• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Second Quarter 2007 Operating Earnings of $0.35 Per Diluted Share
    Company Release - 07/19/2007 08:00

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

    Umpqua Holdings Corporation (NASDAQ:UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced second quarter 2007 operating earnings of $21.3 million, or $0.35 per diluted share, compared to $20.6 million, or $0.42 per diluted share, for the second quarter of 2006. Operating earnings exclude merger related expenses, net of tax.

    Including merger related expenses, net income for the second quarter of 2007 was $19.9 million, or $0.32 per diluted share, compared to $19.6 million, or $0.40 per diluted share for the second quarter of 2006.

        Significant items for the second quarter include:
    
        --  North Bay Bancorp acquisition and system conversion complete,
            anticipated cost savings are on track;
    
        --  Year to date annualized loan growth of 7%, excluding the
            acquisition;
    
        --  Year to date annualized deposit growth of 4%, excluding the
            acquisition, with non-interest bearing demand deposit mix
            increasing from 20.2% to 21.2%;
    
        --  Net interest margin, on a tax equivalent basis, declined 13
            basis points during the second quarter, to 4.34%, of which 7
            basis points related to interest reversal on non-performing
            loans;
    
        --  Cost of interest bearing deposits increased 4 basis points
            during second quarter, lowest rate of quarterly growth in
            three years;
    
        --  Provision for loan losses of $3.4 million, related to a $34.7
            million net increase in non-performing loans, and $1.2 million
            interest reversal in the second quarter, represents a $0.04
            reduction per diluted share;
    
        --  Net recoveries of $59 thousand year to date;
    
        --  Total non-interest income increased 14% on a sequential
            quarter basis;
    
        --  On track with non-acquisition related cost saving initiatives
            announced in first quarter;
    
        --  Bank efficiency ratio, excluding merger related expenses,
            improved from 55.88% in the first quarter to 54.32% in the
            second quarter;
    
        --  Repurchased 2.37 million shares during the second quarter.
    

    "Although the financial services industry is currently operating in a challenging environment, Umpqua has a team of seasoned and professional bank executives that have successfully faced similar challenges in the past," said Umpqua Holdings Corporation president and CEO, Ray Davis. "We remain ever mindful of shareholder interests and will continue to build value for our investors. Accordingly, as a growth company we will open more stores, will roll out new product offerings and continue our innovative approach to banking."

    The following is a comparison of net income to operating earnings for all periods presented:

                                    Quarter ended:       Six months ended:
                              -------------------------- -----------------
    (Dollars in thousands,
     except per share data)    6/30/07  3/31/07  6/30/06  6/30/07  6/30/06
                              -------------------------- -----------------
    Net Income                $ 19,913 $ 20,662 $ 19,631 $ 40,575 $ 37,058
    Add Back: Merger related
     expenses, net of tax        1,430      332      994    1,762    1,144
                              -------------------------- -----------------
         Operating Earnings   $ 21,343 $ 20,994 $ 20,625 $ 42,337 $ 38,202
                              ========================== =================
    
    Earnings per diluted
     share:
    -------------------------
         Net Income           $   0.32 $   0.35 $   0.40 $   0.67 $   0.79
         Operating Earnings   $   0.35 $   0.36 $   0.42 $   0.70 $   0.81
    

    Total consolidated assets as of June 30, 2007 were $8.1 billion, compared to $7.2 billion a year ago. Total gross loans and leases, and deposits, were $6.0 billion and $6.4 billion, respectively, as of June 30, 2007, compared to $5.3 billion and $5.5 billion, respectively, a year ago.

    The Company completed its acquisition of North Bay Bancorp on April 26, 2007. The Company issued 5,170,941 shares in connection with the acquisition, with a total deal value of $142.3 million. The system integration with North Bay Bancorp was completed in May 2007.

    The following table presents the year to date 2007 organic growth rates, which exclude the effects of the North Bay Bancorp acquisition:

                                          Loans and
    (in thousands)                          Leases    Deposits    Assets
                                          --------------------------------
    As reported, 6/30/07                  $5,981,750 $6,414,425 $8,144,558
    less: 12/31/06 balances                5,361,862  5,840,294  7,344,236
                                          --------------------------------
       Total growth                          619,888    574,131    800,322
    
    less: acquisition                        442,950    462,624    725,205
                                          --------------------------------
       Organic growth                     $  176,938 $  111,507 $   75,117
                                          ================================
    
       Annualized organic growth rate         7%         4%         2%
    

    During the first half of 2007, the Company had net recoveries of $59 thousand, compared to net recoveries of $513 thousand for the first half of 2006. Non-performing loans and leases were $48.0 million at June 30, 2007, representing 0.80% of total loans and leases. The allowance for credit losses was 1.17% of total loans and leases at June 30, 2007. During the second quarter, the Company reversed $1.2 million of interest related to new non-performing loans.

    The Company reported a tax equivalent net interest margin of 4.34% for the second quarter of 2007, compared to 4.68% for the second quarter of 2006, and 4.47% for the first quarter of 2007. The decrease in net interest margin over these time periods resulted from increases in short-term market interest rates and the competitive climate, characterized by increasing deposit costs combined with declining earning asset yields, which was partially attributed to the interest reversal discussed previously. The interest reversal noted above resulted in a 7 basis point decline in the tax equivalent net interest margin during the quarter.

    Excluding merger related expenses, the Bank efficiency ratio was 54.32% for the second quarter, down from 55.88% for the first quarter. The decrease related primarily to achievement of cost saving initiatives during the second quarter.

    During the first quarter of 2007, the Company elected early adoption of Statements of Financial Accounting Standard (SFAS) 157 and 159, effective January 1, 2007. SFAS 159, which was issued in February 2007, permits the measurement of selected financial instruments at fair value as of specified election dates. Upon adoption of SFAS 159, the Company selected the fair value measurement option only on certain junior subordinated debentures. The initial fair value measurement of these debentures resulted in a $2.1 million cumulative-effect adjustment, net of tax, recorded as a reduction in retained earnings as of January 1, 2007. The income effect of this fair value adjustment for the first quarter of 2007 of $329 thousand was previously reported in interest expense on junior subordinated debentures. During the second quarter of 2007, this amount was reclassified to other non-interest income.

    As of June 30, 2007, total shareholders' equity was $1.3 billion. Book value per share was $20.48 and tangible book value per share was $7.96. During the second quarter, the Company repurchased 2,366,421 shares of stock at a weighted average price of $25.48 per share.

    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 non-GAAP financial measures provide 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.

    Forward-Looking Statements

    This press release includes forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about opening new stores and introducing new products.

    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 144 locations between Napa, Calif. and Bellevue, Wash., along the Oregon and Northern California Coast and in Central Oregon. Umpqua Holdings also owns a 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, July 19, 2007, at 10:00 a.m. PST (1:00 p.m. EST) during which the Company will discuss first quarter 2007 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 800-369-2088 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 800-365-4718, or by visiting the Company's website.

                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
    
                                                  Quarter Ended:
                                        ----------------------------------
    Dollars in thousands, except per     June 30,   March 31,   June 30,
     share data                             2007       2007        2006
                                        ----------------------------------
    Interest income
      Loans and leases                    $111,797    $103,981    $86,004
      Interest and dividends on
       investments:
         Taxable                             8,720       7,519      6,693
         Exempt from federal income tax      1,335       1,228        854
         Dividends                              88          65         56
      Temporary investments                    616         894        336
                                        ----------------------------------
        Total interest income              122,556     113,687     93,943
    
    Interest expense
      Deposits                              44,581      41,031     25,953
      Repurchase agreements and
        fed funds purchased                    824         403      1,802
      Junior subordinated debentures         4,022       3,863      3,376
      Term debt                                813          80      2,055
                                        ----------------------------------
        Total interest expense              50,240      45,377     33,186
    
    Net interest income                     72,316      68,310     60,757
    
    Provision for loan and lease losses      3,413          83         54
    Non-interest income
      Service charges                        8,148       7,052      6,450
      Brokerage fees                         2,679       2,417      2,534
      Mortgage banking revenue               2,607       1,799      2,503
      Gain (loss) on sale of securities         (2)          5         (1)
      Other income                           2,498       2,692      2,320
                                        ----------------------------------
    Total non-interest income               15,930      13,965     13,806
    
    Non-interest expense
      Salaries and benefits                 28,898      28,269     23,337
      Occupancy and equipment                8,782       8,826      7,199
      Intangible amortization                1,490       1,143        791
      Other                                 12,392      11,220     10,260
      Merger related expenses                2,383         554      1,656
                                        ----------------------------------
    Total non-interest expense              53,945      50,012     43,243
    
    Income before provision for income
     taxes                                  30,888      32,180     31,266
    Provision for income tax                10,975      11,518     11,635
                                        ----------------------------------
    Net income                             $19,913     $20,662    $19,631
                                        ==================================
    
    Weighted average shares outstanding 60,679,485  58,176,465 48,528,525
    Weighted average diluted shares
     outstanding                        61,397,575  58,830,444 48,994,482
    
    Earnings per share - Basic               $0.33       $0.36      $0.40
    Earnings per share - Diluted             $0.32       $0.35      $0.40
    
                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
    
                                                      Six Months Ended:
                                                    ----------------------
                                                    June 30,    June 30,
    Dollars in thousands, except per share data        2007        2006
                                                    ----------------------
    Interest income
      Loans and leases                                $215,778   $159,124
      Interest and dividends on investments:
         Taxable                                        16,239     13,404
         Exempt from federal income tax                  2,563      1,598
         Dividends                                         153        100
      Temporary investments                              1,510        463
                                                    ----------------------
        Total interest income                          236,243    174,689
    
    Interest expense
      Deposits                                          85,612     46,991
      Repurchase agreements and
        fed funds purchased                              1,227      4,191
      Trust preferred securities                         7,885      6,388
      Other borrowings                                     893      2,083
                                                    ----------------------
        Total interest expense                          95,617     59,653
    
    Net interest income                                140,626    115,036
    
    Provision for loan and lease losses                  3,496         75
    Non-interest income
      Service charges                                   15,200     11,934
      Brokerage fees                                     5,096      4,902
      Mortgage banking revenue                           4,406      4,347
      Gain (loss) on sale of securities                      3         (1)
      Other income                                       5,190      4,826
                                                    ----------------------
    Total non-interest income                           29,895     26,008
    
    Non-interest expense
      Salaries and benefits                             57,167     45,138
      Occupancy and equipment                           17,608     14,367
      Intangible amortization                            2,633      1,338
      Other                                             23,612     19,473
      Merger related expenses                            2,937      1,907
                                                    ----------------------
    Total noninterest expense                          103,957     82,223
    
    Income before income taxes                          63,068     58,746
    Provision for income tax                            22,493     21,688
                                                    ----------------------
    Net income                                         $40,575    $37,058
                                                    ======================
    
    Weighted average shares outstanding             59,434,889 46,604,165
    Weighted average diluted shares outstanding     60,131,603 47,111,951
    
    Earnings per share - Basic                           $0.68      $0.80
    Earnings per share - Diluted                         $0.67      $0.79
    
                         Umpqua Holdings Corporation
                         Consolidated Balance Sheets
                                 (Unaudited)
    
    Dollars in thousands, except per   June 30,   March 31,    June 30,
     share data                           2007        2007        2006
                                      -----------------------------------
    Assets:
      Cash and due from banks           $182,739    $140,986    $176,983
      Temporary investments               40,904      87,877      61,981
      Investment securities:
         Trading                           3,090       3,010         376
         Available for sale              893,125     786,301     692,910
         Held to maturity                  8,333       8,698       9,676
      Loans held for sale                 16,953      16,515      31,118
      Loans and leases                 5,981,750   5,392,137   5,296,720
    
      Less: Allowance for loan and
       lease losses                      (68,723)    (60,263)    (58,516)
                                      -----------------------------------
        Loans and leases, net          5,913,027   5,331,874   5,238,204
      Restricted equity securities        16,715      15,510      20,538
      Premises and equipment, net        108,656     100,189     100,040
      Other real estate owned                 --          --          69
      Mortgage servicing rights, net       9,966       9,524      11,550
      Goodwill and other intangibles     767,710     677,854     682,789
      Other assets                       183,340     159,700     153,709
                                      -----------------------------------
    Total assets                      $8,144,558  $7,338,038  $7,179,943
                                      ===================================
    
    Liabilities:
      Deposits                        $6,414,425  $5,830,905  $5,464,770
      Securities sold under
       agreements to repurchase           59,553      48,434      61,720
      Fed funds purchased                 48,000          --     200,000
      Term debt                           75,095       7,461      57,081
      Junior subordinated debentures,
       at fair value                      99,808     100,076          --
      Junior subordinated debentures,
       at amortized cost                 105,213     105,480     204,222
      Other liabilities                   86,426      77,323      79,050
                                      -----------------------------------
        Total liabilities              6,888,520   6,169,679   6,066,843
    
    Shareholders' equity:
      Common stock                     1,019,618     933,064     923,309
      Retained earnings                  251,715     242,870     208,335
    
      Accumulated other comprehensive
       loss                              (15,295)     (7,575)    (18,544)
                                      -----------------------------------
        Total shareholders' equity     1,256,038   1,168,359   1,113,100
                                      -----------------------------------
    Total liabilities and
     shareholders' equity             $8,144,558  $7,338,038  $7,179,943
                                      ===================================
    
    Common shares outstanding at
     period end                       61,315,960  58,223,810  57,651,533
    Book value per share                  $20.48      $20.07      $19.31
    Tangible book value per share          $7.96       $8.42       $7.46
    Tangible equity                     $488,328    $490,505    $430,311
    
                         Umpqua Holdings Corporation
                                Loan Portfolio
                                 (Unaudited)
    
                                       June 30,    March 31,    June 30,
    Dollars in thousands                  2007        2007         2006
                                      ------------------------------------
    Loans and leases by class:
    
      Commercial real estate          $3,058,774  $2,732,029   $2,728,367
      Residential real estate            371,894     315,764      301,390
      Construction                     1,148,726   1,155,821    1,142,487
                                      ------------------------------------
        Total real estate              4,579,394   4,203,614    4,172,244
      Commercial                       1,323,640   1,123,654    1,065,874
      Leases                              35,477      24,293       18,192
      Installment and other               54,504      51,175       54,713
      Deferred loan fees, net            (11,265)    (10,599)     (14,303)
                                      ------------------------------------
      Total loans and leases          $5,981,750  $5,392,137   $5,296,720
                                      ====================================
    
                                       Quarter      Quarter     Quarter
                                         Ended        Ended       Ended
                                       June 30,    March 31,    June 30,
    Dollars in thousands                  2007        2007         2006
                                      ------------------------------------
    Allowance for credit losses
    Balance beginning of period          $60,263     $60,090      $44,546
        Provision for loan and lease
         losses                            3,413          83           54
        Acquisitions                       5,078          --       14,043
    
    Charge-offs                             (870)       (713)        (947)
    Less recoveries                          839         803          820
                                      ------------------------------------
         Net (charge-offs) recoveries        (31)         90         (127)
    
    Total Allowance for loan and
     lease losses                         68,723      60,263       58,516
    
    Reserve for unfunded commitments       1,273       1,231        2,145
                                      ------------------------------------
       Total Allowance for credit
        losses                           $69,996     $61,494      $60,661
                                      ====================================
    
    Net charge-offs (recoveries) to
     average loans and leases
     (annualized)                           0.00%      (0.01)%       0.01%
    Recoveries to gross charge-offs           96%        113%          87%
    Allowance for credit losses to
      loans and leases                      1.17%       1.14%        1.15%
    Allowance for credit losses to
      nonperforming loans and leases         146%        463%         828%
    Nonperforming loans and leases
      to total loans and leases             0.80%       0.25%        0.14%
    
    Nonperforming assets:
      Nonperforming loans and leases     $47,955     $13,296       $7,330
      Real estate owned                       --          --           69
                                      ------------------------------------
    Total nonperforming assets           $47,955     $13,296       $7,399
                                      ====================================
    
                         Umpqua Holdings Corporation
                                Loan Portfolio
                                 (Unaudited)
    
                                                    Six Months Ended:
    Dollars in thousands                       June 30, 2007 June 30, 2006
                                               ---------------------------
    Allowance for credit losses
    Balance beginning of period                     $60,090      $43,885
        Provision for loan and lease losses           3,496           75
        Acquisitions                                  5,078       14,043
    
    Charge-offs                                      (1,583)      (1,560)
    Less recoveries                                   1,642        2,073
                                               ---------------------------
        Net recoveries                                   59          513
    
    Total Allowance for loan and lease losses        68,723       58,516
    
    Reserve for unfunded commitments                  1,273        2,145
                                               ---------------------------
       Total Allowance for credit losses            $69,996      $60,661
                                               ===========================
    
    Net recoveries to average
      loans and leases                                 0.00%       (0.02)%
    
    Recoveries to gross charge-offs                     104%         133%
    
                               Deposits by Type
                                 (Unaudited)
    
                      June 30, 2007     March 31, 2007     June 30, 2006
                    ------------------ ----------------- -----------------
    Dollars in
     thousands        Amount    Mix      Amount    Mix     Amount    Mix
                    ------------------ ----------------- -----------------
    Demand, non
     interest-
     bearing        $1,358,235  21.2%  $1,180,536  20.2% $1,264,249  23.1%
    Demand,
     interest-
     bearing         2,801,455  43.7%   2,543,560  43.6%  2,198,838  40.3%
    Savings            373,438   5.8%     361,100   6.2%    421,248   7.7%
    Time             1,881,297  29.3%   1,745,709  30.0%  1,580,435  28.9%
                    ------------------ ----------------- -----------------
       Total
        Deposits    $6,414,425 100.0%  $5,830,905 100.0% $5,464,770 100.0%
                    ================== ================= =================
    
                         Umpqua Holdings Corporation
                               Selected Ratios
                                 (Unaudited)
    
                                                        Quarter Ended:
                                                     ---------------------
                                                      June   March  June
                                                       30,    31,    30,
                                                       2007   2007   2006
                                                     ---------------------
    Net Interest Spread:
      Yield on loans and leases                        7.74%  7.81%  7.63%
      Yield on taxable investments                     4.72%  4.61%  4.53%
      Yield on tax-exempt investments (1)              5.06%  5.89%  5.56%
      Yield on temporary investments                   5.13%  5.28%  4.13%
        Total yield on earning assets (1)              7.33%  7.42%  7.22%
    
      Cost of interest bearing deposits                3.66%  3.62%  2.93%
      Cost of securities sold under agreements to
       repurchase and fed funds purchased              3.74%  3.00%  4.09%
      Cost of term debt                                4.63%  3.76%  5.04%
      Cost of junior subordinated debentures           7.62%  7.60%  7.63%
        Total cost of interest bearing liabilities     3.84%  3.78%  3.27%
    
    Net interest spread (1)                            3.49%  3.64%  3.95%
    Net interest margin (1)                            4.34%  4.47%  4.68%
    
    As reported:
    ------------------------------------------------
    Return on average assets                           1.02%  1.15%  1.31%
    Return on average tangible assets                  1.13%  1.27%  1.42%
    Return on average equity                           6.44%  7.22%  9.18%
    Return on average tangible equity                 16.11% 17.36% 21.17%
    
    Excluding merger related expense net of tax (2):
    ------------------------------------------------
    Return on average assets                           1.09%  1.17%  1.37%
    Return on average tangible assets                  1.21%  1.29%  1.49%
    Return on average equity                           6.91%  7.33%  9.64%
    Return on average tangible equity                 17.26% 17.64% 22.24%
    
    Bank Only Ratios:
    ------------------------------------------------
    Umpqua Bank efficiency ratio (2)                  54.32% 55.88% 51.78%
    Umpqua Bank net interest margin (1)                4.57%  4.72%  4.93%
    
    (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)
    
                                                    Six Months Ended:
                                               ---------------------------
                                               June 30, 2007 June 30, 2006
                                               ---------------------------
    Net Interest Spread:
      Yield on loans and leases                        7.77%         7.51%
      Yield on taxable investments                     4.66%         4.49%
      Yield on tax-exempt investments (1)              5.42%         5.57%
      Yield on temporary investments                   5.22%         4.17%
        Total yield on earning assets (1)              7.37%         7.10%
    
      Cost of interest bearing deposits                3.64%         2.79%
      Cost of securities sold under agreements
       to repurchase and fed funds purchased           3.46%         4.12%
      Cost of borrowings                               4.54%         5.02%
      Cost of trust preferred securities               7.61%         7.51%
        Total cost of interest bearing
         liabilities                                   3.81%         3.12%
    
    Net interest spread (1)                            3.56%         3.98%
    Net interest margin (1)                            4.40%         4.69%
    
    As reported:
    ------------------------------------------
    Return on average assets                           1.08%         1.31%
    Return on average tangible assets                  1.20%         1.42%
    Return on average equity                           6.81%         9.32%
    Return on average tangible equity                 16.72%        21.10%
    
    Excluding merger related expense net of
     tax (2):
    ------------------------------------------
    Return on average assets                           1.13%         1.35%
    Return on average tangible assets                  1.25%         1.46%
    Return on average equity                           7.11%         9.61%
    Return on average tangible equity                 17.45%        21.76%
    
    Bank Only Ratios:
    ------------------------------------------
    Umpqua Bank efficiency ratio (2)                  55.08%        52.64%
    Umpqua Bank net interest margin (1)                4.64%         4.94%
    
    (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:
                                ------------------------------------------
    Dollars in thousands        June 30, 2007 March 31, 2007 June 30, 2006
                                ------------------------------------------
    
      Loans held for sale             $15,468        $15,004       $14,619
      Loans and leases              5,777,447      5,383,958     4,505,246
      Earning assets                6,735,849      6,245,170     5,236,760
      Goodwill & other
       intangibles                    743,801        678,577       486,167
      Total assets                  7,840,422      7,256,788     6,030,752
    
      Non interest bearing
       demand deposits              1,271,311      1,158,203     1,048,201
      Interest bearing deposits     4,881,499      4,595,377     3,547,093
                                ------------------------------------------
      Total deposits                6,152,810      5,753,580     4,595,294
      Interest bearing
       liabilities                  5,252,179      4,864,543     4,064,871
    
      Total shareholders'
       equity                       1,239,691      1,161,185       858,168
      Tangible equity                 495,890        482,608       372,001
    
                         Umpqua Holdings Corporation
                               Average Balances
                                 (Unaudited)
    
                                                    Six Months Ended:
                                               ---------------------------
    Dollars in thousands                       June 30, 2007 June 30, 2006
                                               ---------------------------
    
      Loans held for sale                            $15,237       $12,099
      Loans and leases                             5,581,789     4,261,765
      Earning assets                               6,491,865     4,980,754
      Goodwill & other intangibles                   711,369       447,405
      Total assets                                 7,550,217     5,722,796
    
      Non interest bearing demand deposits         1,215,069     1,008,573
      Interest bearing deposits                    4,739,228     3,396,277
                                               ---------------------------
      Total deposits                               5,954,297     4,404,850
      Interest bearing liabilities                 5,059,432     3,856,833
    
      Total shareholders' equity                   1,200,655       801,494
      Tangible equity                                489,286       354,089
    
                         Umpqua Holdings Corporation
                    Mortgage Banking Statistical Analysis
                                 (unaudited)
    
                                                   Quarter Ended:
                                           -------------------------------
                                           June 30,  March 31,  June 30,
                                              2007      2007       2006
                                           -------------------------------
    Dollars in thousands
    Mortgage Servicing Rights (MSR):
    --------------------------------------
    Mortgage loans serviced for others     $897,696  $925,541  $1,004,148
    
    MSR Asset                                $9,966    $9,524     $13,735
    Less: Valuation reserve (1)                  --        --      (2,185)
                                           -------------------------------
       MSR Asset net                         $9,966    $9,524     $11,550
                                           ===============================
    
    MSR net as % of serviced portfolio         1.11%     1.03%       1.15%
    
    Dollars in thousands
    Mortgage Banking Revenue:
    --------------------------------------
    Origination and sale                     $1,700    $1,728      $1,937
    Servicing                                   670       637         665
    Amortization of MSR (1)                      --        --        (321)
    MSR valuation reserve change                 --        --         222
    Change in fair value of MSR                 237      (566)         --
                                           -------------------------------
       Total Mortgage Banking Revenue        $2,607    $1,799      $2,503
                                           ===============================
    
    
                                            Six Months Ended:
                                           -------------------
                                           June 30,  June 30,
                                              2007      2006
                                           -------------------
    Dollars in thousands
    Mortgage Banking Revenue:
    --------------------------------------
    Origination and sale                     $3,428    $3,460
    Servicing                                 1,307     1,340
    Amortization of MSR (1)                      --      (642)
    MSR valuation reserve change                 --       189
    Change in fair value of MSR                (329)       --
                                           -------------------
       Total Mortgage Banking Revenue        $4,406    $4,347
                                           ===================
    
    
    (1) The Company adopted SFAS No. 156 effective January 1, 2007,
     resulting in elimination of the mortgage servicing right valuation
     reserve and MSR amortization.
    

    Source: Umpqua Holdings Corporation


    Contact: Umpqua Holdings Corporation President/CEO Ray Davis, 503-727-4101 raydavis@umpquabank.com or SVP/Finance Ron Farnsworth, 503-727-4108 ronfarnsworth@umpquabank.com