• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Strong Fourth Quarter and Full Year 2004 Results
    Company Release - 01/27/2005 05:00
               Humboldt Conversion Complete, Organic Loan Growth of 20%

    PORTLAND, Ore., Jan. 27 /PRNewswire-FirstCall/ -- Umpqua Holdings Corporation (Nasdaq: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced fourth quarter 2004 net income of $16.3 million, or $0.36 per diluted share, compared to $8.6 million, or $0.30 per diluted share, for the fourth quarter of 2003. For the year ended December 31, 2004, net income was $47.2 million, or $1.30 per diluted share compared to $34.1 million, or $1.19 per diluted share for the year ended 2003. These results reflect earnings per share growth of 20% for the fourth quarter of 2004 compared to the same period a year ago and 9% on an annual basis.

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

    The Company recognized merger-related expenses, net of tax, of $1.7 million, or $0.04 per diluted share, for the fourth quarter of 2004. For the year, merger-related expenses, net of tax, were $3.6 million, or $0.10 per diluted share, compared to $1.3 million, or $0.05 per diluted share, for 2003.

    Excluding merger-related expenses, the Company reported income of $18.0 million, or $0.40 per diluted share for the fourth quarter of 2004, compared to $8.6 million, or $0.30 per diluted share for the fourth quarter of 2003, an increase of 33% on a per share basis. For the year 2004, excluding merger-related expenses, the Company reported income of $50.7 million, or $1.40 per diluted share, compared to $35.5 million, or $1.24 per diluted share for 2003, an increase of 13% on a per share basis.

    As previously announced, the Company completed the sale of its merchant card processing portfolio during December 2004. In accordance with generally accepted accounting principles, the financial results related to the merchant card processing operations, including the gain on sale, have been classified as a discontinued operation, net of tax. For the fourth quarter of 2004, the Company reported income from discontinued operations of $3.5 million, or $0.08 per diluted share, inclusive of the after-tax gain on sale of $3.4 million. For the year ended December 31, 2004, the Company reported income from discontinued operations of $3.9 million, or $0.11 per diluted share and income from continuing operations of $43.3 million, or $1.19 per diluted share.

    Umpqua Bank's net interest margin increased to 5.05% for the month of December 2004, principally resulting from the recent increases in short-term market interest rates. Umpqua Bank's net interest margin was 4.96% for the fourth quarter of 2004, compared to 4.93% for the third quarter of 2004. For the full year 2004, Umpqua Bank's net interest margin was 4.88%, compared to 5.01% for 2003.

    The provision for loan loss was $3.7 million, or 0.43% of average loans on an annualized basis, for the fourth quarter of 2004, as compared to $1.1 million, or 0.22% of average loans on an annualized basis, for the same period in 2003. For the full year 2004, the provision for loan loss was $7.3 million, or 0.27% of average loans, compared to $4.6 million, or 0.24% of average loans, for 2003. Net charge-offs were $2.8 million, or 0.33% of average loans on an annualized basis, for the fourth quarter of 2004, compared to $1.0 million, or 0.21% of average loans on an annualized basis, for the same period in 2003. For the full year 2004, net charge-offs were $4.5 million, or 0.17% of average loans, compared to $3.9 million, or 0.21% of average loans, for 2003. Non-performing assets were 0.48% of total assets at December 31, 2004, down ten basis points from September 30, 2004 and one basis point higher than a year ago. The linked quarter improvement in asset quality is principally attributable to successful resolution of several problem loans and the increased level of gross charge-offs recognized during the quarter. The allowance for credit losses as a percentage of total loans at December 31, 2004 was 1.31%, an increase of four basis points from year-end 2003.

    "The past year's accomplishments were significant and made 2004 a watershed year for Umpqua Holdings," said Ray Davis, President and Chief Executive Officer of Umpqua Holdings Corporation. "In addition to producing record operating results, maintaining exceptional credit quality and producing double-digit organic loan and deposit growth, we achieved our goal of expanding into the high-growth markets of Northern California. We are entering 2005 well positioned to continue building shareholder value through delivering the most unique customer experience in the banking industry," Davis added.

    Umpqua Bank, Umpqua Holdings' largest subsidiary, reported an efficiency ratio before merger-related expenses of 48.4% for the fourth quarter of 2004, compared to 55.4% for the previous quarter and 56.9% for the same quarter one year ago. Excluding the gain on sale of the merchant card processing portfolio and merger related expense, Umpqua Bank's efficiency ratio for the fourth quarter of 2004 was 52.8%.

    Total consolidated assets of Umpqua Holdings as of December 31, 2004 were $4.9 billion, compared to $3.0 billion at December 31, 2003. Total gross loans and deposits were $3.5 billion and $3.8 billion, respectively, as of December 31, 2004, compared to $2.0 billion and $2.4 billion, respectively, as of September 30, 2004.

    Total organic growth for the year in loans and deposits was $408 million, or 20%, and $229 million, or 10%, respectively. Organic growth is defined as growth excluding the increase related to acquisitions on the Company's balance sheet, with all growth subsequent to the acquisition date included as organic. The following table presents the full year 2004 annualized organic growth rates, excluding the impact of acquisitions:

    July 2004                   Organic
        (Dollars in                Dec 31,      Acquired        Dec 31,     Growth
        thousands)                  2004         Growth          2003        Rate
        Loans                   $3,470,961     $1,059,295      $2,003,587     20%
        Deposits                $3,799,107     $1,192,058      $2,378,192     10%
        Assets                  $4,879,968     $1,645,908      $2,963,815      9%
    
    

    The Company acquired approximately $65 million of brokered time deposits as part of the Humboldt Bancorp acquisition. During the fourth quarter of 2004, approximately $55 million of these deposits matured without a marketed renewal. Excluding this planned run-off, the organic growth rate in deposits for the year would have been 12%.

    At December 31, 2004 total shareholders equity was $688 million, and tangible book value per share was $6.31.

    The Company completed the system integration of the Humboldt Bancorp acquisition in the fourth quarter of 2004.

    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, January 27, 2005, at 10:00 a.m. PDT where management will discuss operating results for the fourth quarter and full year 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 888-416-1171, or by visiting that website.

    Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (Unaudited)
                                                      Quarter ended:
        Dollars in thousands,           December 31,   September 30,  December 31,
        except per share data               2004           2004           2003
        Interest income
          Loans and leases                $55,261         $50,875        $31,940
          Investments taxable               6,892           7,433          4,166
          Investments tax exempt              768             749            442
          Temporary investments               296             194             45
          Other interest and
           dividends                           23              14             15
    
            Total interest income          63,240          59,265         36,608
    
        Interest expense
          Deposits                         10,383           8,939          5,408
          Repurchase agreements
           and fed funds purchased            266             207            154
          Trust preferred
           securities                       2,333           1,979            925
          Other borrowings                    584             731            318
    
            Total interest expense         13,566          11,856          6,805
    
        Net interest income                49,674          47,409         29,803
        Provision for loan losses           3,667           1,479          1,075
        Non-interest income
          Service charges                   5,434           5,570          3,188
          Brokerage fees                    3,188           2,736          2,554
          Mortgage banking revenue          1,665           1,942          1,200
          Gain on sale of
           securities                          --              13              2
          Other income                      2,197           1,210            496
    
        Total non-interest income          12,484          11,471          7,440
    
        Non-interest expense
          Salaries and benefits            20,248          19,685         13,583
          Occupancy and equipment           5,809           5,688          3,770
          Other                             9,820          10,150          6,077
          Merger related expenses           2,656           2,176             --
    
        Total non-interest expense         38,533          37,699         23,430
        Income before income taxes
         and discontinued operations       19,958          19,904         12,738
           Provision for income
            tax                             7,170           6,457          4,308
        Income from continuing
         operations                        12,788          13,245          8,430
           Gain on sale of
            discontinued operation,
            net of tax                      3,375              --             --
           Income from discontinued
            operation, net of tax             106             123            160
    
        Net income                        $16,269         $13,368         $8,590
    
        Weighted average shares
         outstanding                   44,121,546      42,149,082     28,389,064
        Weighted average diluted
         shares outstanding            44,870,939      42,889,713     28,802,165
    
        Earnings per share -- Basic:
          Continuing operations             $0.29           $0.31          $0.30
          Discontinued operations           $0.08           $0.01          $0.00
            Net income                      $0.37           $0.32          $0.30
    
        Earnings per share -- Diluted:
          Continuing operations             $0.28           $0.31          $0.29
          Discontinued operations           $0.08           $0.00          $0.01
            Net income                      $0.36           $0.31          $0.30
    
    
                               Umpqua Holdings Corporation
                            Consolidated Statements of Income
                                       (Unaudited)
                                                   Twelve months ended:
        Dollars in thousands, except
         per share data                       December 31, 2004December 31, 2003
         Interest income
          Loans and leases                           $170,791           $126,900
          Investments taxable                          24,330             12,255
          Investments tax exempt                        2,325              2,443
          Temporary investments                           544                465
          Other interest and dividends                     68                 69
    
            Total interest income                     198,058            142,132
    
        Interest expense
          Deposits                                     30,999             23,608
          Repurchase agreements and
           fed funds purchased                            794                502
          Trust preferred securities                    6,555              3,715
          Other borrowings                              2,023              1,035
            Total interest expense                     40,371             28,860
    
        Net interest income                           157,687            113,272
    
        Provision for loan losses                       7,321              4,550
        Non-interest income
          Service charges                              17,404             12,556
          Brokerage fees                               11,829              9,498
          Mortgage banking revenue                      7,655             11,473
          Gain on sale of securities                       19              2,155
          Other income                                  4,466              2,319
    
        Total non-interest income                      41,373             38,001
    
        Non-interest expense
          Salaries and benefits                        67,351             53,090
          Occupancy and equipment                      19,765             14,834
          Other                                        32,466             25,263
          Merger related expenses                       5,597              2,082
    
        Total non-interest expense                    125,179             95,269
    
        Income before income taxes and
         discontinued operations                       66,560             51,454
            Provision for income tax                   23,270             17,970
        Income from continuing operations              43,290             33,484
            Gain on sale of discontinued
             operations, net of tax                     3,375                 --
            Income from discontinued
             operations, net of tax                       501                635
        Net income                                    $47,166            $34,119
    
        Weighted average shares
         outstanding                               35,804,038         28,294,291
        Weighted average diluted
         shares outstanding                        36,345,443         28,666,070
    
        Earnings per share -- Basic:
          Continuing operations                         $1.21              $1.18
          Discontinued operations                       $0.11              $0.03
            Net income                                  $1.32              $1.21
    
        Earnings per share -- Diluted:
          Continuing operations                         $1.19              $1.17
          Discontinued operations                       $0.11              $0.02
            Net income                                  $1.30              $1.19
    
    
                               Umpqua Holdings Corporation
                               Consolidated Balance Sheets
                                       (Unaudited)
    
        Dollars in thousands,            December 31,  September 30,  December 31,
         except per share data               2004          2004           2003
        Assets:
          Cash and cash equivalents       $116,188       $245,557       $134,006
          Trading account securities         1,577          1,539          1,265
          Investments available for sale   678,003        738,538        501,904
          Investments held to maturity      11,807         12,340         14,612
          Loans held for sale               20,791         29,632         37,798
          Loans and leases               3,470,961      3,323,137      2,003,587
          Less:  Allowance for loan
           losses                          (44,229)       (43,374)       (25,352)
            Loans and leases, net        3,426,732      3,279,763      1,978,235
          Federal Home Loan Bank
           stock                            14,218         14,840          7,168
          Premises and equipment, net       85,681         94,928         63,328
          Other real estate owned              979            641          2,529
          Mortgage servicing rights, net    11,154         11,140         10,608
          Goodwill and other
           intangibles                     408,460        409,516        159,585
          Other assets                     104,378        108,027         52,777
    
        Total assets                    $4,879,968     $4,946,461     $2,963,815
    
        Liabilities:
          Deposits                      $3,799,107     $3,919,271     $2,378,192
          Securities sold under
           agreements to repurchase
           and fed funds purchased          88,267         47,752         83,531
          Borrowings                        88,451         88,521         55,000
          Notes payable for Trust
           preferred securities            166,256        166,280         97,941
          Other liabilities                 50,274         52,660         30,182
            Total liabilities            4,192,355      4,274,484      2,644,846
    
        Shareholders' equity:
          Common stock                     560,611        556,995        230,773
          Retained earnings                128,112        114,494         89,058
          Accumulated other
           comprehensive
             Income (loss)                  (1,012)           488           (862)
            Total shareholders'
             equity                        687,613        671,977        318,969
        Total liabilities and
         shareholders' equity           $4,879,968     $4,946,461     $2,963,815
    
        Common shares outstanding at
         period end                     44,211,075     43,979,674     28,411,816
        Book value per share                $15.55         $15.28         $11.23
        Tangible book value per share        $6.31          $5.97          $5.61
        Tangible equity                   $279,153       $262,461       $159,384
    
    
                               Umpqua Holdings Corporation
                                     Loan Portfolio
                                       (Unaudited)
    
                                  December 31,     September 30,     December 31,
        Dollars in thousands         2004              2004              2003
        Loans and leases by purpose:
          Commercial real estate  $1,874,646        $1,814,303        $1,072,191
          Residential real estate    221,047           214,518            84,423
          Construction               461,096           427,863           232,849
            Total real estate      2,556,789         2,456,684         1,389,463
          Commercial                 823,364           766,274           565,652
          Leases                      18,357            19,552            10,918
          Consumer                    71,174            78,647            36,790
          Other                        1,277             1,980               764
          Total loans and leases  $3,470,961        $3,323,137        $2,003,587
    
                                  Quarter Ended     Quarter Ended    Quarter Ended
                                   December 31,      September 30,    December 31,
        Dollars in thousands          2004              2004              2003
        Allowance for credit losses
          Balance beginning
           of period                 $43,374           $27,319           $25,312
             Provision for
              credit losses            3,667             1,479             1,075
             Acquisitions                 --            17,257                --
             Reclassification             --            (1,216)               --
    
        Charge-offs                   (3,443)           (2,124)           (1,591)
        Less:  recoveries                631               659               556
             Net charge-offs          (2,812)           (1,465)           (1,035)
    
          Total Allowance
           for loan losses            44,229            43,374            25,352
    
        Reserve for unfunded
         commitments                   1,338             1,216                --
           Total Allowance
            for credit losses        $45,567           $44,590           $25,352
    
        Net charge-offs to average
         loans and leases (annualized)  0.33%            0.18%            0.21%
        Recoveries to
         gross charge- offs            18.33%           31.03%           34.95%
        Allowance for credit losses to
          loans and leases              1.31%            1.34%            1.27%
        Allowance for credit
         losses to nonperforming
         loans and leases                202%             160%             222%
        Nonperforming loans and leases
          To total loans and leases     0.65%            0.84%            0.57%
    
        Nonperforming assets
          Nonperforming loans and
           leases                    $22,573           $27,796           $11,425
          Real estate owned              979               641             2,529
        Total nonperforming
         assets                      $23,552           $28,437           $13,954
    
    
                               Umpqua Holdings Corporation
                                     Loan Portfolio
                                       (Unaudited)
    
    
                                                   Year Ended          Year Ended
                                                   December 31,       December 31,
        Dollars in thousands                          2004                2003
        Allowance for credit losses
          Balance beginning of                       $25,352             $24,731
            Provision for credit losses                7,321               4,550
            Acquisitions                              17,257                  --
            Reclassification                          (1,216)                 --
    
        Charge-offs                                   (6,429)             (6,077)
        Less:  recoveries                              1,944               2,148
            Net charge-offs                           (4,485)             (3,929)
    
          Total Allowance for loan loss               44,229              25,352
        Reserve for unfunded commitments               1,338                  --
           Total Allowance for credit loss           $45,567             $25,352
        Net charge-offs to average
          loans and leases (annualized)                 0.17%              0.21%
    
        Recoveries to gross charge-offs                30.24%             35.35%
    
    
    
                                     Deposits by Type
                                       (Unaudited)
    
                               December 31,     September 30,     December 31,
                                   2004              2004             2003
        Dollars in thousands Amount   Mix     Amount   Mix     Amount    Mix
        Demand, non interest
         bearing           $891,731  23.5%   $935,206  23.9%  $589,901  24.8%
        Demand, interest
         bearing          1,504,396  39.6%  1,502,899  38.3% 1,048,733  44.1%
        Savings             452,684  11.9%    531,466  13.6%   145,960   6.1%
        Time                950,296  25.0%    949,700  24.2%   593,598  25.0%
          Total
           Deposits      $3,799,107 100.0% $3,919,271 100.0% $2,378,192 100.0%
    
    
    
                               Umpqua Holdings Corporation
                                     Selected Ratios
                                       (Unaudited)
    
                                                       Quarter ended:
                                         December 31,  September 30,  December 31,
                                            2004           2004           2003
        Net Interest Spread:
          Yield on loans and leases          6.44%         6.35%         6.38%
          Yield on taxable investments       4.10%         4.15%         3.67%
          Yield on tax-exempt
           investments (A)                   7.29%         6.72%         6.61%
          Yield on temporary investments     1.92%         1.54%         0.77%
            Total yield on earning
             assets                          6.02%         5.91%         5.85%
    
          Cost of interest
           bearing deposits                  1.41%         1.29%         1.23%
          Cost of securities sold
           under agreements to
           repurchase and
           fed funds purchased               1.32%         1.37%         1.20%
          Cost of borrowings                 2.63%         1.79%         1.78%
          Cost of trust preferred            5.58%         4.93%         4.68%
            Total cost of interest
             bearing liabilities             1.66%         1.50%         1.39%
    
        Net interest spread                  4.36%         4.41%         4.45%
    
        Net interest margin                  4.74%         4.73%         4.77%
    
        Before Merger Related Expenses:  (B)
        Return on average assets             1.45%         1.25%         1.19%
        Return on average tangible assets    1.58%         1.36%         1.26%
        Return on average equity            10.52%         9.35%        10.85%
        Return on average tangible equity   26.46%        24.11%        22.10%
    
        After Merger Related Expenses:  (B)
        Return on average assets             1.32%         1.13%         1.19%
        Return on average tangible assets    1.44%         1.23%         1.26%
        Return on average equity             9.53%         8.46%        10.85%
        Return on average tangible equity   23.96%        21.81%        22.10%
    

    Bank Only Ratios:

        Umpqua Bank efficiency
         ratio before
         merger expenses  (B)               48.40%        55.43%        56.89%
        Umpqua Bank net interest margin      4.96%         4.93%         4.91%
    

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

    (B) Includes the impact of the gain on sale of, and income from, discontinued operations.

    Umpqua Holdings Corporation
                                    Selected Ratios
                                       (Unaudited)
    
                                                           Year ended:
                                                   December 31,    December 31,
                                                       2004            2003
        Net Interest Spread:
          Yield on loans and leases                         6.31%         6.63%
          Yield on taxable investments                      4.05%         3.51%
          Yield on tax-exempt investments (A)               6.93%         6.82%
          Yield on temporary investments                    1.61%         1.11%
            Total yield on earning assets                   5.87%         6.08%
    
          Cost of interest bearing deposits                 1.32%         1.42%
          Cost of securities sold under
           agreements to repurchase and fed
           funds purchased                                  1.13%         1.17%
          Cost of borrowings                                2.00%         2.48%
          Cost of trust preferred                           5.02%         4.86%
            Total cost of interest bearing liabilities      1.53%         1.58%
    
        Net interest spread                                 4.34%         4.50%
    
        Net interest margin                                 4.68%         4.85%
    
        Before Merger Related Expenses:  (B)
        Return on average assets                            1.29%         1.31%
        Return on average tangible assets                   1.39%         1.39%
        Return on average equity                           10.34%        11.68%
        Return on average tangible equity                  23.97%        24.80%
    
        After Merger Related Expenses:  (B)
        Return on average assets                            1.20%         1.26%
        Return on average tangible assets                   1.30%         1.34%
        Return on average equity                            9.61%        11.24%
        Return on average tangible equity                  22.27%        23.87%
    
        Bank Only Ratios:
        Umpqua Bank efficiency ratio before
         merger expenses  (B)                              53.51%        55.49%
        Umpqua Bank net interest margin                     4.88%         5.01%
    

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

    (B) Includes the impact of the gain on sale of, and income from, discontinued operations.

    Umpqua Holdings Corporation
                          Mortgage Banking Statistical Analysis
                                       (unaudited)
    
                                                     Quarter ended:
                                     December 31,     September 30,   December 31,
                                         2004              2004           2003
        Dollars in thousands
        Mortgage Servicing Rights (MSR):
        Mortgage loans
         serviced for others          $1,066,905       $1,093,460     $1,166,581
    
        MSR Asset (gross)                $11,946          $11,900        $12,515
        Less:  Valuation reserve            (792)            (760)        (1,907)
           MSR Asset (net of reserve)    $11,154          $11,140        $10,608
    
        MSR as % of serviced portfolio      1.05%            1.02%          0.91%
    
        Mortgage Banking Revenue:
        Origination and sale              $1,447           $2,065         $1,208
        Servicing                            250              196           (228)
        MSR valuation reserve change         (32)            (319)           220
           Total Mortgage Banking Revenue $1,665           $1,942         $1,200
    
    
                                                  Year ended:
                                        December 31,      December 31,
                                            2004              2003
        Dollars in thousands
        Mortgage Banking Revenue:
        Origination and sale              $6,688          $13,884
        Servicing                           (148)          (2,321)
        MSR valuation reserve change       1,115              (90)
           Total Mortgage Banking Revenue $7,655          $11,473
    
        Diluted earnings per
         share contribution of
         Mortgage Group                     $0.04            $0.11
    
    
    SOURCE  Umpqua Holdings Corporation
        -0-                             01/27/2005
        /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
    ST:  Oregon
    IN:  FIN
    SU:  ERN CCA
    
    JL-EB
    -- SFTH023 --
    0225 01/27/200505:00 ESThttp://www.prnewswire.com