• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Second Quarter 2009 Results
    Net income of $7.7 million for second quarter  Earnings available to common shareholders of $0.07 per share for second quarter  Non-performing assets declined to 1.71% of total assets, loans past due 30-89 days declined 46%  Provision for loan loss of $29.3 million, down 50% from first quarter 2009  Net charge-offs of $26.0 million, down 56% from first quarter 2009  Net interest margin of 4.20%, an increase of 13 basis points from first quarter 2009  Total regulatory risk based capital of 14.35%, up from 11.01% a year ago 
    Company Release - 07/16/2009 08:00

    PORTLAND, Ore.--(BUSINESS WIRE)-- Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc., today announced second quarter 2009 net income of $7.7 million, compared to a net loss of $15.2 million for the first quarter of 2009. Including preferred stock dividends of $3.2 million, the net income available to common shareholders was $4.4 million, or $0.07 per diluted share, compared to a net loss available to common shareholders of $18.4 million, or $0.31 per diluted share, for the first quarter of 2009.

    Significant financial statement items for the second quarter of 2009 include:

    • Provision for loan losses of $29.3 million, a decrease of 50% from the first quarter of 2009;
    • Total net charge-offs of $26.0 million, a decrease of 56% from the first quarter of 2009;
    • The allowance for credit losses increased to 1.63% of total loans;
    • Non-performing assets decreased on a sequential quarter basis to 1.71% of total assets. Non-performing loans ended the quarter at 1.87% of total loans. Both were down from March 2009 and year-end 2008 levels;
    • Non-interest bearing demand deposits increased 2% on a sequential quarter basis, or 7.49% on an annualized basis;
    • Net interest margin, on a tax equivalent basis, increased 13 basis points during the quarter to 4.20%;
    • The cost of interest bearing deposits for the second quarter was 1.60%, a decrease of 22 basis points from the first quarter of 2009;
    • Mortgage banking revenue was a record $6.3 million due to significant refinancing activity. Closed mortgage loan volume was $234 million, up 22% from the first quarter of 2009;
    • Loss on investment securities of $1.3 million, included $7.6 million of other-than-temporary impairment;
    • Gain on fair value of junior subordinated debentures of $8.6 million;
    • FDIC assessments were $6.7 million, and included a $4.0 million special assessment;
    • A loss on other real estate owned of $3.2 million was recognized; and
    • Total risk based capital of 14.35%, up from 11.01% a year ago.

    "This quarter's performance is indicative of the progress that Umpqua is making during difficult times. Management has and will continue to remain proactive in addressing credit issues, while focusing on improving our core earnings," said Ray Davis, president and CEO of Umpqua Holdings Corporation. "Even though this quarter's results are good, we realize that Umpqua still has work to do as we reduce credit risk exposure in our residential development portfolio. We also understand the concern regarding commercial real estate, where we continue to stress test. We believe that any potential issues in this area in the future will result from individual loans and not represent a systemic weakness."

    Asset quality

    Non-performing assets were $150.0 million, or 1.71% of total assets, as of June 30, 2009, compared to $159.5 million, or 1.82% of total assets as of March 31, 2009. Of this amount, $9.2 million represented loans past due greater than 90 days and still accruing interest, $104.7 million represented non-accrual loans, and $36.0 million was other real estate owned (OREO).

    Total net charge-offs were $26.0 million in the second quarter of 2009, which represented 1.71% of average loans on an annualized basis. Prior to the second quarter of 2008, the Company recognized the charge-off of loans to an impairment reserve when the loan was resolved, sold, or foreclosed/transferred to other real estate owned. Starting in the second quarter of 2008, the Company accelerated the charge-off of loans to the impairment reserve to the period when impairment arises for collateral dependent loans. Therefore, the non-accrual loans of $104.7 million as of June 30, 2009 have been written-down to their estimated net realizable value, based on disposition value, and are expected to be resolved over the coming quarters at those levels, absent further declines in market prices.

    The provision for loan losses for the second quarter of 2009 was $29.3 million. The allowance for credit losses increased to 1.63% of total loans as of June 30, 2009, compared to 1.58% of total loans as of March 31, 2009 and 1.22% of total loans as of June 30, 2008.

    Commercial real estate loan portfolio

    The total term commercial real estate loan portfolio was $3.4 billion as of June 30, 2009, compared to $3.3 billion as of March 31, 2009. Of this total, $2.4 billion are non-owner occupied, and $1.0 billion are owner occupied as of June 30, 2009, as compared to $2.3 billion and $1.0 billion, respectively, as of March 31, 2009. Of the total portfolio, $25.7 million, or 0.8%, are past due 30-89 days as of June 30, 2009. The portfolio was conservatively underwritten at origination to a minimum debt service coverage ratio of 1.20, and as a result in many cases the loan-to-value was substantially less than our in-house maximum of 75%. This underwriting serves to protect against the low capitalization rate environment of the past several years.

    The Company has completed two rounds of stress testing on the commercial real estate portfolio, for items such as capitalization rate, interest rate and vacancy factors. The results of the stress testing showed no major issues, unlike our experience in the residential development construction portfolio. However, given the economic climate, we expect potential issues that may arise in this portfolio will result from individual loans and not represent a systemic weakness, and are well positioned to manage the exposure and work with our customers until the economic climate improves.

    Additional detail on credit quality, trends, residential development and non-performing assets

    For the past two years, the Company has been aggressively resolving problems arising from the current economic downturn. The following is a recap of the Company's credit quality trends since the start of 2007, noting the accelerated charge-off of impairment reserves, discussed above, was implemented in the second quarter of 2008:

    
    Credit quality trends
    
    (Dollars in thousands)            Ending                        Change in
                                                                    ratio of
    
             Provision  Net           specific    Allowance         non-performing
    
                                                  for        30-89
             for        charge-offs   impairment  credit     days   assets to
                                                  loss
    
             loan loss  (recoveries)  reserve     to loans   past   total assets
                                                  %          due %
    
    Q1 2007  $83        $(90)         $857        1.14%      0.17%  0.06%
    
    Q2 2007  3,413      31            5,088       1.17%      0.56%  0.41%
    
    Q3 2007  20,420     865           16,244      1.47%      0.99%  0.37%
    
    Q4 2007  17,814     21,188        9,893       1.42%      0.64%  0.22%
    
    Q1 2008  15,132     13,476        13,281      1.45%      1.13%  (0.12)%
    
    Q2 2008  25,137     37,976        --          1.22%      0.31%  0.19%
    
    Q3 2008  35,454     15,193        --          1.54%      1.16%  0.41%
    
    Q4 2008  31,955     30,072        --          1.58%      0.96%  0.22%
    
    Q1 2009  59,092     59,871        --          1.58%      1.47%  (0.06)%
    
    Q2 2009  29,331     26,047        --          1.63%      0.80%  (0.11)%
    
    Total    $237,831   $204,629
    
    
    
    

    As presented in the table above, cumulative net charged-off loans since the beginning of 2007 was $204.6 million, or 3.82%, of beginning loans as calculated in the table below:

    
    Cumulative charge-off rate
    
    (Dollars in thousands)
    
    Cumulative net charge-offs since 1/1/07        $204,629
    
    Gross loan balance, 12/31/06                   $5,361,862
    
    Cumulative net charge-off rate since 1/1/07    3.82%
    
    
    
    

    Total construction loans as of June 30, 2009 decreased 7% from March 31, 2009, and decreased 26% from June 30, 2008. Within the construction loan portfolio, the residential development loan segment is $301 million, or 5% of the total loan portfolio. Of this amount, $61 million represents non-performing loans, and $240 million represents performing loans, which are 4% of the total loan portfolio. This segment has decreased $200 million, or 40%, from June 30, 2008.

    The remaining $496 million in construction loans are commercial construction projects. These commercial construction loans are uniquely different from the residential development loans. Total non-performing assets related to commercial construction loans were $13.3 million at June 30, 2009, down 25% from $17.8 million at December 31, 2008. There are no commercial construction loans past due 30-89 days as of June 30, 2009.

    The following is a geographic distribution of the residential development portfolio as of June 30, 2009, March 31, 2009 and June 30, 2008:

    
    Residential development loans
    
    (Dollars in thousands)                                      Non-        Accrual
    
                                                      % change  performing  status
    
                     Balance    Balance    Balance    from      loans       loans
    
                     6/30/08    3/31/09    6/30/09    6/30/08   6/30/09     6/30/09
    
    Northwest        $158,588   $120,460   $120,076   (24)%     $6,985      $113,091
    Oregon
    
    Central Oregon   51,594     20,951     15,493     (70)%     6,118       9,375
    
    Southern Oregon  44,781     29,738     26,561     (41)%     7,254       19,307
    
    Washington       36,324     26,514     24,744     (32)%     4,720       20,024
    
    Greater          135,648    92,744     84,522     (38)%     25,673      58,849
    Sacramento
    
    Northern         74,730     38,266     29,894     (60)%     10,601      19,293
    California
    
    Total            $501,665   $328,673   $301,290   (40)%     $61,351     $239,939
    
    % of total loan  8%         5%         5%                               4%
    portfolio
    
    Quarter change   $(80,352)  $(55,486)  $(27,383)
    $
    
    Quarter change   (14)%      (14)%      (8)%
    %
    
    
    
    

    The following is a stratification by size and region of the remaining residential development loans still on accrual status (excludes non-performing loans) as of June 30, 2009:

    
    Residential development loans -
    stratification of remaining accrual
    basis loans by region by size of loan
    
    (Dollars in thousands)
    
                          $250k    $1       $3       $5 million
                                   million  million
    
                $250k     to       to       to       to          $10
                                                                 million
    
                and less  $1       $3       $5       $10         and      Total
                          million  million  million  million     greater
    
    Northwest   $3,996    $13,312  $31,430  $16,479  $32,905     $14,969  $113,091
    Oregon
    
    Central     2,003     3,642    3,730    --       --          --       9,375
    Oregon
    
    Southern    2,289     8,577    8,441    --       --          --       19,307
    Oregon
    
    Washington  --        2,851    3,770    8,052    5,351       --       20,024
    
    Greater     4,510     8,949    10,477   --       16,572      18,341   58,849
    Sacramento
    
    Northern    2,159     5,827    11,307   --       --          --       19,293
    California
    
    Total       $14,957   $43,158  $69,155  $24,531  $54,828     $33,310  $239,939
    
    % of Total  6%        18%      29%      10%      23%         14%      100%
    
    
    
    

    Only 37% of the remaining performing residential development portfolio is comprised of loans greater than $5 million, with 53% representing loans with balances less than $3 million.

    The following is a distribution of non-performing assets by type and by region as of June 30, 2009:

    
    Non-performing asset balances by region
    
    (Dollars in thousands)
    
                    Northwest  Central  Southern              Greater     Northern
    
                    Oregon     Oregon   Oregon    Washington  Sacramento  California  Total
    
    Loans 90 days
    past due:
    
    Residential     $--        $--      $2,814    $--         $689        $--         $3,503
    development
    
    Commercial      --         --       --        --          --          --          --
    construction
    
    Commercial      --         135      311       --          263         --          709
    real estate
    
    Commercial      --         300      --        466         --          906         1,672
    
    Other           2,904      --       --        --          419         --          3,323
    
    Total 90 days   $2,904     $435     $3,125    $466        $1,371      $906        $9,207
    past due
    
    Non-accrual
    loans:
    
    Residential     $6,985     $6,118   $4,440    $4,720      $24,984     $10,601     $57,848
    development
    
    Commercial      --         1,893    324       629         9,177       367         12,390
    construction
    
    Commercial      3,366      1,562    2,253     --          8,747       11,006      26,934
    real estate
    
    Commercial      320        2,996    303       --          125         3,810       7,554
    
    Other           --         --       --        --          --          --          --
    
    Total
    non-accrual     $10,671    $12,569  $7,320    $5,349      $43,033     $25,784     $104,726
    loans
    
    Total
    non-performing  $13,575    $13,004  $10,445   $5,815      $44,404     $26,690     $113,933
    loans
    
    Other real
    estate owned:
    
    Residential     $2,434     $16,539  $1,493    $351        $6,203      $874        $27,894
    development
    
    Commercial      520        --       --        --          423         --          943
    construction
    
    Commercial      --         301      --        551         3,717       --          4,569
    real estate
    
    Commercial      750        670      --        --          --          76          1,496
    
    Other           916        --       --        --          212         --          1,128
    
    Total OREO      $4,620     $17,510  $1,493    $902        $10,555     $950        $36,030
    
    Total
    non-performing  $18,195    $30,514  $11,938   $6,717      $54,959     $27,640     $149,963
    assets
    
    % of total      12%        20%      8%        5%          37%         18%         100%
    
    
    
    

    The Company has aggressively charged-down impaired assets to their disposition values, and expects to resolve these assets over the next few quarters. As of June 30, 2009, the non-performing assets of $150.0 million have been written down by 38%, or $91.0 million, from their original balance of $241.0 million.

    The following is a distribution of loans past due 30-89 days by loan type by region as of June 30, 2009:

    
    Loans past due 30-89 days by category by region
    
    (Dollars in thousands)
    
                  Northwest  Central  Southern              Greater     Northern
    
                  Oregon     Oregon   Oregon    Washington  Sacramento  California  Total
    
    Loans 30-89
    days past
    due:
    
    Residential   $--        $--      $2,502    $6,708      $1,886      $--         $11,096
    development
    
    Commercial    --         --       --        --          --          --          --
    construction
    
    Commercial    4,615      4,106    5,315     144         2,075       9,457       25,712
    real estate
    
    Commercial    1,437      1,010    408       1,420       802         3,517       8,594
    
    Other         3,172      --       --        2           179         --          3,353
    
    Total 30-89
    days past     $9,224     $5,116   $8,225    $8,274      $4,942      $12,974     $48,755
    due
    
    
    
    

    Loans past due 30-89 days declined 46% to $48.8 million as of June 30, 2009 as compared to $90.0 million as of March 31, 2009.

    Net interest margin

    The Company reported a tax equivalent net interest margin of 4.20% for the second quarter of 2009, compared to 4.07% for the first quarter of 2009, and 4.15% for the second quarter of 2008. The increase in net interest margin resulted primarily from our cost of interest bearing liabilities decreasing more than earning asset yields. Interest reversals on new non-accrual loans during the second quarter of 2009 were $0.8 million, or 5 basis points on the net interest margin. Excluding the reversals of interest, the net interest margin would have increased 18 basis points during the quarter. The cost of interest bearing deposits was 22 basis points lower than the first quarter of 2009.

    Mortgage banking revenue

    Mortgage interest rates decreased significantly early in the second quarter of 2009, resulting in a significant increase in refinancing activity within the market. The Company recognized $6.3 million in total mortgage banking revenue during the second quarter of 2009, on closed loan volume of $234 million, compared to revenue of $4.1 million for the first quarter of 2009, on closed loan volume of $192 million.

    Included in mortgage banking revenue for the second quarter of 2009 was a mortgage servicing right asset (MSR) fair value adjustment of $0.4 million, related to increased refinancing and higher future prepayment speed expectations. On June 30, 2009, the MSR asset was valued at 0.95% of the total serviced loan portfolio, compared to 0.84% at March 31, 2009.

    Loss on sale of investment securities

    During the second quarter of 2009, the Company recognized a net loss of $1.3 million on investment securities. Included in this was a $7.6 million other-than-temporary impairment charge primarily related to non-agency mortgage-backed securities in the held to maturity (HTM) classification, offset by gains on sale of investments of $6.3 million. At June 30, 2009, the HTM non-agency mortgage-backed security portfolio gross book value totaled $5.7 million, or 0.4% of the total investment portfolio.

    Fair value of junior subordinated debentures

    The Company recognized a gain from the change in fair value of junior subordinated debentures of $8.6 million during the second quarter of 2009. The Company utilizes a pricing service along with internal models to determine the valuation of this liability. The majority of the gain relates to the $61.8 million of junior subordinated debentures issued in the third quarter of 2007, which carry interest rate spreads of 135 and 275 basis points over the 3 month LIBOR. As of June 30, 2009, the credit adjusted interest spread for potential new issuances was forecasted to be significantly higher. The difference between spreads represents the gain in fair value of the Company's junior subordinated debentures compared to potential new instruments in the market. This fair value adjustment will reverse and be recognized as a reduction in non-interest income over the remaining period to maturity of the related instrument. As of June 30, 2009, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $83.0 million.

    Non-interest expense

    Total non-interest expense for the second quarter of 2009 was $66.7 million, compared to $60.0 million for the first quarter of 2009, an increase of $6.7 million, or 11%. Included in non-interest expense are several categories which are outside of the control of the Company, including FDIC deposit insurance assessments, gain or loss on other real estate owned valuations, VISA litigation and infrequently occurring expenses such as merger costs and goodwill impairments. Excluding non-controllable or infrequently occurring items, operating expenses totaled $56.7 million for the second quarter of 2009, compared to $54.8 million for the first quarter of 2009, an increase of $1.9 million, or 3%. This increase related mainly to increases of $0.6 million in variable expense related to our mortgage operation (on increased revenue), and an increase in marketing expense of $0.5 million.

    Total FDIC deposit insurance assessments during the second quarter of 2009 were $6.7 million, an increase of 155% over the first quarter of 2009, and 423% over the second quarter of 2008. This increase results from an industry-wide increase in assessments as the FDIC is replenishing the deposit insurance fund, in addition to an industry-wide special assessment in the second quarter of 2009 of $4.0 million.

    Balance sheet

    Total consolidated assets as of June 30, 2009 were $8.8 billion, compared to $8.3 billion a year ago. Total gross loans and leases, and deposits, were $6.1 billion and $6.8 billion, respectively, as of June 30, 2009, compared to $6.1 and $6.4 billion, respectively, as of June 30, 2008.

    Total loans increased $11 million during the second quarter of 2009. Total gross loan fundings during the second quarter of 2009 were $497 million, which were offset by payments received on previously funded loans of $460 million, and net charge-offs of $26 million, resulting in the overall increase of $11 million in loans during the second quarter.

    Total deposits increased $22 million during the second quarter of 2009. Deposits from public entities declined $54 million during the second quarter. Excluding this, deposits from consumers and businesses increased $76 million during the second quarter. Over 2,000 new non-interest bearing demand accounts were opened in the second quarter of 2009, and average non-interest bearing demand deposits increased $52 million over the first quarter of 2009.

    Goodwill

    Based on continued market volatility and the drop in price of the Company's common stock subsequent to year-end 2008, the Company is currently analyzing the value of goodwill within its community banking segment related to its prior acquisitions, to determine whether the value of goodwill has been impaired. Any potential goodwill impairment could be material to reported earnings, but would be a non-cash charge and have no effect on the Company's cash balances, liquidity or tangible equity. In addition, because goodwill and other intangible assets are not included in the calculation of regulatory capital, the Company's well-capitalized regulatory capital ratios would not be affected by this potential non-cash expense. The Company anticipates the analysis will be completed prior to filing the Quarterly Report on Form 10-Q with the Securities and Exchange Commission by early August 2009.

    Capital

    As of June 30, 2009, total shareholders' equity was $1.5 billion, comprised of $203 million in preferred stock (par value of $214.2 million issued to the U.S. Treasury on November 14, 2008 and described below), and common stock of $1.3 billion. Book value per common share was $21.00, tangible book value per share was $8.47 and the ratio of tangible common equity to assets was 6.37%.

    The Company's estimated total risk-based capital ratio as of June 30, 2009 is 14.35%, and has increased from 11.01% as of June 30, 2008. Our total risk-based capital level is in excess of the regulatory definition of "well capitalized" of 10.00%. This capital ratio as of June 30, 2009 is an estimate pending completion and filing of the Company's regulatory reports.

    Excluding the sale of preferred stock during the fourth quarter of 2008, the Company's total risk-based capital ratio as of June 30, 2009 would have been 11.42%, which increased from 11.01% as of June 30, 2008.

    On November 14, 2008, in exchange for an aggregate purchase price of $214.2 million, Umpqua Holdings Corporation issued and sold to the United States Department of the Treasury (U.S. Treasury) pursuant to the TARP Capital Purchase Program the following: (i) 214,181 shares of the Company's newly designated Fixed Rate Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $1,000 per share ($214,181,000 liquidation preference in the aggregate) and (ii) a warrant to purchase up to 2,221,795 shares of the Company's common stock, no par value per share, at an exercise price of $14.46 per share, subject to certain anti-dilution and other adjustments. The warrant may be exercised for up to ten years after it was issued.

    In connection with the issuance and sale of the Company's securities, the Company entered into a Letter Agreement including the Securities Purchase Agreement - Standard Terms, dated November 14, 2008, with the U.S. Treasury (the "Agreement"). The Agreement contains limitations on the payment of quarterly cash dividends on the Company's common stock in excess of $0.19 per share, and on the Company's ability to repurchase its common stock. The Agreement also grants registration rights to the holders of the Series A Preferred Stock, the Warrant and the common stock to be issued under the Warrant and subjects the Company to executive compensation limitations included in the Emergency Economic Stabilization Act of 2008, as amended.

    The Series A Preferred Stock bears cumulative dividends at a rate of 5% per annum for the first five years and 9% per annum thereafter, in each case, applied to the $1,000 per share liquidation preference, but will only be paid when, as and if declared by the Company's board of directors out of funds legally available therefor. The Series A Preferred Stock has no maturity date and ranks senior to our common stock (and on an equivalent basis with the Company's other authorized series of preferred stock, of which no shares are currently outstanding) with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company.

    There were no repurchases of common stock during the first six months of 2009. The total remaining available common shares authorized for repurchase is approximately 1.5 million as of June 30, 2009.

    Visa related activity

    In March 2008, Visa completed its initial public offering. Umpqua Bank and certain other Visa member banks are shareholders in Visa. The Company holds shares of Visa Class B common stock that are, under certain conditions, convertible into Visa Class A common stock, which class of stock is publicly traded on the New York Stock Exchange. Following the initial public offering of Visa's Class A common stock, 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 non-interest income in the first quarter of 2008.

    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 non-interest expense. This reserve was created in the fourth quarter of 2007, pending completion of the Visa initial public offering, as a charge to non-interest expense.

    In October 2008, Visa announced that it had reached a settlement with Discover Card related to an antitrust lawsuit, and that it had established an additional reserve related to the settlement with Discover Card that had not already been funded into the escrow account. In connection with this settlement, the Company recorded, in the third quarter of 2008, a liability and corresponding expense of $2.1 million pre-tax, for its proportionate share of that liability. In December, this liability and expense was reversed when VISA deposited sufficient funds into the escrow account to cover the remaining amount of the settlement. The Company is not a party to the Visa litigation and its liability arises solely from the Bank's membership interest in Visa.

    The deposit of funds into the escrow account in December has the effect of a repurchase of Class A common share equivalents from the Class B shareholders and further reduces the conversion ratio applicable to Class B common stock outstanding from 0.7143 per Class A share to 0.6296 per Class A share.

    The remaining unredeemed shares of Visa Class B common stock are restricted and may not be transferred until the later of (i) three years from the date of the initial public offering, or (ii) the period of time necessary to resolve the covered litigation. 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 June 30, 2009, the value of the Class A shares was $62.26 per share. The value of unredeemed Class A equivalent shares owned by the Company was $18.4 million as of June 30, 2009, and has not been reflected in the accompanying financial statements.

    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. Management believes "tangible common equity" and the "tangible common equity ratio" is a meaningful measure of capital adequacy. Tangible common equity is calculated as total shareholders' equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs). In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders' equity divided by tangible assets.

    The following table provides reconciliations of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).

    
    Dollars in thousands, except per share data  6/30/09     3/31/09     6/30/08
    
    Total shareholders' equity                   $1,468,375  $1,469,844  $1,244,234
    
    Subtract:
    
    Preferred stock                              203,231     202,692     --
    
    Goodwill and other intangible assets, net    755,032     756,468     761,738
    
    Tangible common shareholders' equity         $510,112    $510,684    $482,496
    
    Total assets                                 $8,768,629  $8,782,533  $8,345,989
    
    Subtract:
    
    Goodwill and other intangible assets, net    755,032     756,468     761,738
    
    Tangible assets                              $8,013,597  $8,026,065  $7,584,251
    
    Common shares outstanding                    60,237,042  60,198,057  60,087,850
    
    Tangible common equity ratio                 6.37%       6.36%       6.36%
    
    Tangible book value per common share         $8.47       $8.48       $8.03
    
    
    
    

    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 150 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, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Bank's Private Bank Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, July 16, 2009, at 10:00 a.m. PT (1:00 p.m. ET) during which the Company will discuss second quarter 2009 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 "14663432." 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 with the conference ID noted above, or by visiting the Company's Website.

    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 limitations on exposure in our commercial real estate loan portfolio, our ability to effectively manage that exposure and the timely completion of a goodwill impairment analysis. 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, unanticipated deterioration in the commercial real estate loan portfolio, loss of, or inability to recruit, personnel to manage problem credits, a delay in completion of the goodwill impairment analysis or results of that analysis that could negatively impact the earnings reported in this release.

    
    Umpqua Holdings Corporation
    
    Consolidated Statements of Income
    
    (Unaudited)
    
                     Quarter Ended:
    
                                                               Sequential  Year over
    
                                                               Quarter     Year
    
    Dollars in
    thousands,       Jun 30, 2009  Mar 31, 2009  Jun 30, 2008  % Change    % Change
    except per
    share data
    
    Interest income
    
    Loans and        $88,940       $88,173       $97,963       1%          (9)%
    leases
    
    Interest and
    dividends on
    investments:
    
    Taxable          13,889        14,371        10,882        (3)%        28%
    
    Exempt from
    federal income   1,935         1,800         1,677         8%          15%
    tax
    
    Dividends        --            --            116           --          (100)%
    
    Temporary        19            32            87            (41)%       (78)%
    investments
    
    Total interest   104,783       104,376       110,725       0%          (5)%
    income
    
    Interest
    expense
    
    Deposits         21,957        24,463        31,468        (10)%       (30)%
    
    Repurchase
    agreements and   180           184           495           (2)%        (64)%
    fed funds
    purchased
    
    Junior
    subordinated     2,395         2,560         3,216         (6)%        (26)%
    debentures
    
    Term debt        1,262         1,756         2,011         (28)%       (37)%
    
    Total interest   25,794        28,963        37,190        (11)%       (31)%
    expense
    
    Net interest     78,989        75,413        73,535        5%          7%
    income
    
    Provision for
    loan and lease   29,331        59,092        25,137        (50)%       17%
    losses
    
    Non-interest
    income
    
    Service charges  8,322         7,701         8,819         8%          (6)%
    
    Brokerage fees   1,745         1,379         2,070         27%         (16)%
    
    Mortgage
    banking          6,259         4,070         3,687         54%         70%
    revenue, net
    
    Net (loss) gain
    on investment    (1,270)       35            (2)           nm          nm
    securities
    
    Gain on junior
    subordinated
    debentures       8,611         580           3,199         nm          169%
    carried at fair
    value
    
    Other income     3,383         1,752         2,206         93%         53%
    
    Total
    non-interest     27,050        15,517        19,979        74%         35%
    income
    
    Non-interest
    expense
    
    Salaries and     32,041        31,073        27,668        3%          16%
    benefits
    
    Occupancy and    9,708         9,621         9,149         1%          6%
    equipment
    
    Intangible       1,362         1,362         1,491         0%          (9)%
    amortization
    
    FDIC             6,699         2,625         1,281         155%        423%
    assessments
    
    Other            13,598        12,771        11,849        6%          15%
    
    Net loss on
    other real       3,170         2,299         2,851         38%         11%
    estate owned
    
    Merger related   73            200           --            (64)%       nm
    expenses
    
    Total
    non-interest     66,651        59,951        54,289        11%         23%
    expense
    
    Income (loss)
    before           10,057        (28,113)      14,088        136%        (29)%
    provision for
    income taxes
    
    Provision
    (benefit) for    2,396         (12,864)      3,932         119%        (39)%
    income tax
    
    Net income       7,661         (15,249)      10,156        150%        (25)%
    (loss)
    
    Dividends and
    undistributed
    earnings
    allocated to     11            4             30            175%        (63)%
    participating
    equity
    securities
    
    Preferred stock
    dividend -       3,216         3,191         --            1%          nm
    undeclared
    
    Net earnings
    (loss)
    available to     $4,434        $(18,444)     $10,126       124%        (56)%
    common
    shareholders
    
    Weighted
    average shares   60,221,023    60,175,868    60,074,920    0%          0%
    outstanding
    
    Weighted
    average diluted  60,463,321    60,175,868    60,398,441    0%          0%
    shares
    outstanding
    
    Earnings (loss)
    per common       $0.07         $(0.31)       $0.17         123%        (59)%
    share - Basic
    
    Earnings (loss)
    per common       $0.07         $(0.31)       $0.17         123%        (59)%
    share - Diluted
    
    nm = not meaningful
    
    Umpqua Holdings Corporation
    
    Consolidated Statements of Income
    
    (Unaudited)
    
                     Six Months Ended:
    
    Dollars in
    thousands,       Jun 30, 2009    Jun 30, 2008  % Change
    except per
    share data
    
    Interest income
    
    Loans and        $177,113        $202,115      (12)%
    leases
    
    Interest and
    dividends on
    investments:
    
    Taxable          28,260          20,211        40%
    
    Exempt from
    federal income   3,735           3,356         11%
    tax
    
    Dividends        --              194           (100)%
    
    Temporary        51              290           (82)%
    investments
    
    Total interest   209,159         226,166       (8)%
    income
    
    Interest
    expense
    
    Deposits         46,420          71,093        (35)%
    
    Repurchase
    agreements and   364             1,244         (71)%
    fed funds
    purchased
    
    Junior
    subordinated     4,955           7,138         (31)%
    debentures
    
    Other            3,018           3,136         (4)%
    borrowings
    
    Total interest   54,757          82,611        (34)%
    expense
    
    Net interest     154,402         143,555       8%
    income
    
    Provision for
    loan and lease   88,423          40,269        120%
    losses
    
    Non-interest
    income
    
    Service charges  16,023          17,196        (7)%
    
    Brokerage fees   3,124           4,245         (26)%
    
    Mortgage
    banking          10,329          1,817         468%
    revenue, net
    
    Net gain (loss)
    on investment    (1,235)         3,899         (132)%
    securities
    
    Gain on junior
    subordinated
    debentures       9,191           4,841         90%
    carried at fair
    value
    
    Proceeds from
    Visa mandatory   --              12,633        (100)%
    partial
    redemption
    
    Other income     5,135           4,942         4%
    
    Total
    non-interest     42,567          49,573        (14)%
    income
    
    Non-interest
    expense
    
    Salaries and     63,114          55,912        13%
    benefits
    
    Occupancy and    19,329          18,265        6%
    equipment
    
    Intangible       2,724           2,982         (9)%
    amortization
    
    FDIC             9,324           2,496         274%
    assessments
    
    Other            26,369          23,842        11%
    
    Net loss on
    other real       5,469           3,462         58%
    estate owned
    
    Visa litigation  --              (5,183)       (100)%
    
    Merger related   273             --            nm
    expenses
    
    Total
    non-interest     126,602         101,776       24%
    expense
    
    Income (loss)
    before           (18,056)        51,083        (135)%
    provision for
    income taxes
    
    Provision
    (benefit) for    (10,468)        16,256        (164)%
    income tax
    
    Net income       (7,588)         34,827        (122)%
    (loss)
    
    Dividends and
    undistributed
    earnings
    allocated to     15              112           (87)%
    participating
    equity
    securities
    
    Preferred stock
    dividend -       6,407           --            nm
    undeclared
    
    Net earnings
    (loss)
    available to     $(14,010)       $34,715       (140)%
    common
    shareholders
    
    Weighted
    average shares   60,198,570      60,051,880    0%
    outstanding
    
    Weighted
    average diluted  60,198,570      60,385,886    0%
    shares
    outstanding
    
    Earnings (loss)
    per share -      $(0.23)         $0.58         (140)%
    Basic
    
    Earnings (loss)
    per share -      $(0.23)         $0.57         (140)%
    Diluted
    
    nm = not
    meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Consolidated Balance Sheets
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                                                               Quarter     Year
    
    Dollars in
    thousands,       Jun 30, 2009  Mar 31, 2009  Jun 30, 2008  % Change    % Change
    except per
    share data
    
    Assets:
    
    Cash and due     $131,354      $136,035      $194,458      (3)%        (32)%
    from banks
    
    Temporary        962           70,565        1,353         (99)%       (29)%
    investments
    
    Investment
    securities:
    
    Trading          2,247         1,485         2,087         51%         8%
    
    Available for    1,465,342     1,435,293     998,307       2%          47%
    sale
    
    Held to          6,344         13,783        5,115         (54)%       24%
    maturity
    
    Loans held for   52,863        34,013        12,694        55%         316%
    sale
    
    Loans and        6,093,957     6,082,480     6,111,488     0%          0%
    leases
    
    Less: Allowance
    for loan and     (98,370)      (95,086)      (73,721)      3%          33%
    lease losses
    
    Loans and        5,995,587     5,987,394     6,037,767     0%          (1)%
    leases, net
    
    Restricted
    equity           16,491        16,491        18,892        0%          (13)%
    securities
    
    Premises and     103,553       103,712       104,861       0%          (1)%
    equipment, net
    
    Mortgage
    servicing        10,631        8,732         11,576        22%         (8)%
    rights, at fair
    value
    
    Goodwill and
    other            755,032       756,468       761,738       0%          (1)%
    intangibles,
    net
    
    Other real       36,030        32,766        5,826         10%         518%
    estate owned
    
    Other assets     192,193       185,796       191,315       3%          0%
    
    Total assets     $8,768,629    $8,782,533    $8,345,989    0%          5%
    
    Liabilities:
    
    Deposits         $6,814,705    $6,792,534    $6,359,909    0%          7%
    
    Securities sold
    under            56,358        50,274        41,281        12%         37%
    agreements to
    repurchase
    
    Fed funds        66,000        --            147,945       nm          (55)%
    purchased
    
    Term debt        106,396       206,458       236,774       (48)%       (55)%
    
    Junior
    subordinated     83,036        91,682        126,539       (9)%        (34)%
    debentures, at
    fair value
    
    Junior
    subordinated     103,349       103,430       104,146       0%          (1)%
    debentures, at
    amortized cost
    
    Other            70,410        68,311        85,161        3%          (17)%
    liabilities
    
    Total            7,300,254     7,312,689     7,101,755     0%          3%
    liabilities
    
    Shareholders'
    equity:
    
    Preferred stock  203,231       202,692       --            0%          nm
    
    Common stock     1,006,660     1,006,199     990,952       0%          2%
    
    Retained         244,875       243,447       263,446       1%          (7)%
    earnings
    
    Accumulated
    other            13,609        17,506        (10,164)      (22)%       234%
    comprehensive
    income (loss)
    
    Total
    shareholders'    1,468,375     1,469,844     1,244,234     0%          18%
    equity
    
    Total
    liabilities and  $8,768,629    $8,782,533    $8,345,989    0%          5%
    shareholders'
    equity
    
    Common shares
    outstanding at   60,237,042    60,198,057    60,087,850    0%          0%
    period end
    
    Book value per   $21.00        $21.05        $20.71        0%          1%
    common share
    
    Tangible book
    value per        $8.47         $8.48         $8.03         0%          5%
    common share
    
    Tangible equity  $510,112      $510,684      $482,496      0%          6%
    - common
    
    Tangible common
    equity to        6.37%         6.36%         6.36%
    tangible assets
    
    nm = not
    meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Loan Portfolio
    
    (Unaudited)
    
                                                                        Sequential  Year
                                                                                    over
    
    Dollars in    Jun 30, 2009      Mar 31, 2009      Jun 30, 2008      Quarter     Year
    thousands
    
    Loans and                                                                       %
    leases by     Amount      Mix   Amount      Mix   Amount      Mix   % Change    Change
    class:
    
    Commercial    $3,373,624  55%   $3,268,762  54%   $3,161,908  52%   3%          7%
    real estate
    
    Residential   429,775     7%    431,592     7%    401,245     7%    0%          7%
    real estate
    
    Construction  797,352     13%   855,697     14%   1,070,429   18%   (7)%        (26)%
    
    Total real    4,600,751   75%   4,556,051   75%   4,633,582   76%   1%          (1)%
    estate
    
    Commercial    1,429,856   23%   1,458,792   24%   1,406,339   23%   (2)%        2%
    
    Leases        37,806      1%    39,953      1%    40,839      1%    (5)%        (7)%
    
    Installment   36,314      1%    38,360      1%    42,131      1%    (5)%        (14)%
    and other
    
    Deferred
    loan fees,    (10,770)    0%    (10,676)    0%    (11,403)    0%    1%          (6)%
    net
    
    Total loans   $6,093,957  100%  $6,082,480  100%  $6,111,488  100%  0%          0%
    and leases
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Deposits by Type/Core Deposits
    
    (Unaudited)
    
                                                                               Sequential  Year
                                                                                           over
    
    Dollars in          Jun 30, 2009       Mar 31, 2009      Jun 30, 2008      Quarter     Year
    thousands
    
                        Amount      Mix    Amount      Mix   Amount      Mix   % Change    %
                                                                                           Change
    
    Demand, non         $1,316,648  19%    $1,292,512  19%   $1,256,236  20%   2%          5%
    interest-bearing
    
    Demand,             2,875,843   43%    2,902,691   43%   2,857,116   45%   (1)%        1%
    interest-bearing
    
    Savings             293,972     4%     295,895     4%    310,542     5%    (1)%        (5)%
    
    Time                2,328,242   34%    2,301,436   34%   1,936,015   30%   1%          20%
    
    Total Deposits      $6,814,705  100%   $6,792,534  100%  $6,359,909  100%  0%          7%
    
    Total Core
    deposits-ending     $5,465,814  80%    $5,490,094  81%   $5,207,125  82%   0%          5%
    (1)
    
    Total Core
    deposits-quarterly  $5,474,859         $5,471,590        $5,243,442        0%          4%
    average (1)
    
    Number of open
    accounts:
    
    Demand, non         152,251            150,191           144,293           1%          6%
    interest-bearing
    
    Demand,             61,199             61,133            59,298            0%          3%
    interest-bearing
    
    Savings             72,381             70,966            70,620            2%          2%
    
    Time                33,475             33,654            33,760            (1)%        (1)%
    
    Total               319,306            315,944           307,971           1%          4%
    
    Average balance
    per account:
    
    Demand, non         $8.6               $8.6              $8.7
    interest-bearing
    
    Demand,             47.0               47.5              48.2
    interest-bearing
    
    Savings             4.1                4.2               4.4
    
    Time                69.6               68.4              57.3
    
    Total               21.3               21.5              20.7
    
    (1) Core deposits are defined as total deposits less time deposits greater than $100,000.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Credit Quality
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                                  Quarter Ended                Quarter     Year
    
    Dollars in      Jun 30, 2009  Mar 31, 2009   Jun 30, 2008  % Change    % Change
    thousands
    
    Allowance for
    credit losses:
    
    Balance
    beginning of    $95,086       $95,865        $86,560
    period
    
    Provision for
    loan and lease  29,331        59,092         25,137        (50)%       17%
    losses
    
    Charge-offs     (26,508)      (60,414)       (38,752)      (56)%       (32)%
    
    Less:           461           543            776           (15)%       (41)%
    Recoveries
    
    Net             (26,047)      (59,871)       (37,976)      (56)%       (31)%
    charge-offs
    
    Total
    Allowance for   98,370        95,086         73,721        3%          33%
    loan and lease
    losses
    
    Reserve for
    unfunded        860           935            1,112
    commitments
    
    Total
    Allowance for   $99,230       $96,021        $74,833       3%          33%
    credit losses
    
    Net
    charge-offs to
    average loans   1.71%         3.96%          2.51%
    and leases
    (annualized)
    
    Recoveries to
    gross           1.74%         0.90%          2.00%
    charge-offs
    
    Allowance for
    credit losses   1.63%         1.58%          1.22%
    to loans and
    leases
    
    Nonperforming
    assets:
    
    Loans on
    non-accrual     $104,726      $112,949       $94,666       (7)%        11%
    status
    
    Loans past due
    90+ days &      9,207         13,780         3,911         (33)%       135%
    accruing
    
    Total
    nonperforming   113,933       126,729        98,577        (10)%       16%
    loans
    
    Other real
    estate owned    36,030        32,766         5,826         10%         518%
    (1)
    
    Total
    nonperforming   $149,963      $159,495       $104,403      (6)%        44%
    assets
    
    Nonperforming
    loans to total  1.87%         2.08%          1.61%
    loans and
    leases
    
    Nonperforming
    assets to       1.71%         1.82%          1.25%
    total assets
    
    Past due 30-89  $48,755       $89,699        $18,897       (46)%       158%
    days
    
    Past due 30-89
    days to total   0.80%         1.47%          0.31%
    loans and
    leases
    
    (1) Other real estate owned for 6/30/09 and 3/31/09 includes $8.9 million of
    real estate legally sold, but for lack of initial investment of the purchaser,
    was not accounted for as a sale, and therefore continues to be reported as other
    real estate owned.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Credit Quality (continued)
    
    (Unaudited)
    
                                               Six Months Ended:
    
    Dollars in thousands                       Jun 30, 2009  Jun 30, 2008  % Change
    
    Allowance for credit losses
    
    Balance beginning of period                $95,865       $84,904
    
    Provision for loan and lease losses        88,423        40,269        120%
    
    Charge-offs                                (86,922)      (52,722)      65%
    
    Less: Recoveries                           1,004         1,270         (21)%
    
    Net charge-offs                            (85,918)      (51,452)      67%
    
    Total Allowance for loan and lease losses  98,370        73,721        33%
    
    Reserve for unfunded commitments           860           1,112
    
    Total Allowance for credit losses          $99,230       $74,833       33%
    
    Net charge-offs to average loans and       2.83%         1.70%
    leases
    
    Recoveries to gross charge-offs            1.16%         2.41%
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Selected Ratios
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
                     Jun 30, 2009  Mar 31, 2009  Jun 30, 2008  Change      Change
    
    Net Interest
    Spread:
    
    Yield on loans   5.81%         5.79%         6.44%         0.02        (0.63)
    and leases
    
    Yield on
    taxable          4.45%         4.83%         4.93%         (0.38)      (0.48)
    investments
    
    Yield on
    tax-exempt       5.75%         5.79%         5.62%         (0.04)      0.13
    investments (1)
    
    Yield on
    temporary        0.18%         0.24%         2.00%         (0.06)      (1.82)
    investments
    
    Total yield on
    earning assets   5.56%         5.61%         6.23%         (0.05)      (0.67)
    (1)
    
    Cost of
    interest         1.60%         1.82%         2.45%         (0.22)      (0.85)
    bearing
    deposits
    
    Cost of
    securities sold
    under
    agreements to    1.06%         1.26%         2.09%         (0.20)      (1.03)
    repurchase and
    fed funds
    purchased
    
    Cost of term     3.63%         3.45%         3.51%         0.18        0.12
    debt
    
    Cost of junior
    subordinated     4.93%         5.30%         5.53%         (0.37)      (0.60)
    debentures
    
    Total cost of
    interest         1.75%         1.99%         2.61%         (0.24)      (0.86)
    bearing
    liabilities
    
    Net interest     3.81%         3.62%         3.62%         0.19        0.19
    spread (1)
    
    Net interest
    margin -         4.20%         4.07%         4.15%         0.13        0.05
    Consolidated
    (1)
    
    Net interest
    margin - Bank    4.33%         4.20%         4.33%         0.13        0.00
    (1)
    
    Return on        0.20%         (0.86)%       0.49%         1.06        (0.29)
    average assets
    
    Return on
    average          0.22%         (0.94)%       0.54%         1.16        (0.32)
    tangible assets
    
    Return on
    average common   1.40%         (5.80)%       3.24%         7.20        (1.84)
    equity
    
    Return on
    average          3.45%         (14.07)%      8.21%         17.52       (4.76)
    tangible common
    equity
    
    Efficiency
    ratio -          62.31%        65.32%        57.59%        (3.01)      4.72
    Consolidated
    
    Efficiency       64.71%        62.41%        56.52%        2.30        8.19
    ratio - Bank
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent basis using a
    35% tax rate.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Selected Ratios
    
    (Unaudited)
    
                                                 Six Months Ended:
    
                                                 Jun 30, 2009  Jun 30, 2008  Change
    
    Net Interest Spread:
    
    Yield on loans and leases                    5.80%         6.66%         (0.86)
    
    Yield on taxable investments                 4.64%         4.61%         0.03
    
    Yield on tax-exempt investments (1)          5.77%         5.59%         0.18
    
    Yield on temporary investments               0.22%         2.70%         (2.48)
    
    Total yield on earning assets (1)            5.59%         6.38%         (0.79)
    
    Cost of interest bearing deposits            1.71%         2.74%         (1.03)
    
    Cost of securities sold under agreements to  1.15%         2.60%         (1.45)
    repurchase and fed funds purchased
    
    Cost of term debt                            3.52%         3.69%         (0.17)
    
    Cost of junior subordinated debentures       5.12%         6.11%         (0.99)
    
    Total cost of interest bearing liabilities   1.87%         2.91%         (1.04)
    
    Net interest spread (1)                      3.72%         3.47%         0.25
    
    Net interest margin - Consolidated (1)       4.14%         4.06%         0.08
    
    Net interest margin - Bank (1)               4.26%         4.26%         0.00
    
    Return on average assets                     (0.32)%       0.84%         (1.16)
    
    Return on average tangible assets            (0.35)%       0.93%         (1.28)
    
    Return on average equity                     (2.21)%       5.57%         (7.78)
    
    Return on average tangible equity            (5.39)%       14.22%        (19.61)
    
    Efficiency ratio - Consolidated              63.70%        52.30%        (11.40)
    
    Efficiency ratio - Bank                      63.59%        50.54%        (13.05)
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent basis using a
    35% tax rate.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Average Balances
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
    Dollars in       Jun 30, 2009  Mar 31, 2009  Jun 30, 2008  % Change    % Change
    thousands
    
    Temporary        $41,449       $52,063       $17,538       (20)%       136%
    investments
    
    Investment
    securities,      1,249,218     1,188,859     892,619       5%          40%
    taxable
    
    Investment
    securities,      198,999       183,581       173,171       8%          15%
    tax-exempt
    
    Loans held for   41,273        44,226        23,290        (7)%        77%
    sale
    
    Loans and        6,095,815     6,135,710     6,091,914     (1)%        0%
    leases
    
    Total earning    7,626,754     7,604,439     7,198,532     0%          6%
    assets
    
    Goodwill &
    other            755,647       757,055       762,398       0%          (1)%
    intangible
    assets, net
    
    Total assets     8,746,777     8,713,845     8,320,962     0%          5%
    
    Non interest
    bearing demand   1,303,909     1,251,971     1,248,093     4%          4%
    deposits
    
    Interest
    bearing          5,499,990     5,450,614     5,172,049     1%          6%
    deposits
    
    Total deposits   6,803,899     6,702,585     6,420,142     2%          6%
    
    Interest
    bearing          5,902,284     5,911,972     5,731,942     0%          3%
    liabilities
    
    Shareholders'    1,271,669     1,288,744     1,258,591     (1)%        1%
    equity - common
    
    Tangible common  516,022       531,689       496,193       (3)%        4%
    equity
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Average Balances
    
    (Unaudited)
    
                                             Six Months Ended:
    
    Dollars in thousands                     Jun 30, 2009  Jun 30, 2008  % Change
    
    Temporary investments                    $46,727       $21,612       116%
    
    Investment securities, taxable           1,219,205     884,716       38%
    
    Investment securities, tax-exempt        191,333       173,460       10%
    
    Loans held for sale                      42,741        21,284        101%
    
    Loans and leases                         6,115,652     6,077,501     1%
    
    Total earning assets                     7,615,658     7,178,573     6%
    
    Goodwill & other intangible assets, net  756,347       763,194       (1)%
    
    Total assets                             8,730,402     8,304,302     5%
    
    Non interest bearing demand deposits     1,278,083     1,249,360     2%
    
    Interest bearing deposits                5,475,438     5,213,438     5%
    
    Total deposits                           6,753,521     6,462,798     4%
    
    Interest bearing liabilities             5,907,101     5,715,791     3%
    
    Shareholders' equity - common            1,280,159     1,253,991     2%
    
    Tangible common equity                   523,812       490,797       7%
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Mortgage Banking Activity
    
    (unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
    Dollars in       Jun 30, 2009  Mar 31, 2009  Jun 30, 2008  % Change    % Change
    thousands
    
    Mortgage
    Servicing
    Rights (MSR):
    
    Mortgage loans
    serviced for     $1,122,891    $1,038,715    $922,039      8%          22%
    others
    
    MSR Asset, at    $10,631       $8,732        $11,576       22%         (8)%
    fair value
    
    MSR as % of
    serviced         0.95%         0.84%         1.26%
    portfolio
    
    Mortgage
    Banking
    Revenue:
    
    Origination and  $5,889        $4,857        $1,284        21%         359%
    sale
    
    Servicing        738           654           603           13%         22%
    
    Change in fair
    value of MSR     (368)         (1,441)       1,800         (74)%       (120)%
    asset
    
    Total Mortgage   $6,259        $4,070        $3,687        54%         70%
    Banking Revenue
    
    Closed loan      $234,023      $191,713      $92,403       22%         153%
    volume
    
                     Six Months Ended:
    
    Dollars in       Jun 30, 2009  Jun 30, 2008  % Change
    thousands
    
    Mortgage
    Banking
    Revenue:
    
    Origination and  $10,746       $3,136        243%
    sale
    
    Servicing        1,392         1,203         16%
    
    Change in fair
    value of MSR     (1,809)       (124)         nm
    asset
    
    Change in fair
    value of MSR     --            (2,398)       (100)%
    hedge
    
    Total Mortgage   $10,329       $1,817        468%
    Banking Revenue
    
    Closed loan      $425,736      $173,343      146%
    volume
    
    nm = not meaningful
    
    
    
    

    
        Source: Umpqua Holdings Corporation
    

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