• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports First Quarter 2008 Results
    Net Income of $24.7 Million or $0.41 Per Diluted Share 18% Reduction in Non-Performing Loans, 10% Reduction in Non-Performing AssetsĀ 
    Company Release - 04/17/2008 08:00

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

    Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced first quarter 2008 net income of $24.7 million, or $0.41 per diluted share, compared to $20.7 million, or $0.35 per diluted share, for the first quarter of 2007, an increase of 17%.

    Significant financial statement items for the first quarter of 2008 include:

            --  Non-performing assets ended the quarter at 1.06% of total
                assets, down from 1.18% as of December 31, 2007.
                Non-performing loans ended the quarter at 1.24% of total
                loans, down from 1.50% as of December 31, 2007;
    
            --  Mandatory partial redemption of a portion of our Visa Inc.
                shares for $12.6 million, from their recent initial public
                offering, and reversal of fourth quarter 2007 Visa Inc.
                related litigation reserve of $5.2 million. These two
                combined increased earnings by $17.8 million, or $0.18 per
                diluted share;
    
            --  Provision for loan losses of $15.1 million, representing a
                reduction of $0.15 per diluted share;
    
            --  Mortgage banking revenue includes a $2.4 million loss on
                the mortgage servicing right (MSR) hedge, resulting from
                significant market volatility in the first quarter, and a
                $1.6 million impairment in the MSR asset based on
                declining mortgage rates during the last half of March,
                which resulted in a reduction of $0.04 per diluted share;
    
            --  Gain on sale of investment securities of $3.9 million, or
                $0.04 per diluted share;
    
            --  Gain on fair value of junior subordinated debentures of
                $1.6 million based on widening spreads for new issuance,
                increased earnings per diluted share by $0.02;
    
            --  First quarter 2008 net charge-offs were $13.5 million;
    
            --  Cost of interest bearing deposits decreased 50 basis
                points during the first quarter; and
    
            --  Net interest margin, on a tax equivalent basis, declined 2
                basis points during the first quarter to 3.98%. The
                reduction was attributable to interest reversals on
                non-accrual loans of $0.3 million.
    

    "Although the economic environment remains challenging for the financial services industry, Umpqua's management team recognized the situation earlier than many and has worked aggressively for the past three quarters to resolve credit issues quickly," said Ray Davis, president and CEO of Umpqua Holdings Corporation. "This quarter's results are a move in the right direction and demonstrate the good work of a great team of professionals."

    Operating earnings exclude merger related expense, net of tax, although the Company had no merger related expense in the first quarter of 2008. 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) 3/31/08 12/31/07 3/31/07 % Change   % Change
                             ---------------------------------------------
    Net Income               $24,671   $9,516 $20,662       159%       19%
    Add Back: Merger related
     expenses, net of tax         --       71     332     (100)%    (100)%
                             ------------------------
         Operating Earnings  $24,671   $9,587 $20,994       157%       18%
                             ========================
    
    Earnings per diluted
     share:
    ------------------------
         Net Income            $0.41    $0.16   $0.35       156%       17%
         Operating Earnings    $0.41    $0.16   $0.36       156%       14%
    

    Credit quality

    Non-performing assets were $88.3 million, or 1.06% of total assets, as of March 31, 2008, compared to $98.0 million, or 1.18% of total assets as of December 31, 2007. Of this amount, $3.3 million represented loans past due greater than 90 days and still accruing interest, $71.7 million of non-accrual loans, and $13.3 million of other real estate owned. This represents a reduction of 18% and 10% in non-performing loans and non-performing assets, respectively, from December 31, 2007.

    Within other real estate owned, there were $12.1 million of additions during the first quarter, and $5.7 million of sales, resulting in the ending balance of $13.3 million at March 31, 2008.

    Within the allowance for credit losses, the Company has identified $13.3 million of reserves related to non-accrual loans, which are specifically measured for impairment. Management views this reserve as adequate to absorb future losses that may arise from resolution of these loans. The provision for loan losses for the first quarter of 2008 was $15.1 million. The unallocated portion of the allowance for credit losses remained unchanged during the first quarter at $4.1 million, or 4.7% of the total allowance.

    For the first quarter of 2008, the Company had net charge-offs of $13.5 million, compared to $21.2 million for the fourth quarter of 2007, a reduction of 36%. The allowance for credit losses was 1.45% of total loans and leases at March 31, 2008, compared to 1.42% of total loans and leases at December 31, 2007.

    Total construction loans at March 31, 2008 were $1.1 billion, down 6% from December 31, 2007. Within this total, the residential development loan segment is $582 million. This segment has decreased $92 million, or 14%, from December 31, 2007, and decreased $182 million, or 24%, from September 30, 2007. Oregon/Washington residential development loans total $348 million, a decrease of 11% from the fourth quarter. California residential development loans total $234 million, a decrease of 17% from the fourth quarter. The remaining $530 million in construction loans are commercial construction projects. These commercial construction loans are uniquely different than the residential development loans and are performing with no notable issues.

    Net interest margin

    The Company reported a tax equivalent net interest margin of 3.98% for the first quarter of 2008, compared to 4.00% for the fourth quarter of 2007, and 4.47% for the first quarter of 2007. The decrease in net interest margin over the last year resulted from volatility in short-term market interest rates and the competitive climate, characterized by declining earning asset yields. The $0.3 million interest reversal on non-accrual loans noted above resulted in a 2 basis point decline in the tax equivalent net interest margin during the quarter.

    Mortgage banking revenue and investment gains

    In the fourth quarter of 2007, the Company began hedging the value of its mortgage servicing right (MSR) asset. Starting in late February 2008 and continuing into March 2008, the bond markets experienced extraordinary volatility based on the current economic climate. This resulted in spread widening and price declines on the MSR hedge that was not offset by corresponding gains in the related MSR asset. The MSR hedge position was reduced in late February 2008. This volatility resulted in a $2.4 million charge recognized in the first quarter of 2008 for the MSR hedge, a component of mortgage banking revenue. By mid-March 2008, the Company unwound the MSR hedge completely given the continued volatility. Mortgage interest rates began to decline in the second half of March 2008, resulting in the company recognizing $1.6 million of MSR valuation impairment for the quarter.

    Mortgage origination and sale revenue increased 21% on a sequential quarter basis, to $1.85 million, based on increased refinance activity. Production revenue increased 7% as compared to the first quarter of 2007, based on expanded operations and an overall lower rate environment.

    Also in the first quarter of 2008, the Company sold a portion of its investment portfolio recognizing a gain of $3.9 million. The sale was part of a repositioning of the investment portfolio to reduce the weighted average life in response to the current economic outlook.

    Balance sheet

    Total consolidated assets as of March 31, 2008 were $8.4 billion, compared to $7.3 billion a year ago. Total gross loans and leases, and deposits, were $6.0 billion and $6.5 billion, respectively, as of March 31, 2008, compared to $5.4 billion and $5.8 billion, respectively, a year ago.

    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 $143.2 million. This acquisition led to an increase in assets, loans and deposits of $728 million, $443 million and $463 million, respectively, from a year ago.

    As of March 31, 2008, total shareholders' equity was $1.3 billion. Book value per share was $20.93 and tangible book value per share was $8.22 as of March 31, 2008, up from $20.67 and $7.92 per share, respectively, at December 31, 2007. There were no repurchases of common stock during the first quarter of 2008. The total remaining available common shares authorized for repurchase is approximately 1.54 million as of March 31, 2008.

    VISA related activity

    In March 2008, Visa Inc. (Visa) completed its initial public offering. Umpqua Bank and certain other Visa member banks are shareholders in Visa. Following the initial public offering, the Company received $12.6 million in proceeds from the offering, as a mandatory partial redemption of 295,377 shares, reducing the Company's holdings from 764,036 shares to 468,659 shares of Class B common stock. Using proceeds from this offering, Visa established a $3.0 billion escrow account to cover the resolution of pending litigation and related claims. The partial redemption proceeds are reflected in other non-interest income in the first quarter of 2008.

    The remaining unredeemed shares of Visa Class B common stock are restricted and may not be transferred until the later of (1) three years from the date of the initial public offering or (2) the period of time necessary to resolve the covered litigation. A conversion ratio of 0.71429 was established for the conversion rate of Class B shares into Class A shares. If the funds in the escrow account are insufficient to settle all the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation, and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus. As of March 31, 2008, the value of the Class A shares was $62.36 per share. The value of unredeemed Class A equivalent shares owned by the Company was $20.9 million as of March 31, 2008, and has not been reflected in the accompanying financial statements.

    In connection with Visa's establishment of the litigation escrow account, the Company reversed a $5.2 million reserve in the first quarter of 2008, reflected as a reduction of other non-interest expense. This reserve was created in the fourth quarter of 2007, pending completion of the Visa Inc. initial public offering as a charge to other non-interest expense.

    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 the prospect of improved performance and the adequacy of the allowance for loan losses and our specific reserves. Specific risks that could cause results to differ from the forward-looking statements are set forth in our filings with the SEC and include, without limitation, further deterioration in credit quality and our ability to resolve non-accrual loans in a satisfactory manner.

    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 147 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, April 17, 2008, at 10:00 a.m. PT (1:00 p.m. ET) during which the Company will discuss first quarter 2008 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 "40669748." 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                 Mar 31, 2008 Dec 31, 2007 Mar 31, 2007
                                    --------------------------------------
    Interest income
      Loans and leases                  $104,152     $112,050     $103,981
      Interest and dividends on
       investments:
         Taxable                           9,329        9,515        7,519
         Exempt from federal income
          tax                              1,679        1,671        1,228
         Dividends                            78           76           65
      Temporary investments                  203          976          894
                                    --------------------------------------
        Total interest income            115,441      124,288      113,687
    Interest expense
      Deposits                            39,625       47,090       41,031
      Repurchase agreements and fed
       funds purchased                       749          378          403
      Junior subordinated
       debentures                          3,922        4,492        3,863
      Term debt                            1,125          875           80
                                    --------------------------------------
        Total interest expense            45,421       52,835       45,377
    Net interest income                   70,020       71,453       68,310
    Provision for loan and lease
     losses                               15,132       17,814           83
    Non-interest income
      Service charges                      8,377        8,478        7,052
      Brokerage fees                       2,175        2,444        2,417
      Mortgage banking revenue           (1,870)        2,019        1,799
      Gain (loss) on sale of
       securities                          3,901          (3)            5
      Other income                        16,400        3,449        2,692
                                    --------------------------------------
    Total non-interest income             28,983       16,387       13,965
    Non-interest expense
      Salaries and benefits               28,244       27,692       28,269
      Occupancy and equipment              9,116        9,011        8,826
      Intangible amortization              1,491        1,694        1,143
      Other                                8,025       18,753       11,220
      Merger related expenses                 --          118          554
                                    --------------------------------------
    Total non-interest expense            46,876       57,268       50,012
    Income before provision for
     income taxes                         36,995       12,758       32,180
    Provision for income tax              12,324        3,242       11,518
                                    --------------------------------------
    Net income                           $24,671       $9,516      $20,662
                                    ======================================
    
    Weighted average shares
     outstanding                      60,028,839   59,939,649   58,176,465
    Weighted average diluted shares
     outstanding                      60,377,224   60,343,710   58,830,444
    
    Earnings per share - Basic             $0.41        $0.16        $0.36
    Earnings per share - Diluted           $0.41        $0.16        $0.35
    
    
                                          --------------------------------
                                             Sequential       Year over
                                               Quarter          Year
    Dollars in thousands, except per share
     data                                     % Change        % Change
                                          --------------------------------
    Interest income
      Loans and leases                                (7)%              0%
      Interest and dividends on
       investments:
         Taxable                                      (2)%             24%
         Exempt from federal income tax                 0%             37%
         Dividends                                      3%             20%
      Temporary investments                          (79)%           (77)%
        Total interest income                         (7)%              2%
    Interest expense
      Deposits                                       (16)%            (3)%
      Repurchase agreements and fed funds
       purchased                                       98%             86%
      Junior subordinated debentures                 (13)%              2%
      Term debt                                        29%           1306%
        Total interest expense                       (14)%              0%
    Net interest income                               (2)%              3%
    Provision for loan and lease losses              (15)%              nm
    Non-interest income
      Service charges                                 (1)%             19%
      Brokerage fees                                 (11)%           (10)%
      Mortgage banking revenue                      (193)%          (204)%
      Gain (loss) on sale of securities                 nm              nm
      Other income                                    376%            509%
    Total non-interest income                          77%            108%
    Non-interest expense
      Salaries and benefits                             2%              0%
      Occupancy and equipment                           1%              3%
      Intangible amortization                        (12)%             30%
      Other                                          (57)%           (28)%
      Merger related expenses                       (100)%          (100)%
    Total non-interest expense                       (18)%            (6)%
    Income before provision for income
     taxes                                            190%             15%
    Provision for income tax                          280%              7%
    Net income                                        159%             19%
    
    Weighted average shares outstanding                 0%              3%
    Weighted average diluted shares
     outstanding                                        0%              3%
    
    Earnings per share - Basic                        156%             14%
    Earnings per share - Diluted                      156%             17%
    
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                         Consolidated Balance Sheets
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    
                                    --------------------------------------
    Dollars in thousands, except
     per share data                 Mar 31, 2008 Dec 31, 2007 Mar 31, 2007
                                    --------------------------------------
    Assets:
      Cash and due from banks           $173,472     $188,782     $140,986
      Temporary investments               19,707        3,288       87,877
      Investment securities:
         Trading                           2,379        2,837        3,010
         Available for sale            1,068,914    1,050,756      786,301
         Held to maturity                  5,266        6,005        8,698
      Loans held for sale                 39,623       13,047       16,515
      Loans and leases                 6,044,956    6,055,635    5,392,137
      Less: Allowance for loan and
       lease losses                     (86,560)     (84,904)     (60,263)
                                    --------------------------------------
        Loans and leases, net          5,958,396    5,970,731    5,331,874
      Restricted equity securities        15,269       15,273       15,510
      Premises and equipment, net        104,505      106,267      100,189
      Other real estate owned             13,348        6,943           --
      Mortgage servicing rights,
       net                                 8,640       10,088        9,524
      Goodwill and other
       intangibles                       763,275      764,906      677,854
      Other assets                       183,098      201,130      159,700
                                    --------------------------------------
    Total assets                      $8,355,892   $8,340,053   $7,338,038
                                    ======================================
    
    Liabilities:
      Deposits                        $6,513,238   $6,589,326   $5,830,905
      Securities sold under
       agreements to repurchase           38,296       36,294       48,434
      Fed funds purchased                 55,000       69,500           --
      Term debt                          173,853       73,927        7,461
      Junior subordinated
       debentures, at fair value         129,803      131,686      100,076
      Junior subordinated
       debentures, at amortized
       cost                              104,413      104,680      105,480
      Other liabilities                   84,499       94,702       77,323
                                    --------------------------------------
        Total liabilities              7,099,102    7,100,115    6,169,679
    
    Shareholders' equity:
      Common stock                       989,764      988,780      933,064
      Retained earnings                  264,767      251,545      242,870
      Accumulated other
       comprehensive loss                  2,259        (387)      (7,575)
                                    --------------------------------------
        Total shareholders' equity     1,256,790    1,239,938    1,168,359
                                    --------------------------------------
    Total liabilities and
     shareholders' equity             $8,355,892   $8,340,053   $7,338,038
                                    ======================================
    
    
    Common shares outstanding at
     period end                       60,059,908   59,980,161   58,223,810
    Book value per share                  $20.93       $20.67       $20.07
    Tangible book value per share          $8.22        $7.92        $8.42
    Tangible equity                     $493,515     $475,032     $490,505
    Tangible equity to tangible
     assets                                6.50%        6.27%        7.36%
    
                                                   Sequential  Year over
                                                    Quarter       Year
    Dollars in thousands, except per share data     % Change    % Change
                                                  ------------------------
    Assets:
      Cash and due from banks                            (8)%          23%
      Temporary investments                              499%        (78)%
      Investment securities:
         Trading                                        (16)%        (21)%
         Available for sale                                2%          36%
         Held to maturity                               (12)%        (39)%
      Loans held for sale                                204%         140%
      Loans and leases                                     0%          12%
      Less: Allowance for loan and lease losses            2%          44%
        Loans and leases, net                              0%          12%
      Restricted equity securities                         0%         (2)%
      Premises and equipment, net                        (2)%           4%
      Other real estate owned                             92%           nm
      Mortgage servicing rights, net                    (14)%         (9)%
      Goodwill and other intangibles                       0%          13%
      Other assets                                       (9)%          15%
    Total assets                                           0%          14%
    
    Liabilities:
      Deposits                                           (1)%          12%
      Securities sold under agreements to
       repurchase                                          6%        (21)%
      Fed funds purchased                               (21)%           nm
      Term debt                                          135%           nm
      Junior subordinated debentures, at fair
       value                                             (1)%          30%
      Junior subordinated debentures, at amortized
       cost                                                0%         (1)%
      Other liabilities                                 (11)%           9%
        Total liabilities                                  0%          15%
    
    Shareholders' equity:
      Common stock                                         0%           6%
      Retained earnings                                    5%           9%
      Accumulated other comprehensive loss             (684)%       (130)%
        Total shareholders' equity                         1%           8%
    Total liabilities and shareholders' equity             0%          14%
    
    
    Common shares outstanding at period end                0%           3%
    Book value per share                                   1%           4%
    Tangible book value per share                          4%         (2)%
    Tangible equity                                        4%           1%
    Tangible equity to tangible assets
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                                Loan Portfolio
                                 (Unaudited)
    ----------------------------------------------------------------------
    
    Dollars in thousands    Mar 31, 2008    Dec 31, 2007    Mar 31, 2007
                           --------------- --------------- ---------------
    Loans and leases by
     class:                  Amount   Mix    Amount   Mix    Amount   Mix
                           --------------- --------------- ---------------
    
      Commercial real
       estate              $3,104,288  51% $3,020,573  50% $2,732,029  51%
      Residential real
       estate                 371,565   6%    379,804   6%    315,764   6%
      Construction          1,111,931  18%  1,187,984  20%  1,155,821  21%
                           --------------- --------------- ---------------
        Total real estate   4,587,784  75%  4,588,361  76%  4,203,614  78%
      Commercial            1,380,860  23%  1,394,985  22%  1,123,654  21%
      Leases                   40,968   1%     40,207   1%     24,293   0%
      Installment and
       other                   46,585   1%     43,371   1%     51,175   1%
      Deferred loan fees,
       net                   (11,241)   0%   (11,289)   0%   (10,599)   0%
                           -----------------------------------------------
         Total loans and
          leases           $6,044,956 100% $6,055,635 100% $5,392,137 100%
                           ===============================================
    
                                                    Sequential  Year over
    Dollars in thousands                              Quarter      Year
    Loans and leases by class:                       % Change    % Change
                                                   -----------------------
    
      Commercial real estate                                 3%        14%
      Residential real estate                              (2)%        18%
      Construction                                         (6)%       (4)%
        Total real estate                                    0%         9%
      Commercial                                           (1)%        23%
      Leases                                                 2%        69%
      Installment and other                                  7%       (9)%
      Deferred loan fees, net                                0%         6%
         Total loans and leases                              0%        12%
    
                         Umpqua Holdings Corporation
                        Deposits by Type/Core Deposits
                                 (Unaudited)
    ----------------------------------------------------------------------
    
                            Mar 31, 2008    Dec 31, 2007    Mar 31, 2007
                           --------------- --------------- ---------------
    Dollars in thousands     Amount   Mix    Amount   Mix    Amount   Mix
                           --------------- --------------- ---------------
    Demand, non interest-
     bearing               $1,260,756  19% $1,272,872  19% $1,180,536  20%
    Demand, interest-
     bearing                2,950,827  46%  2,948,035  45%  2,543,560  44%
    Savings                   341,173   5%    410,339   6%    361,100   6%
    Time                    1,960,482  30%  1,958,080  30%  1,745,709  30%
                           -----------------------------------------------
       Total Deposits      $6,513,238 100% $6,589,326 100% $5,830,905 100%
                           ===============================================
    
    
       Total Core deposits $5,347,970  82% $5,450,788  83% $4,917,416  84%
    
    
                                                    Sequential  Year over
                                                     Quarter      Year
    Dollars in thousands                             % Change   % Change
                                                   -----------------------
    Demand, non interest-bearing                          (1)%          7%
    Demand, interest-bearing                                0%         16%
    Savings                                              (17)%        (6)%
    Time                                                    0%         12%
       Total Deposits                                     (1)%         12%
    
    
       Total Core deposits                                (2)%          9%
    
    
    (1) Core deposits are defined as total deposits less time deposits
     greater than $100,000.
    
                         Umpqua Holdings Corporation
                                Credit Quality
                                 (Unaudited)
    ----------------------------------------------------------------------
    
                                 Quarter Ended Quarter Ended Quarter Ended
    Dollars in thousands         Mar 31, 2008  Dec 31, 2007  Mar 31, 2007
                                 -----------------------------------------
    Allowance for credit losses
    Balance beginning of period        $84,904       $88,278       $60,090
        Provision for loan and
         lease losses                   15,132        17,814            83
    
    Charge-offs                       (13,970)      (21,733)         (713)
    Less: Recoveries                       494           545           803
                                 -----------------------------------------
         Net charge-offs              (13,476)      (21,188)            90
    
    Total Allowance for loan and
     lease losses                       86,560        84,904        60,263
    
    Reserve for unfunded
     commitments                         1,141         1,182         1,231
                                 -----------------------------------------
       Total Allowance for
        credit losses                  $87,701       $86,086       $61,494
                                 =========================================
    
    Net charge-offs to average
     loans and leases
     (annualized)                        0.89%         1.38%       (0.01)%
    Recoveries to gross charge-
     offs                                   4%            3%          113%
    Allowance for credit losses
     to loans and leases                 1.45%         1.42%         1.14%
    Allowance for credit losses
     to nonperforming loans               117%           94%          463%
    
    Nonperforming loans to total
     loans and leases                    1.24%         1.50%         0.25%
    Nonperforming assets to
     total assets                        1.06%         1.18%         0.18%
    
    Nonperforming assets:
      Loans on non-accrual
       status                          $71,664       $81,317       $11,826
      Loans past due 90+ days &
       accruing                          3,327         9,782         1,470
                                 -----------------------------------------
    Total nonperforming loans           74,991        91,099        13,296
      Other real estate owned           13,348         6,943            --
                                 -----------------------------------------
    Total nonperforming assets         $88,339       $98,042       $13,296
                                 =========================================
    
                                                      Sequential Year over
                                                       Quarter     Year
    Dollars in thousands                               % Change  % Change
                                                     ---------------------
    Allowance for credit losses
    Balance beginning of period
        Provision for loan and lease losses
    
    Charge-offs                                            (36)%    1,859%
    Less: Recoveries                                        (9)%     (38)%
         Net charge-offs                                   (36)%        nm
    
    Total Allowance for loan and lease losses                 2%       44%
    
    Reserve for unfunded commitments
       Total Allowance for credit losses                      2%       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 nonperforming
     loans
    
    Nonperforming loans to total loans and leases
    Nonperforming assets to total assets
    
    Nonperforming assets:
      Loans on non-accrual status                          (12)%      506%
      Loans past due 90+ days & accruing                   (66)%      126%
    Total nonperforming loans                              (18)%      464%
      Other real estate owned                                92%        nm
    Total nonperforming assets                             (10)%      564%
    
    nm = not meaningful
    
                         Umpqua Holdings Corporation
                               Selected Ratios
                                 (Unaudited)
    ----------------------------------------------------------------------
    
                                                Quarter Ended:
                                    --------------------------------------
                                    Mar 31, 2008 Dec 31, 2007 Mar 31, 2007
                                    --------------------------------------
    Net Interest Spread:
      Yield on loans and leases            6.89%        7.28%        7.81%
      Yield on taxable investments         4.29%        4.79%        4.61%
      Yield on tax-exempt
       investments (1)                     5.55%        5.58%        5.89%
      Yield on temporary
       investments                         3.18%        4.56%        5.28%
        Total yield on earning
         assets (1)                        6.53%        6.93%        7.42%
    
      Cost of interest bearing
       deposits                            3.03%        3.53%        3.62%
      Cost of securities sold under
       agreements to repurchase and
       fed funds purchased                 3.09%        2.70%        3.00%
      Cost of term debt                    4.07%        4.63%        3.76%
      Cost of junior subordinated
       debentures                          6.68%        7.53%        7.60%
        Total cost of interest
         bearing liabilities               3.21%        3.71%        3.78%
    
    Net interest spread (1)                3.32%        3.22%        3.64%
         Net interest margin -
          Consolidated (1)                 3.98%        4.00%        4.47%
    
         Net interest margin - Bank
          (1)                              4.19%        4.24%        4.72%
    
    As reported:
    -------------------------------
    Return on average assets               1.20%        0.46%        1.15%
    Return on average tangible
     assets                                1.32%        0.50%        1.27%
    Return on average equity               7.94%        3.04%        7.22%
    Return on average tangible
     equity                               20.44%        7.92%       17.36%
    Efficiency ratio - Consolidated       47.00%       64.68%       60.40%
    Efficiency ratio - Bank               44.71%       60.76%       56.51%
    
    Excluding merger related
     expense (2):
    -------------------------------
    Return on average assets               1.20%        0.46%        1.17%
    Return on average tangible
     assets                                1.32%        0.51%        1.29%
    Return on average equity               7.94%        3.06%        7.33%
    Return on average tangible
     equity                               20.44%        7.97%       17.64%
    Efficiency ratio - Consolidated       47.00%       64.55%       59.73%
    Efficiency ratio - Bank               44.71%       60.64%       55.88%
    
                                                      Sequential Year over
                                                       Quarter     Year
                                                        Change    Change
                                                     ---------------------
    Net Interest Spread:
      Yield on loans and leases                           (0.39)    (0.92)
      Yield on taxable investments                        (0.50)    (0.32)
      Yield on tax-exempt investments (1)                 (0.03)    (0.34)
      Yield on temporary investments                      (1.38)    (2.10)
        Total yield on earning assets (1)                 (0.40)    (0.89)
    
      Cost of interest bearing deposits                   (0.50)    (0.59)
      Cost of securities sold under agreements to
       repurchase and fed funds purchased                   0.39      0.09
      Cost of term debt                                   (0.56)      0.31
      Cost of junior subordinated debentures              (0.85)    (0.92)
        Total cost of interest bearing liabilities        (0.50)    (0.57)
    
    Net interest spread (1)                                 0.10    (0.32)
         Net interest margin - Consolidated (1)           (0.02)    (0.49)
    
         Net interest margin - Bank (1)                   (0.05)    (0.53)
    
    As reported:
    -------------------------------------------------
    Return on average assets                                0.74      0.05
    Return on average tangible assets                       0.82      0.05
    Return on average equity                                4.90      0.72
    Return on average tangible equity                      12.52      3.08
    Efficiency ratio - Consolidated                      (17.68)   (13.40)
    Efficiency ratio - Bank                              (16.05)   (11.80)
    
    Excluding merger related expense (2):
    -------------------------------------------------
    Return on average assets                                0.74      0.03
    Return on average tangible assets                       0.81      0.03
    Return on average equity                                4.88      0.61
    Return on average tangible equity                      12.47      2.80
    Efficiency ratio - Consolidated                      (17.55)   (12.73)
    Efficiency ratio - Bank                              (15.93)   (11.17)
    
    
    (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            Mar 31, 2008 Dec 31, 2007 Mar 31, 2007
                                    --------------------------------------
    
      Temporary investments              $25,685      $84,964      $68,706
      Investment securities,
       taxable                           876,813      800,501      658,694
      Investment securities, tax-
       exempt                            173,749      169,609      118,808
      Loans held for sale                 19,278       15,123       15,004
      Loans and leases                 6,063,088    6,087,801    5,383,958
                                    --------------------------------------
         Total earning assets          7,158,613    7,157,998    6,245,170
      Goodwill & other intangibles       763,989      766,109      678,577
      Total assets                     8,287,643    8,288,478    7,256,788
    
      Non interest bearing demand
       deposits                        1,250,628    1,304,484    1,158,203
      Interest bearing deposits        5,254,826    5,288,940    4,595,377
                                    --------------------------------------
      Total deposits                   6,505,454    6,593,424    5,753,580
      Interest bearing liabilities     5,699,639    5,656,152    4,864,543
    
      Total shareholders' equity       1,249,391    1,243,095    1,161,185
      Tangible equity                    485,402      476,986      482,608
    
                                                   Sequential   Year over
                                                     Quarter      Year
    Dollars in thousands                            % Change    % Change
                                                  ------------------------
    
      Temporary investments                              (70)%       (63)%
      Investment securities, taxable                       10%         33%
      Investment securities, tax-exempt                     2%         46%
      Loans held for sale                                  27%         28%
      Loans and leases                                      0%         13%
         Total earning assets                               0%         15%
      Goodwill & other intangibles                          0%         13%
      Total assets                                          0%         14%
    
      Non interest bearing demand deposits                (4)%          8%
      Interest bearing deposits                           (1)%         14%
      Total deposits                                      (1)%         13%
      Interest bearing liabilities                          1%         17%
    
      Total shareholders' equity                            1%          8%
      Tangible equity                                       2%          1%
    
                         Umpqua Holdings Corporation
                          Mortgage Banking Activity
                                 (unaudited)
    ----------------------------------------------------------------------
    
                                                Quarter Ended:
                                    --------------------------------------
    Dollars in thousands            Mar 31, 2008 Dec 31, 2007 Mar 31, 2007
                                    --------------------------------------
    
    Mortgage Servicing Rights
     (MSR):
    -------------------------------
    Mortgage loans serviced for
     others                             $866,652     $870,680     $925,541
    
    MSR Asset, at fair value              $8,640      $10,088       $9,524
    
    MSR as % of serviced portfolio         1.00%        1.16%        1.03%
    
    
    Mortgage Banking Revenue:
    -------------------------------
    Origination and sale                  $1,852       $1,530       $1,728
    Servicing                                600          601          637
    Early pay-off of MSR                   (296)        (184)        (323)
    Change in fair value of MSR
     asset                               (1,628)          406        (243)
    Change in fair value of MSR
     hedge                               (2,398)        (334)           --
                                    --------------------------------------
       Total Mortgage Banking
        Revenue                         $(1,870)       $2,019       $1,799
                                    ======================================
    
                                                   Sequential   Year over
                                                     Quarter      Year
    Dollars in thousands                            % Change    % Change
                                                  ------------------------
    
    Mortgage Servicing Rights (MSR):
    ----------------------------------------------
    Mortgage loans serviced for others                      0%        (6)%
    
    MSR Asset, at fair value                             (14)%        (9)%
    
    MSR as % of serviced portfolio
    
    
    Mortgage Banking Revenue:
    ----------------------------------------------
    Origination and sale                                   21%          7%
    Servicing                                               0%        (6)%
    Early pay-off of MSR                                   61%        (8)%
    Change in fair value of MSR asset                   (501)%        570%
    Change in fair value of MSR hedge                     618%          nm
       Total Mortgage Banking Revenue                   (193)%      (204)%
    
    
    nm = not meaningful
    

    Source: Umpqua Holdings Corporation


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