• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Third Quarter Earnings
    Third Quarter Earnings Impacted by California Housing MarketĀ 
    Company Release - 10/18/2007 08:00

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

    Umpqua Holdings Corporation (NASDAQ:UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced third quarter 2007 operating earnings of $13.3 million, or $0.22 per diluted share, compared to $24.3 million, or $0.42 per diluted share, for the third quarter of 2006. Operating earnings exclude merger-related expenses, net of tax.

    Including merger-related expenses, net income for the third quarter of 2007 was $13.2 million, or $0.22 per diluted share, compared to $22.9 million, or $0.39 per diluted share for the third quarter of 2006.

        Significant items for the third quarter include:
    
            --  Increase in non-performing loans to $68.9 million, or
                1.13% of total loans, related primarily to the residential
                development portfolio in our northern California
                operation;
    
            --  Provision for loan losses of $20.4 million, representing a
                $0.17 per diluted share additional charge over the second
                quarter;
    
            --  Reversal of $1.3 million in interest income related to
                $20.8 million net increase in non-accrual loans;
    
            --  Other real estate owned increased to $10.3 million, which
                was sold with no loss subsequent to quarter end;
    
            --  Net charge-offs of $806 thousand year to date, represents
                0.02% of average loans;
    
            --  Year to date annualized organic loan growth of 7%,
                excluding the acquisition;
    
            --  Year to date annualized organic deposit growth of 5%,
                excluding the acquisition;
    
            --  Core deposits increased 3% during the third quarter in the
                Oregon/Washington region;
    
            --  Net interest margin, on a tax equivalent basis, declined
                14 basis points during the third quarter, to 4.20%, of
                which 7 basis points related to interest reversal on new
                non-accrual loans noted above;
    
            --  Cost of interest bearing deposits increased 3 basis points
                during third quarter, but declined 10 basis points during
                the month of September;
    
            --  Issued $60 million of new junior subordinated debentures
                during the third quarter, with a weighted average
                adjustable interest rate of 3 month LIBOR plus 182 basis
                points;
    
            --  Total non-interest income increased 16% on a sequential
                quarter basis, related primarily to positive fair value
                adjustments related to junior subordinated debentures;
    
            --  Bank efficiency ratio, excluding merger-related expenses,
                of 55.3% in the third quarter;
    

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

                                                     Sequential Year over
                                Quarter ended:         Quarter     Year
                          --------------------------
    (Dollars in
     thousands, except
     per share data)       9/30/07  6/30/07  9/30/06 % Change   % Change
                          ------------------------------------------------
    Net Income            $ 13,177 $ 19,913 $ 22,856      (34)%      (42)%
    Add Back: Merger-
     related expenses,
     net of tax                158    1,430    1,471      (89)%      (89)%
                          ------------------------------------------------
      Operating Earnings  $ 13,335 $ 21,343 $ 24,327      (38)%      (45)%
                          ================================================
    
    Earnings per diluted
     share:
    ---------------------
      Net Income          $   0.22 $   0.32 $   0.39      (31)%      (44)%
      Operating Earnings  $   0.22 $   0.35 $   0.42      (37)%      (48)%
    
                                Nine months ended:        Year over Year
                          ------------------------------
    (Dollars in
     thousands, except
     per share data)          9/30/07         9/30/06       % Change
                          ------------------------------------------------
    Net Income            $        53,752 $       59,914             (10)%
    Add Back: Merger-
     related expenses,
     net of tax                     1,920          2,615             (27)%
                          ------------------------------------------------
      Operating Earnings  $        55,672 $       62,529             (11)%
                          ================================================
    
    Earnings per diluted
     share:
    ---------------------
      Net Income          $          0.89 $         1.17             (24)%
      Operating Earnings  $          0.92 $         1.23             (25)%
    

    "During this past quarter, the California housing down-turn negatively impacted Umpqua. I have instructed our credit professionals to take an aggressive posture in identifying, reserving for, and resolving problem loans. Accordingly, we believe the third quarter provision for loan losses will be adequate for subsequent charge-offs related to these non-performing assets," said Umpqua Holdings Corporation president and CEO Ray Davis.

    During the third quarter, the Company experienced an increase in non-performing assets related primarily to deterioration in the northern California residential development market. Non-performing loans increased $21 million during the quarter, to $68.9 million. Non-performing assets increased $31 million during the quarter, to $79.2 million. Subsequent to quarter end, the Company sold $10 million of other real estate owned with no loss recognized. This other real estate owned was recorded as a non-accrual loan in the second quarter. The residential development segment represents $66.7 million, or 84% of the total $79.2 million in non-performing assets.

    The following represents a summary of non-performing assets by region as of September 30, 2007:

                            Non-performing assets
    ----------------------------------------------------------------------
                                         Oregon/
    (dollars in thousands)             Washington  California     Total
                                       -----------------------------------
    
    90 days past due and accruing:
    ----------------------------------
      Residential development          $       --  $      166  $      166
      Commercial real estate                   --         346         346
      Commercial                               --         496         496
      Other                                   153         327         480
                                       -----------------------------------
       Total                           $      153  $    1,335  $    1,488
    
    Non-accrual loans:
    ----------------------------------
      Residential development          $    9,984  $   46,581  $   56,565
      Commercial real estate                1,474         537       2,011
      Commercial                            6,456       2,387       8,843
      Other                                    --          --          --
                                       -----------------------------------
       Total                           $   17,914  $   49,505  $   67,419
                                       -----------------------------------
    
       Total non-performing loans      $   18,067  $   50,840  $   68,907
                                       -----------------------------------
    
    Other real estate owned:
    ----------------------------------
      Residential development          $   10,000  $       --  $   10,000
      Commercial real estate                   --          --          --
      Commercial                               --          --          --
      Other                                    --         310         310
                                       -----------------------------------
       Total                           $   10,000  $      310  $   10,310
                                       -----------------------------------
    
       Total non-performing assets     $   28,067  $   51,150  $   79,217
                                       ===================================
    
    Total Loans and leases             $3,452,645  $2,626,790  $6,079,435
    Non-performing loans to total
     loans and leases                        0.52%       1.94%       1.13%
    

    Within the allowance for credit losses, the Company has identified $16.2 million of impairment reserve related to $67.4 million of non-accrual loans, which are specifically measured for impairment. This impairment reserve increased $11.2 million during the quarter. The net increase in impairment reserve, combined with downgrades within the portfolio related primarily to residential development, led to the $20.4 million provision for loan losses during the third quarter. The third quarter provision for loan losses is expected to cover subsequent charge-offs on these non-performing loans.

    The following represents a summary of our non-accrual loan impairment estimate as of September 30, 2007:

                     Non-accrual loan impairment estimate
    ----------------------------------------------------------------------
                                                                Impairment
    (dollars in thousands)                   # of Loans Balance  Estimate
                                             -----------------------------
    
    Non-accrual loans:
    ----------------------------------------
      Residential development                        47 $56,565    $14,761
      Commercial real estate                         13   2,011         98
      Commercial                                     23   8,843      1,385
                                             -----------------------------
       Total non-accrual loans                       83 $67,419    $16,244
                                             =============================
    

    During the first nine months of 2007, the Company had net charge-offs of $806 thousand, compared to net charge-offs of $64 thousand for the first nine months of 2006. non-performing loans and leases were $68.9 million at September 30, 2007, representing 1.13% of total loans and leases. The allowance for credit losses was 1.47% of total loans and leases at September 30, 2007, compared to 1.17% of total loans and leases at June 30, 2007.

    The Company completed its acquisition of North Bay Bancorp on April 26, 2007, by issuing 5,163,573 shares in connection with this 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:

    (dollars in thousands)        Loans and Leases  Deposits     Assets
                                  ----------------------------------------
    As reported, 9/30/07               $6,079,435  $6,518,217  $8,225,811
    less: 12/31/06 balances             5,361,862   5,840,294   7,344,236
                                  ----------------------------------------
      Total growth                        717,573     677,923     881,575
    
    less: acquisition                     442,950     462,624     727,799
                                  ----------------------------------------
      Organic growth                   $  274,623  $  215,299  $  153,776
                                  ========================================
    
    Annualized organic growth
     rate                                       7%          5%          3%
    

    Total consolidated assets as of September 30, 2007, were $8.2 billion, compared to $7.2 billion a year ago. Total gross loans and leases, and deposits, were $6.1 billion and $6.5 billion, respectively, as of September 30, 2007, compared to $5.4 billion and $5.7 billion, respectively, a year ago.

    The Company reported a tax equivalent net interest margin of 4.20% for the third quarter of 2007, compared to 4.83% for the third quarter of 2006, and 4.34% for the second 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 income reversal discussed previously. The $1.3 million interest reversal on new non-accrual loans 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 55.15% for the nine months ended September 30, 2007, compared to 52.08% for the same period a year ago. The increase related primarily to the decline in net interest margin discussed previously.

    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. During the third quarter, the Company issued $60 million in new junior subordinated debentures (net of common stock investment), carrying a weighted adjustable interest rate of 3 month LIBOR plus 182 basis points. The Company elected fair value measurement on these debentures. As a result, the Company recognized a $4.1 million gain in fair value on junior subordinated debentures during the third quarter, as market interest rate spreads increased significantly on like instruments. This compares to a $279 thousand fair value increase during the second quarter. Also during the third quarter, the Company redeemed a $25 million junior subordinated debenture (net of common stock investment) prior to its maturity.

    As of September 30, 2007, total shareholders' equity was $1.2 billion. Book value per share was $20.60 and tangible book value per share was $7.78. During the third quarter, the Company repurchased 1.65 million shares of stock at a weighted average price of $21.23 per share. For the first nine months of 2007, the company repurchased 4.01 million shares of stock at a weighted average price of $23.73 per share. The total remaining available common shares authorized for repurchase is approximately 1.54 million.

    We have expanded disclosure of our loan, deposit and core deposit portfolios by region within the financial tables of this earnings release.

    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 identification and management of problem loans, the level of expected gross loan charge-offs and the adequacy of the provision for loan losses taken in the third quarter.

    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 146 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, October 18, 2007, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss third 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 800-752-8363 a few minutes before 10:00 a.m. The conference ID is "18219442." 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 two hours after the conference call by dialing 800-642-1687, or by visiting the Company's website.

                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
    ----------------------------------------------------------------------
                                 Quarter Ended:
      --------------------------------------------------------------------
    
    
    
    Dollars in thousands, except
     per share data               Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    Interest income
     Loans and leases              $   116,111  $   111,797    $   106,320
     Interest and dividends on
      investments:
       Taxable                           9,137        8,720          6,797
       Exempt from federal income
        tax                              1,588        1,335          1,142
       Dividends                            96           88            105
     Temporary investments                 929          616            374
                                  ----------------------------------------
      Total interest income            127,861      122,556        114,738
    Interest expense
     Deposits                           48,138       44,581         34,121
     Repurchase agreements and
      fed funds purchased                  530          824          2,155
     Junior subordinated
      debentures                         4,444        4,022          3,971
     Term debt                             874          813            692
                                  ----------------------------------------
      Total interest expense            53,986       50,240         40,939
    Net interest income                 73,875       72,316         73,799
    Provision for loan and lease
     losses                             20,420        3,413          2,352
    Non-interest income
     Service charges                     8,448        8,148          7,606
     Brokerage fees                      2,498        2,679          2,506
     Mortgage banking revenue            1,366        2,607          1,445
     Loss on sale of securities            (13)          (2)            --
     Other income                        6,244        2,498          1,919
                                  ----------------------------------------
    Total non-interest income           18,543       15,930         13,476
    Non-interest expense
     Salaries and benefits              28,005       28,898         26,387
     Occupancy and equipment             9,166        8,782          8,540
     Intangible amortization             1,767        1,490          1,195
     Other                              13,692       12,392         12,113
     Merger-related expenses               263        2,383          2,451
                                  ----------------------------------------
    Total non-interest expense          52,893       53,945         50,686
    Income before provision for
     income taxes                       19,105       30,888         34,237
    Provision for income tax             5,928       10,975         11,381
                                  ----------------------------------------
    Net income                     $    13,177  $    19,913    $    22,856
                                  ========================================
    
    Weighted average shares
     outstanding                    60,489,522   60,679,485     57,802,381
    Weighted average diluted
     shares outstanding             61,065,401   61,397,575     58,452,461
    
    Earnings per share - Basic     $      0.22  $      0.33    $      0.40
    Earnings per share - Diluted   $      0.22  $      0.32    $      0.39
    
    
                                                     Sequential Year over
                                                      Quarter      Year
    Dollars in thousands, except per share data      % Change   % Change
                                                     ---------- ----------
    Interest income
     Loans and leases                                       4%         9%
     Interest and dividends on investments:
       Taxable                                              5%        34%
       Exempt from federal income tax                      19%        39%
       Dividends                                            9%        (9)%
     Temporary investments                                 51%       148%
      Total interest income                                 4%        11%
    Interest expense
     Deposits                                               8%        41%
    
     Repurchase agreements and fed funds purchased        (36)%      (75)%
     Junior subordinated debentures                        10%        12%
     Term debt                                              8%        26%
      Total interest expense                                7%        32%
    Net interest income                                     2%         0%
    Provision for loan and lease losses                   498%       768%
    Non-interest income
     Service charges                                        4%        11%
     Brokerage fees                                        (7)%        0%
     Mortgage banking revenue                             (48)%       (5)%
     Loss on sale of securities                              nm         nm
     Other income                                         150%       225%
    Total non-interest income                              16%        38%
    Non-interest expense
     Salaries and benefits                                 (3)%        6%
     Occupancy and equipment                                4%         7%
     Intangible amortization                               19%        48%
     Other                                                 10%        13%
     Merger-related expenses                              (89)%      (89)%
    Total non-interest expense                             (2)%        4%
    Income before provision for income taxes              (38)%      (44)%
    Provision for income tax                              (46)%      (48)%
    Net income                                            (34)%      (42)%
    
    Weighted average shares outstanding                     0%         5%
    Weighted average diluted shares outstanding            (1)%        4%
    
    Earnings per share - Basic                            (33)%      (45)%
    Earnings per share - Diluted                          (31)%      (44)%
    
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                      Consolidated Statements of Income
                                 (Unaudited)
    ----------------------------------------------------------------------
                                              Nine months ended:
                                    --------------------------------------
    Dollars in thousands, except
     per share data                 Sept 30, 2007 Sept 30, 2006 % Change
                                    --------------------------------------
    Interest income
     Loans and leases                $   331,889   $   265,444        25%
     Interest and dividends on
      investments:
       Taxable                            25,376        20,201        26%
       Exempt from federal income
        tax                                4,151         2,740        51%
       Dividends                             249           205        21%
     Temporary investments                 2,439           837       191%
                                    --------------------------------------
       Total interest income             364,104       289,427        26%
    Interest expense
     Deposits                            133,750        81,112        65%
     Repurchase agreements and fed
      funds purchased                      1,757         6,346       (72)%
     Trust preferred securities           12,329        10,359        19%
     Other borrowings                      1,767         2,775       (36)%
                                    --------------------------------------
       Total interest expense            149,603       100,592        49%
    Net interest income                  214,501       188,835        14%
    Provision for loan and lease
     losses                               23,916         2,427       885%
    Non-interest income
     Service charges                      23,648        19,540        21%
     Brokerage fees                        7,594         7,408         3%
     Mortgage banking revenue              5,772         5,792         0%
     Loss on sale of securities              (10)           (1)         nm
     Other income                         11,434         6,745        70%
                                    --------------------------------------
    Total non-interest income             48,438        39,484        23%
    Non-interest expense
     Salaries and benefits                85,172        71,525        19%
     Occupancy and equipment              26,774        22,907        17%
     Intangible amortization               4,400         2,533        74%
     Other                                37,304        31,586        18%
     Merger-related expenses               3,200         4,358       (27)%
                                    --------------------------------------
    Total non-interest expense           156,850       132,909        18%
    Income before income taxes            82,173        92,983       (12)%
    Provision for income tax              28,421        33,069       (14)%
                                    --------------------------------------
    Net income                       $    53,752   $    59,914       (10)%
                                    ======================================
    
    Weighted average shares
     outstanding                      59,790,297    50,377,923        19%
    Weighted average diluted shares
     outstanding                      60,450,412    51,010,413        19%
    
    Earnings per share - Basic       $      0.90   $      1.19       (24)%
    Earnings per share - Diluted     $      0.89   $      1.17       (24)%
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                         Consolidated Balance Sheets
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
    
                                  ----------------------------------------
    Dollars in thousands, except
     per share data               Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    Assets:
     Cash and due from banks       $   148,434  $   182,739   $   151,334
     Temporary investments              46,787       40,904        40,700
     Investment securities:
       Trading                           4,144        3,090           682
       Available for sale              911,883      893,125       689,841
       Held to maturity                  7,116        8,333         9,494
     Loans held for sale                19,964       16,953        18,951
     Loans and leases                6,079,435    5,981,750     5,385,262
     Less: Allowance for loan and
      lease losses                     (88,278)     (68,723)      (60,475)
                                  ----------------------------------------
       Loans and leases, net         5,991,157    5,913,027     5,324,787
     Restricted equity securities       15,297       16,715        15,255
     Premises and equipment, net       107,189      108,656        99,251
     Other real estate owned            10,310           --            31
     Mortgage servicing rights,
      net                                9,474        9,966        10,427
     Goodwill and other
      intangibles                      767,210      767,710       680,722
     Other assets                      186,846      183,340       157,373
                                  ----------------------------------------
    Total assets                   $ 8,225,811  $ 8,144,558   $ 7,198,848
                                  ========================================
    
    Liabilities:
     Deposits                      $ 6,518,217  $ 6,414,425   $ 5,650,338
     Securities sold under
      agreements to repurchase          52,883       59,553        65,471
     Fed funds purchased                20,000       48,000            --
     Term debt                          75,010       75,095        57,072
     Junior subordinated
      debentures, at fair value        131,984       99,808            --
     Junior subordinated
      debentures, at amortized
      cost                             104,947      105,213       203,955
     Other liabilities                  89,580       86,426        80,332
                                  ----------------------------------------
       Total liabilities             6,992,621    6,888,520     6,057,168
    
    Shareholders' equity:
     Common stock                      987,543    1,019,618       929,893
     Retained earnings                 253,487      251,715       220,726
     Accumulated other
      comprehensive loss                (7,840)     (15,295)       (8,939)
                                  ----------------------------------------
       Total shareholders' equity    1,233,190    1,256,038     1,141,680
                                  ----------------------------------------
    Total liabilities and
     shareholders' equity          $ 8,225,811  $ 8,144,558   $ 7,198,848
                                  ========================================
    
    
    Common shares outstanding at
     period end                     59,864,335   61,315,960    58,028,555
    Book value per share           $     20.60  $     20.48   $     19.67
    Tangible book value per share  $      7.78  $      7.96   $      7.94
    Tangible equity                $   465,980  $   488,328   $   460,958
    Tangible equity to tangible
     assets                               6.25%        6.62%         7.07%
    
    
                                                     Sequential Year over
                                                      Quarter      Year
    Dollars in thousands, except per share data      % Change   % Change
                                                     ---------------------
    Assets:
     Cash and due from banks                              (19)%       (2)%
     Temporary investments                                 14%        15%
     Investment securities:
       Trading                                             34%          nm
       Available for sale                                   2%        32%
       Held to maturity                                   (15)%      (25)%
     Loans held for sale                                   18%         5%
     Loans and leases                                       2%        13%
     Less: Allowance for loan and lease losses             28%        46%
       Loans and leases, net                                1%        13%
     Restricted equity securities                          (8)%        0%
     Premises and equipment, net                           (1)%        8%
     Other real estate owned                                 nm         nm
     Mortgage servicing rights, net                        (5)%       (9)%
     Goodwill and other intangibles                         0%        13%
     Other assets                                           2%        19%
    Total assets                                            1%        14%
    
    Liabilities:
     Deposits                                               2%        15%
    
     Securities sold under agreements to repurchase       (11)%      (19)%
     Fed funds purchased                                  (58)%         nm
     Term debt                                              0%        31%
     Junior subordinated debentures, at fair value         32%          nm
     Junior subordinated debentures, at amortized
      cost                                                  0%       (49)%
     Other liabilities                                      4%        12%
       Total liabilities                                    2%        15%
    
    Shareholders' equity:
     Common stock                                          (3)%        6%
     Retained earnings                                      1%        15%
     Accumulated other comprehensive loss                 (49)%      (12)%
       Total shareholders' equity                          (2)%        8%
    Total liabilities and shareholders' equity              1%        14%
    
    
    Common shares outstanding at period end                (2)%        3%
    Book value per share                                    1%         5%
    Tangible book value per share                          (2)%       (2)%
    Tangible equity                                        (5)%        1%
    Tangible equity to tangible assets
    
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                     Loan Portfolio - Total and by Region
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
    Dollars in thousands
    Loans and leases by class:    Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    
    Total Consolidated:
    -----------------------------
     Commercial real estate         $3,071,588   $3,058,774    $2,697,218
     Residential real estate           379,657      371,894       312,639
     Construction                    1,191,757    1,148,726     1,238,369
                                  ----------------------------------------
      Total real estate              4,643,002    4,579,394     4,248,226
     Commercial                      1,365,786    1,323,640     1,085,014
     Leases                             37,095       35,477        19,514
     Installment and other              44,970       54,504        45,119
     Deferred loan fees, net           (11,418)     (11,265)      (12,611)
                                  ----------------------------------------
      Total loans and leases        $6,079,435   $5,981,750    $5,385,262
                                  ========================================
    
    Oregon/Washington region:
    -----------------------------
     Commercial real estate         $1,710,224   $1,672,094    $1,594,723
     Residential real estate           250,751      244,654       202,228
     Construction                      631,087      595,264       515,064
                                  ----------------------------------------
      Total real estate              2,592,062    2,512,012     2,312,015
     Commercial                        799,598      826,760       766,913
     Leases                             37,005       35,333        19,134
     Installment and other              31,216       36,770        25,907
     Deferred loan fees, net            (7,236)      (7,012)       (7,966)
                                  ----------------------------------------
      Total loans and leases        $3,452,645   $3,403,863    $3,116,003
                                  ========================================
      % of consolidated total               57%          57%           58%
    
    California region:
    -----------------------------
     Commercial real estate         $1,361,364   $1,386,680    $1,102,495
     Residential real estate           128,906      127,240       110,411
     Construction                      560,670      553,462       723,305
                                  ----------------------------------------
      Total real estate              2,050,940    2,067,382     1,936,211
     Commercial                        566,188      496,880       318,101
     Leases                                 90          144           380
     Installment and other              13,754       17,734        19,212
     Deferred loan fees, net            (4,182)      (4,253)       (4,645)
                                  ----------------------------------------
      Total loans and leases        $2,626,790   $2,577,887    $2,269,259
                                  ========================================
      % of consolidated total               43%          43%           42%
    
                                                     Sequential Year over
    Dollars in thousands                              Quarter      Year
    Loans and leases by class:                       % Change   % Change
                                                     ---------------------
    
    Total Consolidated:
    ------------------------------------------------
     Commercial real estate                               0.4%      13.9%
     Residential real estate                              2.1%      21.4%
     Construction                                         3.7%      (3.8)%
      Total real estate                                   1.4%       9.3%
     Commercial                                           3.2%      25.9%
     Leases                                               4.6%      90.1%
     Installment and other                              (17.5)%     (0.3)%
     Deferred loan fees, net                              1.4%      (9.5)%
      Total loans and leases                              1.6%      12.9%
    
    Oregon/Washington region:
    ------------------------------------------------
     Commercial real estate                               2.3%       7.2%
     Residential real estate                              2.5%      24.0%
     Construction                                         6.0%      22.5%
      Total real estate                                   3.2%      12.1%
     Commercial                                          (3.3)%      4.3%
     Leases                                               4.7%      93.4%
     Installment and other                              (15.1)%     20.5%
     Deferred loan fees, net                              3.2%      (9.2)%
      Total loans and leases                              1.4%      10.8%
      % of consolidated total
    
    California region:
    ------------------------------------------------
     Commercial real estate                              (1.8)%     23.5%
     Residential real estate                              1.3%      16.8%
     Construction                                         1.3%     (22.5)%
      Total real estate                                  (0.8)%      5.9%
     Commercial                                          13.9%      78.0%
     Leases                                             (37.5)%    (76.3)%
     Installment and other                              (22.4)%    (28.4)%
     Deferred loan fees, net                             (1.7)%    (10.0)%
      Total loans and leases                              1.9%      15.8%
      % of consolidated total
    
                         Umpqua Holdings Corporation
                                Credit Quality
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
                                 Quarter Ended Quarter Ended Quarter Ended
    Dollars in thousands         Sept 30, 2007 Jun 30, 2007  Sept 30, 2006
                                 -----------------------------------------
    Allowance for credit losses
    Balance beginning of period       $68,723       $60,263       $58,516
      Provision for loan and
       lease losses                    20,420         3,413         2,352
      Acquisitions                         --         5,078           184
    
    Charge-offs                        (1,414)         (870)       (1,027)
    Less: Recoveries                      549           839           450
                                 -----------------------------------------
      Net charge-offs                    (865)          (31)         (577)
    
    Total Allowance for loan and
     lease losses                      88,278        68,723        60,475
    
    Reserve for unfunded
     commitments                        1,246         1,273         2,021
                                 -----------------------------------------
     Total Allowance for credit
      losses                          $89,524       $69,996       $62,496
                                 =========================================
    
    Net charge-offs to average
     loans and leases
     (annualized)                        0.06%         0.00%         0.04%
    Recoveries to gross charge-
     offs                                  39%           96%           44%
    Allowance for credit losses
     to loans and leases                 1.47%         1.17%         1.16%
    Allowance for credit losses
     to non-performing loans              130%          146%          591%
    
    Non-performing loans to
     total loans and leases              1.13%         0.80%         0.20%
    Non-performing assets to
     total assets                        0.96%         0.59%         0.15%
    
    Non-performing assets:
     Loans on non-accrual status      $67,419       $46,642       $10,158
     Loans past due 90+ days &
      accruing                          1,488         1,313           416
                                 -----------------------------------------
    Total non-performing loans        $68,907       $47,955       $10,574
     Other real estate owned           10,310            --            31
                                 -----------------------------------------
    Total non-performing assets       $79,217       $47,955       $10,605
                                 =========================================
    
                                                      Sequential Year over
                                                       Quarter     Year
    Dollars in thousands                              % Change   % Change
                                                      --------------------
    Allowance for credit losses
    Balance beginning of period
      Provision for loan and lease losses
      Acquisitions
    
    Charge-offs                                             63%        38%
    Less: Recoveries                                       (35)%       22%
      Net charge-offs                                     2690%        50%
    
    Total Allowance for loan and lease losses               28%        46%
    
    Reserve for unfunded commitments
     Total Allowance for credit losses                      28%        43%
    
    Net charge-offs to average loans and leases
     (annualized)
    Recoveries to gross charge-offs
    
    Allowance for credit losses to loans and leases
    Allowance for credit losses to non-performing
     loans
    
    Non-performing loans to total loans and leases
    Non-performing assets to total assets
    
    Non-performing assets:
     Loans on non-accrual status                            45%       564%
     Loans past due 90+ days & accruing                     13%       258%
    Total non-performing loans                              44%       552%
     Other real estate owned                                  nm        nm
    Total non-performing assets                             65%       647%
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                          Credit Quality (continued)
                                 (Unaudited)
    ----------------------------------------------------------------------
                                              Nine Months ended:
    Dollars in thousands            Sept 30, 2007 Sept 30, 2006 % Change
                                    --------------------------------------
    Allowance for credit losses
    Balance beginning of period          $60,090       $43,885
      Provision for loan and lease
       losses                             23,916         2,427
      Acquisitions                         5,078        14,227
    
    Charge-offs                           (2,997)       (2,587)       16%
    Less: Recoveries                       2,191         2,523       (13)%
                                    ---------------------------
      Net charge-offs                       (806)          (64)     1159%
    
    Total Allowance for loan and
     lease losses                         88,278        60,475
    
    Reserve for unfunded
     commitments                           1,246         2,021
                                    ---------------------------
      Total Allowance for credit
       losses                            $89,524       $62,496
                                    ===========================
    
    Net charge-offs to average
     loans and leases (annualized)          0.02%         0.00%
    Recoveries to gross charge-offs           73%           98%
    
                         Umpqua Holdings Corporation
                               Deposits by Type
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
                            Sept 30, 2007   Jun 30, 2007    Sept 30, 2006
                           --------------- --------------- ---------------
    Dollars in thousands     Amount   Mix    Amount   Mix    Amount   Mix
                           ---------- ---- ---------- ---- ---------- ----
    Demand, non interest-
     bearing               $1,294,334  20% $1,358,235  21% $1,246,499  22%
    Demand, interest-
     bearing                2,950,605  45%  2,801,455  44%  2,420,474  43%
    Savings                   358,825   6%    373,438   6%    380,587   7%
    Time                    1,914,453  29%  1,881,297  29%  1,602,778  28%
                           -----------------------------------------------
      Total Deposits       $6,518,217 100% $6,414,425 100% $5,650,338 100%
                           ===============================================
    
                                                     Sequential Year over
                                                      Quarter      Year
    Dollars in thousands                             % Change   % Change
                                                     ---------- ----------
    Demand, non interest-bearing                         (4.7)%      3.8%
    Demand, interest-bearing                              5.3%      21.9%
    Savings                                              (3.9)%     (5.7)%
    Time                                                  1.8%      19.4%
      Total Deposits                                      1.6%      15.4%
    
                         Umpqua Holdings Corporation
                       Deposits/Core Deposits by Region
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
                        Sept 30, 2007     Jun 30, 2007    Sept 30, 2006
                       ---------------- ---------------- -----------------
    Dollars in
     thousands           Amount    Mix    Amount    Mix    Amount    Mix
                       ---------------- ---------------- -----------------
    
    Deposits by
     region:
    ------------------
    Oregon/Washington  $3,700,826   57% $3,604,939   56% $3,426,675   61%
    California          2,817,391   43%  2,809,486   44%  2,223,663   39%
                       ---------------------------------------------------
     Total Deposits    $6,518,217  100% $6,414,425  100% $5,650,338  100%
                       ===================================================
    
    Core deposits by
     region (1):
    ------------------
    Oregon/Washington  $3,183,550   58% $3,095,630   58% $3,006,830   62%
    California          2,270,478   42%  2,277,890   42%  1,864,027   38%
                       ---------------------------------------------------
     Total Core
      deposits         $5,454,028  100% $5,373,520  100% $4,870,857  100%
                       ===================================================
     % of total
      deposits                 84%              84%              86%
    
    
                                                      Sequential Year over
                                                       Quarter     Year
    Dollars in thousands                              % Change   % Change
                                                     ---------------------
    
    Deposits by region:
    ------------------------------------------------
    Oregon/Washington                                      2.7%       8.0%
    California                                             0.3%      26.7%
     Total Deposits                                        1.6%      15.4%
    
    Core deposits by region (1):
    ------------------------------------------------
    Oregon/Washington                                      2.8%       5.9%
    California                                            (0.3)%     21.8%
     Total Core deposits                                   1.5%      12.0%
     % of total deposits
    
    
    (1) Core deposits are defined as total deposits less time deposits
     greater than $100,000.
    
                         Umpqua Holdings Corporation
                           Organic Growth by Region
                                 (Unaudited)
    ----------------------------------------------------------------------
    
                             Oregon/Washington           California
    ----------------------------------------------------------------------
    Dollars in thousands     Loans     Deposits      Loans      Deposits
    ----------------------------------------------------------------------
    Balance, 9/30/07      $3,452,645  $3,700,826  $2,626,790   $2,817,391
    
    Less: 12/31/06
     balance               3,168,596   3,500,965   2,193,266    2,339,329
                          ------------------------------------------------
      Total growth year
       to date               284,049     199,861     433,524      478,062
    
    Less: acquisition         16,166       3,559     426,784      459,065
                          ------------------------------------------------
      Organic Growth      $  267,883  $  196,302  $    6,740   $   18,997
                          ================================================
    
    Year to date organic
     growth %                    8.5%        5.6%        0.3%         0.8%
    Year to date
     acquisition growth %        0.5%        0.1%       19.5%        19.6%
    Total year to date
     growth %                    9.0%        5.7%       19.8%        20.4%
    
    Annualized organic
     growth rate - 2007         11.3%        7.5%        0.4%         1.1%
    
    Organic growth rate -
     2006                       18.1%       16.3%       (5.4)%        3.7%
    Organic growth rate -
     2005                       13.3%       12.9%       12.7%        12.7%
    Organic growth rate -
     2004                       17.7%        8.0%        4.7%         3.2%
    
                                                            Total
    ----------------------------------------------------------------------
    Dollars in thousands                              Loans     Deposits
    ----------------------------------------------------------------------
    Balance, 9/30/07                               $6,079,435  $6,518,217
    
    Less: 12/31/06 balance                          5,361,862   5,840,294
                                                  ------------------------
      Total growth year to date                       717,573     677,923
    
    Less: acquisition                                 442,950     462,624
                                                  ------------------------
      Organic Growth                               $  274,623  $  215,299
                                                  ========================
    
    Year to date organic growth %                         5.1%        3.7%
    Year to date acquisition growth %                     8.3%        7.9%
    Total year to date growth %                          13.4%       11.6%
    
    Annualized organic growth rate - 2007                 6.8%        4.9%
    
    Organic growth rate - 2006                           10.7%       12.6%
    Organic growth rate - 2005                           13.1%       12.8%
    Organic growth rate - 2004                           20.2%        9.6%
    
                         Umpqua Holdings Corporation
                               Selected Ratios
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
                                               Quarter Ended:
                                  ----------------------------------------
                                  Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    Net Interest Spread:
     Yield on loans and leases            7.62%        7.74%         7.88%
     Yield on taxable investments         4.83%        4.72%         4.53%
     Yield on tax-exempt
      investments (1)                     5.62%        5.06%         6.08%
     Yield on temporary
      investments                         5.18%        5.13%         3.99%
      Total yield on earning
       assets (1)                         7.24%        7.33%         7.49%
    
     Cost of interest bearing
      deposits                            3.69%        3.66%         3.19%
     Cost of securities sold
      under agreements to
      repurchase and fed funds
      purchased                           3.28%        3.74%         4.45%
     Cost of term debt                    4.62%        4.63%         4.81%
     Cost of junior subordinated
      debentures                          7.59%        7.62%         7.72%
      Total cost of interest
       bearing liabilities                3.86%        3.84%         3.45%
    
    Net interest spread (1)               3.38%        3.49%         4.04%
      Net interest margin -
       Consolidated (1)                   4.20%        4.34%         4.83%
    
      Net interest margin - Bank
       (1)                                4.45%        4.57%         5.08%
    
    As reported:
    -----------------------------
    Return on average assets              0.64%        1.02%         1.27%
    Return on average tangible
     assets                               0.70%        1.13%         1.41%
    Return on average equity              4.20%        6.44%         8.06%
    Return on average tangible
     equity                              10.92%       16.11%        20.50%
    Efficiency ratio -
     Consolidated                        56.83%       60.76%        57.75%
    Efficiency ratio - Bank              55.57%       56.98%        53.95%
    
    Excluding merger-related
     expense (2):
    -----------------------------
    Return on average assets              0.65%        1.09%         1.35%
    Return on average tangible
     assets                               0.71%        1.21%         1.50%
    Return on average equity              4.25%        6.91%         8.58%
    Return on average tangible
     equity                              11.05%       17.26%        21.82%
    Efficiency ratio -
     Consolidated                        56.54%       58.08%        54.95%
    Efficiency ratio - Bank              55.30%       54.32%        51.20%
    
    
                                                      Sequential Year over
                                                       Quarter     Year
                                                        Change    Change
                                                      --------------------
    Net Interest Spread:
     Yield on loans and leases                            (0.12)    (0.26)
     Yield on taxable investments                          0.11      0.30
     Yield on tax-exempt investments (1)                   0.56     (0.46)
     Yield on temporary investments                        0.05      1.19
      Total yield on earning assets (1)                   (0.09)    (0.25)
    
     Cost of interest bearing deposits                     0.03      0.50
     Cost of securities sold under agreements to
      repurchase and fed funds purchased                  (0.46)    (1.17)
     Cost of term debt                                    (0.01)    (0.19)
     Cost of junior subordinated debentures               (0.03)    (0.13)
      Total cost of interest bearing liabilities           0.02      0.41
    
    Net interest spread (1)                               (0.11)    (0.66)
      Net interest margin - Consolidated (1)              (0.14)    (0.63)
    
      Net interest margin - Bank (1)                      (0.12)    (0.63)
    
    As reported:
    -------------------------------------------------
    Return on average assets                              (0.38)    (0.63)
    Return on average tangible assets                     (0.43)    (0.71)
    Return on average equity                              (2.24)    (3.86)
    Return on average tangible equity                     (5.19)    (9.58)
    Efficiency ratio - Consolidated                       (3.93)    (0.92)
    Efficiency ratio - Bank                               (1.41)     1.62
    
    Excluding merger-related expense (2):
    -------------------------------------------------
    Return on average assets                              (0.44)    (0.70)
    Return on average tangible assets                     (0.50)    (0.79)
    Return on average equity                              (2.66)    (4.33)
    Return on average tangible equity                     (6.21)   (10.77)
    Efficiency ratio - Consolidated                       (1.54)     1.59
    Efficiency ratio - Bank                                0.98      4.10
    
    
    (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)
    ----------------------------------------------------------------------
                                            Nine Months Ended:
                                        ---------------------------
                                        Sept 30, 2007 Sept 30, 2006 Change
                                        ----------------------------------
    Net Interest Spread:
     Yield on loans and leases                  7.72%         7.65%  0.07
     Yield on taxable investments               4.72%         4.50%  0.22
     Yield on tax-exempt investments
      (1)                                       5.49%         5.77% (0.28)
     Yield on temporary investments             5.20%         4.09%  1.11
      Total yield on earning assets (1)         7.33%         7.25%  0.08
    
     Cost of interest bearing deposits          3.66%         2.94%  0.72
     Cost of securities sold under
      agreements to repurchase and fed
      funds purchased                           3.40%         4.23% (0.83)
     Cost of term debt                          4.58%         4.97% (0.39)
     Cost of junior subordinated
      debentures                                7.60%         7.59%  0.01
      Total cost of interest bearing
       liabilities                              3.83%         3.25%  0.58
    
    Net interest spread (1)                     3.50%         4.00% (0.50)
      Net interest margin -
       Consolidated (1)                         4.33%         4.74% (0.41)
    
      Net interest margin - Bank (1)            4.57%         4.99% (0.42)
    
    As reported:
    -----------------------------------
    Return on average assets                    0.93%         1.29% (0.36)
    Return on average tangible assets           1.02%         1.41% (0.39)
    Return on average equity                    5.91%         8.80% (2.89)
    Return on average tangible equity          14.79%        20.87% (6.08)
    Efficiency ratio - Consolidated            59.27%        57.91%  1.36
    Efficiency ratio - Bank                    56.35%        53.94%  2.41
    
    Excluding merger-related expense
     (2):
    -----------------------------------
    Return on average assets                    0.96%         1.35% (0.39)
    Return on average tangible assets           1.06%         1.47% (0.41)
    Return on average equity                    6.12%         9.18% (3.06)
    Return on average tangible equity          15.32%        21.78% (6.46)
    Efficiency ratio - Consolidated            58.06%        56.01%  2.05
    Efficiency ratio - Bank                    55.15%        52.08%  3.07
    
    (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:
                                  ----------------------------------------
    Dollars in thousands          Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    
     Temporary investments           $   71,165   $   48,142    $   37,225
     Investment securities,
      taxable                           765,346      746,721       609,131
     Investment securities, tax-
      exempt                            159,998      148,071       107,851
     Loans held for sale                 10,732       15,468        19,258
     Loans and leases                 6,032,388    5,777,447     5,333,728
                                  ----------------------------------------
       Total earning assets           7,039,629    6,735,849     6,107,193
     Goodwill & other intangibles       766,591      743,801       681,988
     Total assets                     8,190,032    7,840,422     7,135,488
    
     Non interest bearing demand
      deposits                        1,319,280    1,271,311     1,235,838
     Interest bearing deposits        5,171,123    4,881,499     4,248,328
                                  ----------------------------------------
     Total deposits                   6,490,403    6,152,810     5,484,166
     Interest bearing liabilities     5,542,587    5,252,179     4,701,582
    
     Total shareholders' equity       1,245,390    1,239,691     1,124,398
     Tangible equity                    478,799      495,890       442,410
    
                                                     Sequential Year over
                                                      Quarter      Year
    Dollars in thousands                             % Change   % Change
                                                    ----------------------
    
     Temporary investments                                 48%        91%
     Investment securities, taxable                         2%        26%
     Investment securities, tax-exempt                      8%        48%
     Loans held for sale                                  (31)%      (44)%
     Loans and leases                                       4%        13%
       Total earning assets                                 5%        15%
     Goodwill & other intangibles                           3%        12%
     Total assets                                           4%        15%
    
     Non interest bearing demand deposits                   4%         7%
     Interest bearing deposits                              6%        22%
     Total deposits                                         5%        18%
     Interest bearing liabilities                           6%        18%
    
     Total shareholders' equity                             0%        11%
     Tangible equity                                       (3)%        8%
    
                         Umpqua Holdings Corporation
                               Average Balances
                                 (Unaudited)
    ----------------------------------------------------------------------
                                        Nine Months Ended:
                                    ---------------------------
    Dollars in thousands            Sept 30, 2007 Sept 30, 2006 % Change
                                    --------------------------------------
    
     Temporary investments             $   62,680    $   27,360      129%
     Investment securities, taxable       723,978       604,448       20%
     Investment securities, tax-
      exempt                              142,444        91,027       56%
     Loans held for sale                   13,719        14,512       (5)%
     Loans and leases                   5,733,639     4,623,013       24%
                                    ---------------------------
       Total earning assets             6,676,460     5,360,360       25%
     Goodwill & other intangibles         729,979       526,459       39%
     Total assets                       7,765,832     6,198,868       25%
    
     Non interest bearing demand
      deposits                          1,250,188     1,085,161       15%
     Interest bearing deposits          4,884,775     3,683,415       33%
                                    ---------------------------
     Total deposits                     6,134,963     4,768,576       29%
     Interest bearing liabilities       5,222,253     4,141,511       26%
    
     Total shareholders' equity         1,215,730       910,311       34%
     Tangible equity                      485,751       383,852       27%
    
                         Umpqua Holdings Corporation
                          Mortgage Banking Activity
                                 (unaudited)
    ----------------------------------------------------------------------
    
    
                                               Quarter Ended:
                                  ----------------------------------------
    Dollars in thousands          Sept 30, 2007 Jun 30, 2007 Sept 30, 2006
                                  ----------------------------------------
    
    Mortgage Servicing Rights
     (MSR):
    -----------------------------
    Mortgage loans serviced for
     others                           $877,648     $897,696      $978,723
    
    MSR Asset                         $  9,474     $  9,966      $ 13,668
    Less: Valuation reserve (1)             --           --        (3,241)
                                  ----------------------------------------
      MSR Asset net                   $  9,474     $  9,966      $ 10,427
                                  ========================================
    
    MSR net as % of serviced
     portfolio                            1.08%        1.11%         1.07%
    
    
    Mortgage Banking Revenue:
    -----------------------------
    Origination and sale              $  1,468     $  1,700      $  2,141
    Servicing                              546          670           652
    Amortization of MSR (1)                 --           --          (292)
    MSR valuation reserve change            --           --        (1,056)
    Change in fair value of MSR           (648)         237            --
                                  ----------------------------------------
      Total Mortgage Banking
       Revenue                        $  1,366     $  2,607      $  1,445
                                  ========================================
    
                                                     Sequential Year over
                                                      Quarter      Year
    Dollars in thousands                             % Change   % Change
                                                     ---------------------
    
    Mortgage Servicing Rights (MSR):
    ------------------------------------------------
    Mortgage loans serviced for others                     (2)%      (10)%
    
    MSR Asset                                              (5)%      (31)%
    Less: Valuation reserve (1)                            --       (100)%
      MSR Asset net                                        (5)%       (9)%
    
    MSR net as % of serviced portfolio
    
    
    Mortgage Banking Revenue:
    ------------------------------------------------
    Origination and sale                                  (14)%      (31)%
    Servicing                                             (19)%      (16)%
    Amortization of MSR (1)                                --       (100)%
    MSR valuation reserve change                           --       (100)%
    Change in fair value of MSR                          (373)%      100%
      Total Mortgage Banking Revenue                      (48)%       (5)%
    
                                       Nine Months Ended:
                                  -----------------------------
    Dollars in thousands           Sept 30, 2007  Sept 30, 2006 % Change
                                  ----------------------------------------
    
    Mortgage Banking Revenue:
    -----------------------------
    Origination and sale                  $4,896        $5,601       (13)%
    Servicing                              1,853         1,992        (7)%
    Amortization of MSR (1)                   --          (934)     (100)%
    MSR valuation reserve change              --          (867)     (100)%
    Change in fair value of MSR             (977)           --       100%
                                  -----------------------------
      Total Mortgage Banking
       Revenue                            $5,772        $5,792         0%
                                  =============================
    
    
    (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 Ray Davis, President/CEO, 503-727-4101 raydavis@umpquabank.com or Ron Farnsworth, SVP/Finance, 503-727-4108 ronfarnsworth@umpquabank.com