        Time                  949,700  24.2%    572,201  23.1%   577,817    25.5%
         Total
          Deposits         $3,919,271 100.0% $2,479,115 100.0%  $2,263,211  100.0%
    
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
                                       (unaudited)
    
                                                    Quarter ended:
                                        September 30,     June 30,   September 30,
                                           2004            2004         2003
        Net Interest Spread:
          Yield on loans and leases          6.33%          6.12%          6.56%
          Yield on taxable
           investments                       4.15%          3.95%          2.97%
          Yield on tax-exempt
           investments (1)                   6.72%          6.76%          6.50%
          Yield on temporary
           investments                       1.54%          0.91%          1.13%
            Total yield on earning
             assets                          5.89%          5.68%          5.95%
    
          Cost of interest bearing
           deposits                          1.29%          1.25%          1.31%
          Cost of securities sold
           under agreements
           to repurchase and fed
           funds purchased                   1.37%          0.85%          1.03%
          Cost of borrowings                 1.79%          1.91%          2.40%
          Cost of trust preferred            4.93%          4.60%          4.80%
            Total cost of interest
             bearing liabilities             1.50%          1.42%          1.47%
    
        Net interest spread                  4.39%          4.26%          4.48%
    
        Net interest margin                  4.72%          4.57%          4.82%
    
        Before Merger Related
         Expenses:
        Return on average assets             1.25%          1.23%          1.33%
        Return on average tangible
         assets                              1.36%          1.29%          1.41%
        Return on average equity             9.35%         11.65%         12.02%
        Return on average tangible
         equity                             24.11%         22.76%         25.31%
    
        After Merger Related
         Expenses:
        Return on average assets             1.13%          1.18%          1.30%
        Return on average tangible
         assets                              1.23%          1.25%          1.38%
        Return on average equity             8.46%         11.23%         11.70%
        Return on average tangible
         equity                             21.81%         21.93%         24.62%
    
        Bank Only Ratios:
        Umpqua Bank efficiency
         ratio before merger expenses       55.43%         55.11%         55.94%
        Umpqua Bank net interest
         margin                              4.92%          4.74%          4.98%
    
        (1) Tax exempt interest has been adjusted to a taxable equivalent basis
    using a 35% tax rate.
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
                                       (unaudited)
    
                                                       Nine months ended:
                                                     September 30,   September 30,
                                                           2004             2003
        Net Interest Spread:
          Yield on loans and leases                       6.22%             6.71%
          Yield on taxable investments                    4.02%             3.44%
          Yield on tax-exempt investments(1)              6.80%             6.81%
          Yield on temporary investments                  1.34%             1.17%
            Total yield on earning assets                 5.78%             6.16%
    
          Cost of interest bearing
           deposits                                       1.28%             1.48%
          Cost of securities sold under
           agreements to repurchase and
           fed funds purchased                            1.05%             1.23%
          Cost of borrowings                              1.82%             2.92%
          Cost of trust preferred                         4.74%             4.92%
            Total cost of interest bearing
             liabilities                                  1.46%             1.64%
    
        Net interest spread                               4.32%             4.52%
    
        Net interest margin                               4.65%             4.89%
    
        Before Merger Related Expenses:
        Return on average assets                          1.22%             1.35%
        Return on average tangible assets                 1.31%             1.44%
        Return on average equity                         10.25 %           11.97%
        Return on average tangible equity                22.79 %           25.81%
    
        After Merger Related Expenses:
        Return on average assets                          1.15%             1.28%
        Return on average tangible assets                 1.23%             1.37%
        Return on average equity                          9.66%            11.38%
        Return on average tangible equity                21.48%            24.53%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio
         before merger expenses                          56.08%            56.14%
        Umpqua Bank net interest margin                   4.83%             5.05%
    

    (1)Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.

    Umpqua Holdings Corporation
                          Mortgage Banking Statistical Analysis
                                       (unaudited)
    
                                                 Quarter ended:
                                     September 30,      June 30,     September 30,
                                        2004             2004           2003
        Dollars in thousands
    
        Mortgage Servicing
         Rights (MSR):
        Mortgage loans
         serviced for others          $1,093,460       $1,119,351     $1,181,034
    
        MSR Asset (gross)                $11,900          $11,832        $12,859
        Less: Valuation reserve             (760)            (441)        (2,127)
           MSR Asset (net of reserve)    $11,140          $11,391        $10,732
    
        MSR as % of serviced
         portfolio                         1.02%             1.02%          0.91%
    
        Mortgage Banking Revenue:
        Origination and sale              $1,959           $1,903         $2,424
        Servicing                            196             (370)          (904)
        MSR valuation reserve change        (319)             866          1,640
           Total Mortgage
            Banking Revenue               $1,836           $2,399         $3,160
    
                                            Nine months ended:
                                       September 30,    September 30,
                                           2004              2003
        Dollars in thousands
    
        Mortgage Banking Revenue:
        Origination and sale              $5,135          $12,676
        Servicing                           (398)          (2,093)
        MSR valuation reserve change       1,147             (310)
           Total Mortgage
            Banking Revenue               $5,884          $10,273
    
    
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             10/21/2004
        /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, photodesk@prnewswire.com/
        /Web site:  http://www.umpquaholdingscorp.com/
        (UMPQ)
    
    CO:  Umpqua Holdings Corporation; Umpqua Bank; Strand, Atkinson, Williams &
         York, Inc.
    ST:  Oregon, Washington
    IN:  FIN
    SU:  ERN CCA
    
    JL-EB 
    -- SFTH045 --
    8884 10/21/200408:03 EDThttp://www.prnewswire.com