• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Record Full Year 2006 Operating Earnings of $1.65 Per Diluted Share
    Company Had Organic Loan Growth of 11%, Deposit Growth of 13%, Opened Five New Stores in the Fourth Quarter 
    Company Release - 01/25/2007 08:00

    PORTLAND, Ore.--(BUSINESS WIRE)--

    Umpqua Holdings Corporation (NASDAQ:UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced full year 2006 operating earnings of $87.3 million, or $1.65 per diluted share, compared to $69.9 million, or $1.55 per diluted share, for 2005. For the fourth quarter of 2006, operating earnings were $24.8 million, or $0.42 per diluted share, compared to $18.8 million, or $0.42 per diluted share for the same period a year ago. Operating earnings exclude merger related expenses, net of tax.

    Including merger related expenses, net income for full year 2006 was $84.4 million, or $1.59 per diluted share, compared to $69.7 million, or $1.55 per diluted share for 2005. For the fourth quarter of 2006, net income was $24.5 million, or $0.42 per diluted share, compared to $18.8 million, or $0.42 per diluted share for the same period of the prior year.

                            Quarter ended:
                  -----------------------------------
    (Dollars in
     thousands,
     except per
     share data)   12/31/2006  9/30/2006  12/31/2005
                  -----------------------------------
    Net Income    $    24,533 $   22,856 $    18,787
    Add Back:
     Merger
     related
     expenses, net
     of tax               249      1,471          --
                  -----------------------------------
     Operating
      Earnings    $    24,782 $   24,327 $    18,787
                  ===================================
    
    Earnings per
     diluted
     share:
    --------------
     Net Income   $      0.42 $     0.39 $      0.42
     Operating
      Earnings    $      0.42 $     0.42 $      0.42
    
                     Twelve months ended:
                   ------------------------
    (Dollars in
     thousands,
     except per
     share data)    12/31/2006  12/31/2005
                   ------------------------
    Net Income     $    84,447 $    69,735
    Add Back:
     Merger
     related
     expenses, net
     of tax              2,864         157
                   ------------------------
     Operating
      Earnings     $    87,311 $    69,892
                   ========================
    
    Earnings per
     diluted
     share:
    --------------
     Net Income    $      1.59 $      1.55
     Operating
      Earnings     $      1.65 $      1.55
    

    Total consolidated assets as of December 31, 2006 were $7.3 billion, compared to $5.4 billion a year ago. Total gross loans and leases, and deposits, were $5.4 billion and $5.8 billion, respectively, as of December 31, 2006, compared to $3.9 billion and $4.3 billion, respectively, a year ago. The Company completed the acquisition of Western Sierra Bancorp in June 2006.

    The following table presents the full year 2006 organic growth rates, which exclude the effects of the Western Sierra Bancorp acquisition:

                                         Loans and
    (in thousands)                          Leases   Deposits    Assets
                                         ---------------------------------
    As reported, 12/31/06                $5,361,862 $5,840,294 $7,344,236
    less: 12/31/05 balances               3,921,631  4,286,266  5,360,639
                                         ---------------------------------
       Total growth                       1,440,231  1,554,028  1,983,597
    
    less: acquisition                     1,022,231  1,016,053  1,491,466
                                         ---------------------------------
       Organic growth                    $  418,000 $  537,975 $  492,131
                                         =================================
    
       Organic growth rate                       11%        13%         9%
    

    "We are pleased with our record operating earnings, and growth in loans and deposits this year, especially in light of the challenging interest rate environment," said Ray Davis, president and chief executive officer of Umpqua Holdings Corporation.

    Umpqua opened seven new stores in 2006, including five during the fourth quarter. Two were the first of the Company's new neighborhood store strategy, which reduces build time and cost by more than 50%.

    During the full year 2006, the Company had net charge-offs of $0.6 million or 0.01% of average loans and leases. Non-performing loans and leases were $9.1 million at December 31, 2006, representing 0.17% of total loans and leases. The Company provided $2.6 million for future credit losses in 2006. For the fourth quarter, the Company had net charge-offs of $0.5 million, or 0.04% of average loans and leases on an annualized basis, with non-performing loans and leases declining $1.5 million, or 14% from September 30, 2006. The allowance for credit losses was 1.15% of total loans and leases at December 31, 2006.

    Umpqua Bank, Umpqua Holdings' bank subsidiary, reported on a tax equivalent basis a net interest margin of 4.99% for the full year 2006, compared to 5.07% for 2005. For the fourth quarter of 2006, Umpqua Bank reported a net interest margin of 4.97%, compared to 5.06% for the same period a year ago, and 5.08% for the third quarter of 2006. The decrease in margin over these time periods resulted from increases in short-term market interest rates, with the cost of deposits and borrowings increasing more than earning asset yields. The yield on earning assets for Umpqua Holdings increased 1 basis point on a sequential quarter basis to 7.50%, while the cost of interest bearing liabilities increased 16 basis points to 3.61% over the same period.

    Excluding merger related expenses, the Bank efficiency ratio was 51.97% for the full year 2006, down from 52.47% for 2005.

    As of December 31, 2006, total shareholders' equity was $1.16 billion. Book value per share was $19.91, an increase of 20% over the prior year end. Tangible book value per share was $8.21, an increase of 11% over the prior year end.

    On January 18, 2007, the Company announced the acquisition of North Bay Bancorp. The agreement provides for North Bay Bancorp shareholders to receive 1.217 shares of Umpqua common stock for each share of North Bay Bancorp common stock, giving the acquisition a total value of approximately $156 million. The boards of both companies have approved the transaction, which is subject to regulatory approval and approval by the shareholders of North Bay Bancorp, as well as other customary conditions of closing.

    Non-GAAP Financial Measures

    In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Umpqua believes that providing non-GAAP financial measures provides investors with information useful in understanding Umpqua's financial performance. Umpqua provides measures based on "operating earnings," which exclude merger-related expenses. Operating earnings per diluted share is calculated by dividing operating earnings by the same diluted share total used in determining diluted earnings per share.

    A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent is included in the attached financial tables or where the non-GAAP measure is presented.

    About Umpqua Holdings Corporation

    Umpqua Holdings Corporation (NASDAQ:UMPQ) 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 134 locations between Sacramento, Calif. and Bellevue, Wash., along the Oregon and Northern California Coast and in Central Oregon. Umpqua Holdings also owns retail brokerage subsidiary Strand, Atkinson, Williams & York, Inc., which has locations in Umpqua Bank stores and in dedicated offices throughout Oregon and Southwest Washington. Umpqua Bank's Private Client Services Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, January 25, 2007, at 10:00 a.m. PST (1:00 p.m. EST) during which the Company will discuss fourth quarter and full year 2006 results and provide an update on recent activities. 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 888-791-1856 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 866-502-6119, or by visiting that website.

                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
                                                  Quarter Ended:
                                         ---------------------------------
    Dollars in thousands, except per      December  September   December
     share data                            31, 2006   30, 2006   31, 2005
                                         ---------------------------------
    Interest income
      Loans and leases                     $106,757   $106,320    $68,980
      Investments - taxable                   7,032      6,797      6,909
      Investments - tax exempt                1,124      1,127        705
      Other interest                          1,521        389        281
      Dividends                                  80        105         43
                                         ---------------------------------
        Total interest income               116,514    114,738     76,918
    Interest expense
      Deposits                               38,769     34,121     18,668
      Repurchase agreements and
       fed funds purchased                      483      2,155        788
      Trust preferred securities              3,856      3,971      2,887
      Other borrowings                          117        692         26
                                         ---------------------------------
        Total interest expense               43,225     40,939     22,369
    Net interest income                      73,289     73,799     54,549
    Provision for loan and lease losses         125      2,352         68
    Non-interest income
      Service charges                         7,435      7,606      5,671
      Brokerage fees                          2,241      2,506      2,574
      Mortgage banking revenue                1,768      1,445      1,592
      Gain (loss) on sale of securities         (20)        --         13
      Other income                            2,689      1,919      1,624
                                         ---------------------------------
    Total non-interest income                14,113     13,476     11,474
    Non-interest expense
      Salaries and benefits                  27,315     26,387     21,119
      Occupancy and equipment                 8,845      8,540      6,160
      Other                                  12,465     13,308     10,838
      Merger related expenses                   415      2,451         --
                                         ---------------------------------
    Total non-interest expense               49,040     50,686     38,117
    Income before income taxes               38,237     34,237     27,838
    Provision for income tax                 13,704     11,381      9,051
                                         ---------------------------------
    Net income                              $24,533    $22,856    $18,787
                                         =================================
    
    Weighted average shares outstanding  58,045,755 57,802,381 44,514,893
    Weighted average diluted shares
     outstanding                         58,774,890 58,452,461 45,078,683
    
    Earnings per share - Basic                $0.42      $0.40      $0.42
    Earnings per share - Diluted              $0.42      $0.39      $0.42
    
                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
                                                     Twelve Months Ended:
                                                    ----------------------
                                                     December   December
    Dollars in thousands, except per share data       31, 2006   31, 2005
                                                    ----------------------
    Interest income
      Loans and leases                                $372,201   $251,715
      Investments - taxable                             27,233     26,268
      Investments - tax exempt                           3,809      2,544
      Other interest                                     2,413      1,585
      Dividends                                            285        164
                                                    ----------------------
        Total interest income                          405,941    282,276
    Interest expense
      Deposits                                         119,881     59,578
      Repurchase agreements and
       fed funds purchased                               6,829      2,207
      Trust preferred securities                        14,215     10,550
      Other borrowings                                   2,892        659
                                                    ----------------------
        Total interest expense                         143,817     72,994
    Net interest income                                262,124    209,282
    Provision for loan and lease losses                  2,552      2,468
    Non-interest income
      Service charges                                   26,975     21,697
      Brokerage fees                                     9,649     11,317
      Mortgage banking revenue                           7,560      6,426
      Gain (loss) on sale of securities                    (21)     1,439
      Other income                                       9,434      6,903
                                                    ----------------------
    Total non-interest income                           53,597     47,782
    Non-interest expense
      Salaries and benefits                             98,840     82,467
      Occupancy and equipment                           31,752     24,693
      Other                                             46,584     39,634
      Merger related expenses                            4,773        262
                                                    ----------------------
    Total non-interest expense                         181,949    147,056
    Income before income taxes                         131,220    107,540
    Provision for income tax                            46,773     37,805
                                                    ----------------------
    Net income                                         $84,447    $69,735
                                                    ======================
    
    Weighted average shares outstanding             52,310,637 44,438,021
    Weighted average diluted shares outstanding     53,050,201 45,010,563
    
    Earnings per share - Basic                           $1.61      $1.57
    Earnings per share - Diluted                         $1.59      $1.55
    
                         Umpqua Holdings Corporation
                         Consolidated Balance Sheets
                                 (Unaudited)
    
    Dollars in thousands, except per      December  September   December
     share data                            31, 2006   30, 2006   31, 2005
                                         ---------------------------------
    Assets:
      Cash and due from banks              $169,769   $151,334   $151,521
      Temporary investments                 165,879     40,700     10,233
      Trading account securities              4,204        682        601
      Investments available for sale        715,187    689,841    671,868
      Investments held to maturity            8,762      9,494      8,677
      Loans held for sale                    16,053     18,951      9,061
      Loans and leases                    5,361,862  5,385,262  3,921,631
      Less: Allowance for loan and lease
       losses                               (60,090)   (60,475)   (43,885)
                                         ---------------------------------
        Loans and leases, net             5,301,772  5,324,787  3,877,746
      Restricted equity securities           15,255     15,255     14,263
      Premises and equipment, net           101,830     99,251     88,865
      Other real estate owned                    --         31      1,123
      Mortgage servicing rights, net          9,952     10,427     10,890
      Goodwill and other intangibles        679,493    680,722    408,503
      Other assets                          156,080    157,373    107,288
                                         ---------------------------------
    Total assets                         $7,344,236 $7,198,848 $5,360,639
                                         =================================
    
    Liabilities:
      Deposits                           $5,840,294 $5,650,338 $4,286,266
      Securities sold under agreements
       to repurchase                         47,985     65,471     58,865
      Fed funds purchased                        --         --     55,000
      Term Borrowings                         9,513     57,072      3,184
      Notes payable for trust preferred
       securities                           203,688    203,955    165,725
      Other liabilities                      86,545     80,332     53,338
                                         ---------------------------------
        Total liabilities                 6,188,025  6,057,168  4,622,378
    
    Shareholders' equity:
      Common stock                          930,867    929,893    564,579
      Retained earnings                     234,783    220,726    183,591
      Accumulated other comprehensive
       loss                                  (9,439)    (8,939)    (9,909)
                                         ---------------------------------
        Total shareholders' equity        1,156,211  1,141,680    738,261
                                         ---------------------------------
    Total liabilities and shareholders'
     equity                              $7,344,236 $7,198,848 $5,360,639
                                         =================================
    
    
    Common shares outstanding at period
     end                                 58,080,171 58,028,555 44,556,269
    Book value per share                     $19.91     $19.67     $16.57
    Tangible book value per share             $8.21      $7.94      $7.40
    Tangible equity                        $476,718   $460,958   $329,758
    
                         Umpqua Holdings Corporation
                                Loan Portfolio
                                  (Unaudited)
                                          December  September   December
    Dollars in thousands                   31, 2006   30, 2006   31, 2005
                                         ---------------------------------
    Loans and leases by purpose:
      Commercial real estate             $2,644,931 $2,683,187 $2,127,940
      Residential real estate               320,412    312,639    219,254
      Construction                        1,203,657  1,238,369    652,023
                                         ---------------------------------
        Total real estate                 4,169,000  4,234,195  2,999,217
      Commercial                          1,126,189  1,085,014    853,212
      Leases                                 22,870     19,514     17,385
      Consumer                               41,722     44,831     50,361
      Other                                   2,081      1,708      1,456
                                         ---------------------------------
      Total loans and leases             $5,361,862 $5,385,262 $3,921,631
                                         =================================
    
                                          Quarter    Quarter    Quarter
                                            Ended      Ended      Ended
                                          December  September   December
    Dollars in thousands                   31, 2006   30, 2006   31, 2005
                                         ---------------------------------
    Allowance for credit losses
    Balance beginning of period             $60,475    $58,516    $43,603
         Provision for loan and lease
          losses                                125      2,352         68
         Acquisition                             --        184         --
    
    Charge-offs                              (1,618)    (1,027)      (612)
    Less recoveries                           1,108        450        826
                                         ---------------------------------
         Net (charge-offs) recoveries          (510)      (577)       214
    
    Total Allowance for loan and lease
     losses                                  60,090     60,475     43,885
    
    Reserve for unfunded commitments          1,313      2,021      1,601
                                         ---------------------------------
       Total Allowance for credit losses    $61,403    $62,496    $45,486
                                         =================================
    
    Net charge-offs (recoveries) to
     average loans and leases
     (annualized)                              0.04%      0.04%    (0.02)%
    Recoveries to gross charge-offs              68%        44%       135%
    Allowance for credit losses to
     loans and leases                          1.15%      1.16%      1.16%
    Allowance for credit losses to
     nonperforming loans and leases             678%       591%       706%
    Nonperforming loans and leases
     to total loans and leases                 0.17%      0.20%      0.16%
    
    Nonperforming assets:
      Nonperforming loans and leases         $9,058    $10,574     $6,440
      Real estate owned                          --         31      1,123
                                         ---------------------------------
    Total nonperforming assets               $9,058    $10,605     $7,563
                                         =================================
    
                         Umpqua Holdings Corporation
                                Loan Portfolio
                                 (Unaudited)
                                             Twelve Months Twelve Months
                                                  Ended         Ended
                                             December 31,   December 31,
    Dollars in thousands                          2006           2005
                                             -----------------------------
    Allowance for credit losses
    Balance beginning of period                    $43,885        $44,229
        Provision for loan and lease losses          2,552          2,468
        Acquisitions                                14,227             --
    
    Charge-offs                                     (4,205)        (7,752)
    Less recoveries                                  3,631          4,940
                                             -----------------------------
        Net charge-offs                               (574)        (2,812)
    
    Total Allowance for loan and lease losses       60,090         43,885
    
    Reserve for unfunded commitments                 1,313          1,601
                                             -----------------------------
       Total Allowance for credit losses           $61,403        $45,486
                                             =============================
    
    Net charge-offs to average
     loans and leases                                 0.01%          0.08%
    
    Recoveries to gross charge-offs                     86%            64%
    
                               Deposits by Type
                                 (Unaudited)
                                         September 30,
                     December 31, 2006        2006       December 31, 2005
                    ------------------- ---------------- -----------------
    Dollars in
     thousands         Amount    Mix     Amount    Mix     Amount    Mix
                    ------------------ ----------------- -----------------
    Demand, non
     interest-
     bearing         $1,222,107  20.9% $1,246,499  22.1%   $987,714  23.0%
    Demand,
     interest-
     bearing          2,490,386  42.7%  2,420,474  42.8%  1,771,716  41.3%
    Savings             368,238   6.3%    380,587   6.7%    401,632   9.4%
    Time              1,759,563  30.1%  1,602,778  28.4%  1,125,204  26.3%
                    ------------------ ----------------- -----------------
      Total Deposits $5,840,294 100.0% $5,650,338 100.0% $4,286,266 100.0%
                    ================== ================= =================
    
                           Umpqua Holdings Corporation
                                 Selected Ratios
                                   (Unaudited)
                                                     Quarter Ended:
                                              ----------------------------
                                              December September December
                                               31, 2006 30, 2006  31, 2005
                                              ----------------------------
    Net Interest Spread:
      Yield on loans and leases                   7.91%     7.88%    7.22%
      Yield on taxable investments                4.71%     4.53%    4.39%
      Yield on tax-exempt investments (1)         5.51%     6.08%    5.68%
      Yield on temporary investments              5.41%     3.99%    3.78%
        Total yield on earning assets (1)         7.50%     7.49%    6.77%
    
      Cost of interest bearing deposits           3.44%     3.19%    2.35%
      Cost of securities sold under agreements
       to repurchase and fed funds purchased      2.90%     4.45%    2.99%
      Cost of borrowings                          4.19%     4.81%    3.22%
      Cost of trust preferred securities          7.50%     7.72%    6.91%
        Total cost of interest bearing
         liabilities                              3.61%     3.45%    2.59%
    
    Net interest spread (1)                       3.89%     4.04%    4.18%
    Net interest margin (1)                       4.73%     4.83%    4.81%
    
    As reported:
    ------------------------------------------
    Return on average assets                      1.35%     1.27%    1.42%
    Return on average tangible assets             1.49%     1.41%    1.54%
    Return on average equity                      8.47%     8.06%   10.20%
    Return on average tangible equity            20.77%    20.50%   23.01%
    
    Excluding merger related expense net of
     tax (2):
    ------------------------------------------
    Return on average assets                      1.37%     1.35%    1.42%
    Return on average tangible assets             1.51%     1.50%    1.54%
    Return on average equity                      8.56%     8.58%   10.20%
    Return on average tangible equity            20.98%    21.82%   23.01%
    
    Bank Only Ratios:
    ------------------------------------------
    Umpqua Bank efficiency ratio (2)             51.66%    51.20%   52.93%
    Umpqua Bank net interest margin (1)           4.97%     5.08%    5.06%
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent
     basis using a 35% tax rate.
    (2) Excludes merger related expense, net of tax.
    
                         Umpqua Holdings Corporation
                               Selected Ratios
                                 (Unaudited)
                                                          Twelve Months
                                                              Ended:
                                                        ------------------
                                                        December December
                                                         31, 2006 31, 2005
                                                        ------------------
    Net Interest Spread:
      Yield on loans and leases                             7.72%    6.94%
      Yield on taxable investments                          4.55%    4.31%
      Yield on tax-exempt investments (1)                   5.69%    6.15%
      Yield on temporary investments                        4.82%    3.06%
        Total yield on earning assets (1)                   7.32%    6.51%
    
      Cost of interest bearing deposits                     3.09%    1.96%
      Cost of securities sold under
       agreements to repurchase and fed funds purchased     4.09%    2.56%
      Cost of borrowings                                    4.93%    2.11%
      Cost of trust preferred securities                    7.56%    6.36%
        Total cost of interest bearing liabilities          3.35%    2.20%
    
    Net interest spread (1)                                 3.97%    4.31%
    Net interest margin (1)                                 4.74%    4.84%
    
    As reported:
    ----------------------------------------------------
    Return on average assets                                1.31%    1.38%
    Return on average tangible assets                       1.43%    1.50%
    Return on average equity                                8.70%    9.80%
    Return on average tangible equity                      20.84%   22.91%
    
    Excluding merger related expense net of tax (2):
    ----------------------------------------------------
    Return on average assets                                1.35%    1.38%
    Return on average tangible assets                       1.48%    1.50%
    Return on average equity                                9.00%    9.82%
    Return on average tangible equity                      21.55%   22.96%
    
    Bank Only Ratios:
    ----------------------------------------------------
    Umpqua Bank efficiency ratio (2)                       51.97%   52.47%
    Umpqua Bank net interest margin (1)                     4.99%    5.07%
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent
     basis using a 35% tax rate.
    (2) Excludes merger related expense, net of tax.
    
                         Umpqua Holdings Corporation
                               Average Balances
                                 (Unaudited)
                                                    Quarter Ended:
                                            ------------------------------
                                            December  September December
    Dollars in thousands                     31, 2006  30, 2006  31, 2005
                                            ------------------------------
    
      Loans held for sale                     $17,936   $19,258   $13,913
      Loans and leases                      5,339,111 5,333,728 3,778,273
      Earning assets                        6,190,573 6,107,193 4,525,657
      Goodwill & other intangibles            680,030   681,988   406,792
      Total assets                          7,201,791 7,135,488 5,232,214
    
      Non interest bearing demand deposits  1,228,026 1,235,838 1,017,971
      Interest bearing deposits             4,474,364 4,248,328 3,148,531
                                            ------------------------------
      Total deposits                        5,702,390 5,484,166 4,166,502
      Interest bearing liabilities          4,755,568 4,701,582 3,422,088
    
      Total shareholders' equity            1,148,682 1,124,398   730,741
      Tangible equity                         468,652   442,410   323,949
    
                         Umpqua Holdings Corporation
                               Average Balances
                                 (Unaudited)
                                                      Twelve Months Ended:
                                                      --------------------
                                                      December  December
    Dollars in thousands                               31, 2006  31, 2005
                                                      --------------------
    
      Loans held for sale                               $15,375   $15,291
      Loans and leases                                4,803,509 3,613,257
      Earning assets                                  5,569,619 4,353,696
      Goodwill & other intangibles                      565,167   407,313
      Total assets                                    6,451,660 5,053,417
    
      Non interest bearing demand deposits            1,121,171   967,848
      Interest bearing deposits                       3,882,777 3,034,305
                                                      --------------------
      Total deposits                                  5,003,948 4,002,153
      Interest bearing liabilities                    4,296,287 3,317,647
    
      Total shareholders' equity                        970,394   711,765
      Tangible equity                                   405,227   304,452
    
                         Umpqua Holdings Corporation
                    Mortgage Banking Statistical Analysis
                                 (unaudited)
                                                    Quarter Ended:
                                             -----------------------------
                                             December September December
                                              31, 2006 30, 2006  31, 2005
                                             -----------------------------
    Dollars in thousands
    Mortgage Servicing Rights (MSR):
    -----------------------------------------
    Mortgage loans serviced for others       $955,444 $978,723 $1,016,092
    
    MSR Asset (gross)                         $13,553  $13,668    $13,264
    Less: Valuation reserve                    (3,601)  (3,241)    (2,374)
                                             -----------------------------
       MSR Asset (net of reserve)              $9,952  $10,427    $10,890
                                             =============================
    
    MSR as % of serviced portfolio               1.04%    1.07%      1.07%
    
    Dollars in thousands
    Mortgage Banking Revenue:
    -----------------------------------------
    Origination and sale                       $1,753   $2,141     $1,610
    Servicing                                     375      360        214
    MSR valuation reserve change                 (360)  (1,056)      (232)
                                             -----------------------------
       Total Mortgage Banking Revenue          $1,768   $1,445     $1,592
                                             =============================
    
    
                                               Twelve Months
                                                   Ended:
                                             ------------------
                                             December December
                                              31, 2006 31, 2005
                                             ------------------
    Dollars in thousands
    Mortgage Banking Revenue:
    -----------------------------------------
    Origination and sale                       $7,354   $7,266
    Servicing                                   1,433      742
    MSR valuation reserve change               (1,227)  (1,582)
                                             ------------------
       Total Mortgage Banking Revenue          $7,560   $6,426
                                             ==================
    

    Source: Umpqua Holdings Corporation


    Contact: Umpqua Holdings Corporation Ray Davis, President/CEO, 503-727-4101 raydavis@umpquabank.com or Dan Sullivan, EVP/CFO, 503-727-4103 dansullivan@umpquabank.com