• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports Third Quarter 2009 Results
    Company Release - 10/15/2009 08:00

    Net loss available to common shareholders of $0.14 per share for third quarter

    Non-performing assets as % of total assets declined to 1.70% during third quarter

    Deposits increased $401 million during third quarter

    PORTLAND, Ore.--(BUSINESS WIRE)-- Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc. today announced a third quarter 2009 net loss of $7.1 million. Including preferred stock dividends of $3.2 million, the net loss available to common shareholders was $10.4 million, or $0.14 per diluted share.

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

    • Provision for loan losses of $52.1 million;
    • Total net charge-offs of $47.3 million;
    • The allowance for credit losses increased from 1.63% to 1.71% of total loans during the third quarter;
    • Non-performing assets to total assets decreased on a sequential quarter basis from 1.73% to 1.70%;
    • Non-performing loans to total loans increased on a sequential quarter basis from 1.87% to 2.13%;
    • Total deposits increased $401 million, or 6%, on a sequential quarter basis;
    • Net interest margin, on a tax equivalent basis, decreased 15 basis points during the quarter to 4.05%, due in part to 6 basis points from interest reversals on new non-accrual loans, and holding a larger interest bearing cash position;
    • The cost of interest bearing deposits for the third quarter was 1.50%, a decrease of 10 basis points from the second quarter of 2009;
    • Mortgage banking revenue was $4.3 million on closed mortgage loan volume of $159 million;
    • Gain on fair value of junior subordinated debentures of $1.0 million;
    • Net loss on other real estate owned was $8.6 million;
    • Tangible common equity ratio of 8.88% and tangible book value per common share of $8.76, up from 6.37% and $8.47, respectively, as of June 30, 2009, based on a successful underwritten public offering of common stock in August 2009; and
    • Total risk based capital of 17.52%, up from 14.27% as of June 30, 2009.

    "This past quarter was highlighted by the Company's $259 million capital raise, strong deposit growth of over $400 million and continued progress in resolving credit issues," said Ray Davis, president and CEO of Umpqua Holdings Corporation. "As we wind down our exposure to residential development loans, management will remain as focused and aggressive on resolving troubled loans throughout other areas of our portfolio as they are identified. Until the national economy is on solid footing, we realize we will still have work to accomplish in leading Umpqua through the end of this recession. The management team here at Umpqua is confident that the company will emerge from this economy strong and ready to take advantage of future opportunities."

    Asset quality

    Non-performing assets were $156.0 million, or 1.70% of total assets, as of September 30, 2009, compared to $150.0 million, or 1.73% of total assets as of June 30, 2009. Of this amount, $5.6 million represented loans past due greater than 90 days and still accruing interest, $123.7 million represented non-accrual loans, and $26.7 million was other real estate owned (OREO).

    The Company has aggressively charged-down impaired assets to their disposition values, and are expected to be resolved at those levels, absent further declines in market prices. As of September 30, 2009, the non-performing assets of $156.0 million have been written down by 44%, or $121.4 million, from their original balance of $277.4 million.

    The provision for loan losses for the third quarter of 2009 was $52.1 million. Total net charge-offs for the third quarter of 2009 were $47.3 million, which represented 3.07% of average loans on an annualized basis. The allowance for credit losses increased to 1.71% of total loans as of September 30, 2009, compared to 1.63% of total loans as of June 30, 2009 and 1.54% of total loans as of September 30, 2008.

    Loans past due 30-89 days were $46.1 million, or 0.76% of total loans as of September 30, 2009. This amount declined 6% from June 30, 2009, and declined 36% from September 30, 2008.

    Since 2007, 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:

    
    Credit quality trends
    
    (Dollars in thousands)
    
              Provision   Net            Allowance                 Non-performing
    
              for         charge-offs    for credit   30-89 days   assets to
                                         loss
    
              loan loss   (recoveries)   to loans %   past due %   total assets %
    
    Q1 2007   $83         $(90)          1.14%        0.17%        0.18%
    
    Q2 2007   3,413       31             1.17%        0.56%        0.59%
    
    Q3 2007   20,420      865            1.47%        0.99%        0.96%
    
    Q4 2007   17,814      21,188         1.42%        0.64%        1.18%
    
    Q1 2008   15,132      13,476         1.45%        1.13%        1.06%
    
    Q2 2008   25,137      37,976         1.22%        0.31%        1.25%
    
    Q3 2008   35,454      15,193         1.54%        1.16%        1.66%
    
    Q4 2008   31,955      30,072         1.58%        0.96%        1.88%
    
    Q1 2009   59,092      59,871         1.58%        1.47%        1.82%
    
    Q2 2009   29,331      26,047         1.63%        0.80%        1.73%
    
    Q3 2009   52,108      47,342         1.71%        0.76%        1.70%
    
    Total     $289,939    $251,971
    
    
    
    

    Loan portfolio

    Construction loan portfolio

    Total construction loans as of September 30, 2009 decreased 6% from June 30, 2009, and decreased 24% from September 30, 2008. Within the construction loan portfolio, the residential development loan segment was $258.5 million, or 4% of the total loan portfolio. Of this amount, $50.8 million represented non-performing loans, and $207.7 million represented performing loans, which were 3% of the total loan portfolio. The residential development loan segment has decreased $197 million, or 43%, from September 30, 2008.

    Approximately 36% of the remaining performing residential development portfolio was comprised of loans greater than $5 million, and 53% representing loans with balances less than $3 million.

    The remaining $490 million in construction loans as of September 30, 2009 was primarily 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 $17.4 million at September 30, 2009, with $9.4 million, or 1.9% of total commercial construction projects, past due 30-89 days as of September 30, 2009.

    Commercial real estate loan portfolio

    The total term commercial real estate loan portfolio was $3.4 billion as of September 30, 2009. Of this total, $2.4 billion are non-owner occupied, and $1.0 billion are owner occupied as of September 30, 2009. Of the total portfolio, $14.4 million, or 0.4%, are past due 30-89 days as of September 30, 2009, down from $25.7 million, or 0.8% as of June 30, 2009. As shown in table 7 on page 25 of this release, 7% of the total commercial real estate portfolio matures between October 2009 and December 2010, 8% of the portfolio matures in years 2011-2012, and 19% in years 2013-2014. The remaining 66% of the portfolio matures in or after the year 2015.

    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.

    During the past 12 months, the Company has completed several rounds of stress testing on the commercial real estate portfolio, focusing on items such as capitalization rate, interest rate and vacancy factors. The results of the stress testing showed no significant issues, unlike our experience in the residential development construction portfolio. However, given the economic climate, we expect any potential issues that may arise in this portfolio will result from individual loans within distinct geographic areas and not represent a systemic weakness. We are well positioned to manage the exposure and work with our customers until the economic climate improves.

    Restructured loans

    Restructured loans were $182 million as of September 30, 2009. The Company will consider a loan for restructuring only if it is current on payments. The Company does not enter into restructurings on loans in non-performing status, and requires the customer to pledge additional collateral, maintain a minimum debt service coverage ratio of 1.0, and show substantial external sources of repayment prior to the Company agreeing to restructure.

    Additional detail on credit quality, trends, the loan portfolio by segment and non-performing assets

    Additional tables are included at the end of this earnings release covering the following aspects of the Company's loan portfolio: residential development loan trends by region, residential development loan stratification by size and by region, non-performing asset detail by type and by region, loans past due 30-89 days by type and by region, loans past due 30-89 days trends, commercial real estate loan portfolio by type and by region, commercial real estate loan portfolio by type and by year of maturity, commercial real estate loan portfolio by type and by year of origination, commercial construction loan portfolio by type and by region, and commercial loan portfolio by type and by region.

    Net interest margin

    The Company reported a tax equivalent net interest margin of 4.05% for the third quarter of 2009, compared to 4.20% for the second quarter of 2009, and 4.12% for the third quarter of 2008. The decrease in net interest margin resulted primarily from holding higher levels of interest bearing cash, which bear lower interest rates, during the third quarter of 2009, along with interest reversals on new non-accrual loans. Interest reversals on new non-accrual loans during the third quarter of 2009 were $1.2 million, negatively impacting the net interest margin by 6 basis points. Excluding the reversals of interest, the net interest margin would have been 4.11% during the quarter. The cost of interest bearing deposits was 10 basis points lower than the second quarter of 2009.

    Mortgage banking revenue

    The Company generated $4.3 million in total mortgage banking revenue during the third quarter of 2009, on closed loan volume of $159 million, compared to revenue of $6.3 million for the second quarter of 2009, on closed loan volume of $234 million, and revenue of $1.0 million for the third quarter of 2008, on closed loan volume of $85 million.

    Approximately 55% of the third quarter 2009 closed loan volume was from refinance activity, with 45% from new purchase activity. Our application pipeline at September 30, 2009 was $132 million, with 45% of that total for refinances and 55% for new purchases.

    Fair value of junior subordinated debentures

    The Company recognized a gain from the change in fair value of junior subordinated debentures of $1.0 million during the third 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 September 30, 2009, the credit adjusted interest spread for potential new issuances was forecasted to be significantly higher. The difference between spreads creates the gain in fair value of the Company's junior subordinated debentures which results from their carrying amount compared to the estimated amount that would be paid to transfer the liability in an orderly transaction among market participants. 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 September 30, 2009, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $82.0 million.

    Non-interest expense

    Total non-interest expense for the third quarter of 2009 was $68.3 million, compared to $178.6 million for the second quarter of 2009. 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 the non-controllable or infrequently occurring items, the remaining non-interest expense items totaled $56.4 million for the third quarter of 2009, down slightly from $56.7 million for the second quarter of 2009. This decrease related mainly to decreases in variable expense related to our mortgage operation (on decreased revenue).

    Total FDIC deposit insurance assessments during the third quarter of 2009 were $3.3 million, a decrease of 50% from the second quarter of 2009, and an increase of 152% over the third quarter of 2008. The sequential quarter decrease resulted from an industry-wide special assessment in the second quarter of 2009 of $4.0 million. The increase over the prior year resulted from an overall industry-wide increase in assessments as the FDIC is replenishing the deposit insurance fund.

    Balance sheet

    Total consolidated assets as of September 30, 2009 were $9.2 billion, compared to $8.7 billion on June 30, 2009 and $8.3 billion a year ago. Total gross loans and leases, and deposits, were $6.1 billion and $7.2 billion, respectively, as of September 30, 2009, compared to $6.2 and $6.5 billion, respectively, as of September 30, 2008.

    Total loans decreased $23 million during the third quarter of 2009. Total gross loan fundings during the third quarter of 2009 were $410 million, which were offset by payments received on previously funded loans of $385 million, and gross charge-offs of $48 million, resulting in the overall decrease of $23 million in loans during the third quarter.

    Total deposits increased $401 million during the third quarter of 2009. Deposits from public entities declined $134 million during the third quarter. Excluding this, deposits from consumers and businesses increased $535 million during the third quarter. Over 4,400 new non-interest bearing demand accounts were opened in the third quarter of 2009, and approximately 10,800 new deposit accounts opened in total. Average non-interest bearing demand deposits increased $21 million over the second quarter of 2009.

    At September 30, 2009, the Company had $262 million of interest bearing cash earning 0.25%, the target Federal Funds Rate. This excess balance sheet liquidity has been increased as investment security alternatives in the current market are unattractive given the historically low interest rate environment. The Company plans to hold this extra interest bearing cash position until the investment alternatives in the market improve from a return/duration standpoint. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $3 billion as of September 30, 2009, representing 33% of total assets and 41% of total deposits.

    Capital

    As of September 30, 2009, total shareholders' equity was $1.6 billion, comprised of $204 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 equity available to common shareholders of $1.4 billion. Book value per common share was $16.16, tangible book value per common share was $8.76 and the ratio of tangible common equity to tangible assets was 8.88%.

    In August 2009, the Company completed an underwritten public offering of common stock raising $258.7 million by issuing 26,538,461 shares of the Company's common stock, including 3,461,538 shares pursuant to the underwriters' over-allotment option, at a price of $9.75 per share. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $245.7 million. The net proceeds from the offering qualify as tangible common equity and Tier 1 capital and will be used for general corporate purposes, which may include capital to support growth and acquisition opportunities and to position the Company for eventual redemption of preferred stock issued to the U.S. Treasury under the Capital Purchase Program.

    The Company's estimated total risk-based capital ratio as of September 30, 2009 is 17.52%, and has increased from 11.30% as of September 30, 2008. Our total risk-based capital level is well in excess of the regulatory definition of "well capitalized" of 10.00%. This capital ratio as of September 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 September 30, 2009 would have been 14.60%, an increase from the 11.30% as of September 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.

    After completion of the underwritten public offering of common stock in August 2009, the number of shares of common stock underlying the warrant issued to the U.S. Treasury were reduced by 50%, and now total 1,110,898 at the same exercise price of $14.46 per share.

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

    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 certain non-GAAP financial measures provide investors with information useful in understanding Umpqua's financial performance, however, readers of this report are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

    Umpqua incurs significant expenses related to the completion and integration of mergers. Additionally, we may recognize goodwill impairment losses that have no direct effect on the Company's or the Bank's cash balances, liquidity, or regulatory capital ratios. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges. We define operating earnings as earnings available to common shareholders before merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating income by the same diluted share total used in determining diluted earnings per common share.

    The following table provides the reconciliation of net (loss) earnings available to common shareholders (GAAP) to operating (loss) earnings (non-GAAP), and net (loss) earnings per diluted common share (GAAP) to operating (loss) earnings per diluted share (non-GAAP) for the periods presented:

    
                                                              Sequential   Year over
    
                           Quarter ended:                     Quarter      Year
    
    (Dollars in
    thousands, except      9/30/09     6/30/09      9/30/08   % Change     % Change
    per share data)
    
    Net (loss) earnings
    available to common    $(10,376)   $(107,514)   $12,350   90%          (184)%
    shareholders
    
    Add back: Merger
    expense, net of tax,   --          111,996      --        nm           nm
    and goodwill
    impairment
    
    Operating (loss)       $(10,376)   $4,482       $12,350   (332)%       (184)%
    earnings
    
    Earnings (loss) per
    diluted share:
    
    Net (loss) earnings
    available to common    $(0.14)     $(1.79)      $0.20     (92)%        (170)%
    shareholders
    
    Operating (loss)       $(0.14)     $0.07        $0.20     (300)%       (170)%
    earnings
    
    
    
    
    
                                              Nine months ended:     Year over Year
    
                                              9/30/09      9/30/08   % Change
    
    Net (loss) earnings available to common   $(136,338)   $47,065   (390)%
    shareholders
    
    Add back: Merger expense, net of tax,     112,116      --        nm
    and goodwill impairment
    
    Operating (loss) earnings                 $(24,222)    $47,065   (151)%
    
    Earnings (loss) per diluted share:
    
    Net (loss) earnings available to common   $(2.10)      $0.78     (369)%
    shareholders
    
    Operating (loss) earnings                 $(0.37)      $0.78     (147)%
    
    nm = not meaningful
    
    
    
    

    Management believes "tangible common equity" and the "tangible common equity ratio" are meaningful measures 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      9/30/09      6/30/09      9/30/08
    data
    
    Total shareholders' equity                  $1,606,150   $1,356,423   $1,247,068
    
    Subtract:
    
    Preferred stock                             203,779      203,231      --
    
    Goodwill and other intangible assets, net   641,759      643,080      760,252
    
    Tangible common shareholders' equity        $760,612     $510,112     $486,816
    
    Total assets                                $9,204,346   $8,656,677   $8,327,633
    
    Subtract:
    
    Goodwill and other intangible assets, net   641,759      643,080      760,252
    
    Tangible assets                             $8,562,587   $8,013,597   $7,567,381
    
    Common shares outstanding at period end     86,780,559   60,237,042   60,124,192
    
    Tangible common equity ratio                8.88%        6.37%        6.43%
    
    Tangible book value per common share        $8.76        $8.47        $8.10
    
    
    
    

    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 153 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, October 15, 2009, at 10:00 a.m. PT (1:00 p.m. ET) during which the Company will discuss third 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 "33238668." 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 resolution of non-accrual loans. 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, and loss of, or inability to recruit, personnel to manage problem credits.

    
    Umpqua Holdings Corporation
    
    Consolidated Statements of Income
    
    (Unaudited)
    
                    Quarter Ended:
    
                                                             Sequential   Year over
    
                                                             Quarter      Year
    
    Dollars in
    thousands,      Sep 30,      Jun 30,      Sep 30, 2008   % Change     % Change
    except per      2009         2009
    share data
    
    Interest
    income
    
    Loans and       $89,474      $88,940      $98,180        1%           (9)%
    leases
    
    Interest and
    dividends on
    investments:
    
    Taxable         15,365       13,889       9,725          11%          58%
    
    Exempt from
    federal         2,020        1,935        1,644          4%           23%
    income tax
    
    Dividends       22           --           104            nm           (79)%
    
    Temporary
    investments &   207          19           69             989%         200%
    interest
    bearing cash
    
    Total
    interest        107,088      104,783      109,722        2%           (2)%
    income
    
    Interest
    expense
    
    Deposits        22,132       21,957       30,025         1%           (26)%
    
    Repurchase
    agreements      163          180          714            (9)%         (77)%
    and fed funds
    purchased
    
    Junior
    subordinated    2,114        2,395        3,211          (12)%        (34)%
    debentures
    
    Term debt       917          1,262        2,064          (27)%        (56)%
    
    Total
    interest        25,326       25,794       36,014         (2)%         (30)%
    expense
    
    Net interest    81,762       78,989       73,708         4%           11%
    income
    
    Provision for
    loan and        52,108       29,331       35,454         78%          47%
    lease losses
    
    Non-interest
    income
    
    Service         8,542        8,322        8,911          3%           (4)%
    charges
    
    Brokerage       1,993        1,745        2,319          14%          (14)%
    fees
    
    Mortgage
    banking         4,288        6,259        1,027          (31)%        318%
    revenue, net
    
    Net (loss)
    gain on         158          (1,270)      (2,477)        (112)%       (106)%
    investment
    securities
    
    Gain on
    junior
    subordinated    982          8,611        25,311         (89)%        (96)%
    debentures
    carried at
    fair value
    
    Other income    1,962        3,383        1,573          (42)%        25%
    
    Total
    non-interest    17,925       27,050       36,664         (34)%        (51)%
    income
    
    Non-interest
    expense
    
    Salaries and    31,583       32,041       29,131         (1)%         8%
    benefits
    
    Occupancy and   9,937        9,708        9,340          2%           6%
    equipment
    
    Intangible      1,319        1,362        1,437          (3)%         (8)%
    amortization
    
    FDIC            3,321        6,699        1,318          (50)%        152%
    assessments
    
    Net loss on
    other real      8,641        3,170        2,193          173%         294%
    estate owned
    
    VISA            --           --           2,085          nm           (100)%
    litigation
    
    Goodwill        --           111,952      --             (100)%       nm
    impairment
    
    Merger
    related         --           73           --             (100)%       nm
    expenses
    
    Other           13,548       13,598       12,986         0%           4%
    
    Total
    non-interest    68,349       178,603      58,490         (62)%        17%
    expense
    
    Income (loss)
    before          (20,770)     (101,895)    16,428         (80)%        (226)%
    provision for
    income taxes
    
    Provision
    (benefit) for   (13,626)     2,396        4,041          (669)%       (437)%
    income tax
    
    Net income      (7,144)      (104,291)    12,387         (93)%        (158)%
    (loss)
    
    Dividends and
    undistributed
    earnings
    allocated to    7            7            37             0%           (81)%
    participating
    equity
    securities
    
    Preferred
    stock           3,225        3,216        --             0%           nm
    dividend -
    undeclared
    
    Net earnings
    (loss)
    available to    $(10,376)    $(107,514)   $12,350        (90)%        (184)%
    common
    shareholders
    
    Weighted
    average         74,084,640   60,221,023   60,096,637     23%          23%
    shares
    outstanding
    
    Weighted
    average
    diluted         74,084,640   60,221,023   60,429,085     23%          23%
    shares
    outstanding
    
    Earnings
    (loss) per      $(0.14)      $(1.79)      $0.21          (92)%        (167)%
    common share
    - Basic
    
    Earnings
    (loss) per      $(0.14)      $(1.79)      $0.20          (92)%        (170)%
    common share
    - Diluted
    
    nm = not meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Consolidated Statements of Income
    
    (Unaudited)
    
                                              Nine Months Ended:
    
    Dollars in thousands, except per share    Sep 30, 2009   Sep 30, 2008   % Change
    data
    
    Interest income
    
    Loans and leases                          $266,587       $300,295       (11)%
    
    Interest and dividends on investments:
    
    Taxable                                   43,625         29,936         46%
    
    Exempt from federal income tax            5,755          5,000          15%
    
    Dividends                                 22             298            (93)%
    
    Temporary investments & interest          258            359            (28)%
    bearing cash
    
    Total interest income                     316,247        335,888        (6)%
    
    Interest expense
    
    Deposits                                  68,552         101,118        (32)%
    
    Repurchase agreements and fed funds       527            1,958          (73)%
    purchased
    
    Junior subordinated debentures            7,069          10,349         (32)%
    
    Other borrowings                          3,935          5,200          (24)%
    
    Total interest expense                    80,083         118,625        (32)%
    
    Net interest income                       236,164        217,263        9%
    
    Provision for loan and lease losses       140,531        75,723         86%
    
    Non-interest income
    
    Service charges                           24,565         26,107         (6)%
    
    Brokerage fees                            5,117          6,564          (22)%
    
    Mortgage banking revenue, net             14,617         2,844          414%
    
    Net gain (loss) on investment             (1,077)        1,422          (176)%
    securities
    
    Gain on junior subordinated debentures    10,173         30,152         (66)%
    carried at fair value
    
    Proceeds from Visa mandatory partial      --             12,633         (100)%
    redemption
    
    Other income                              7,097          6,515          9%
    
    Total non-interest income                 60,492         86,237         (30)%
    
    Non-interest expense
    
    Salaries and benefits                     94,697         85,043         11%
    
    Occupancy and equipment                   29,266         27,605         6%
    
    Intangible amortization                   4,043          4,419          (9)%
    
    FDIC assessments                          12,645         3,814          232%
    
    Net loss on other real estate owned       14,110         5,655          150%
    
    Visa litigation                           --             (3,098)        (100)%
    
    Goodwill impairment                       111,952        --             nm
    
    Merger related expenses                   273            --             nm
    
    Other                                     39,917         36,828         8%
    
    Total non-interest expense                306,903        160,266        91%
    
    Income (loss) before provision for        (150,778)      67,511         (323)%
    income taxes
    
    Provision (benefit) for income tax        (24,094)       20,297         (219)%
    
    Net income (loss)                         (126,684)      47,214         (368)%
    
    Dividends and undistributed earnings
    allocated to participating equity         22             149            (85)%
    securities
    
    Preferred stock dividend - undeclared     9,632          --             nm
    
    Net earnings (loss) available to common   $(136,338)     $47,065        (390)%
    shareholders
    
    Weighted average shares outstanding       64,878,125     60,066,908     8%
    
    Weighted average diluted shares           64,878,125     60,400,299     7%
    outstanding
    
    Earnings (loss) per share - Basic         $(2.10)        $0.78          (369)%
    
    Earnings (loss) per share - Diluted       $(2.10)        $0.78          (369)%
    
    nm = not meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Consolidated Balance Sheets
    
    (Unaudited)
    
                                                             Sequential   Year over
    
                                                             Quarter      Year
    
    Dollars in
    thousands,      Sep 30,      Jun 30,      Sep 30, 2008   % Change     % Change
    except per      2009         2009
    share data
    
    Assets:
    
    Cash and due
    from banks,     $108,768     $115,476     $161,282       (6)%         (33)%
    non-interest
    bearing
    
    Cash and due
    from banks,     261,642      15,878       --             nm           nm
    interest
    bearing
    
    Temporary       575          962          5,556          (40)%        (90)%
    investments
    
    Investment
    securities:
    
    Trading         1,912        2,247        1,531          (15)%        25%
    
    Available for   1,848,482    1,465,342    963,714        26%          92%
    sale
    
    Held to         6,211        6,344        16,609         (2)%         (63)%
    maturity
    
    Loans held      23,614       52,863       14,061         (55)%        68%
    for sale
    
    Loans and       6,071,042    6,093,957    6,161,541      0%           (1)%
    leases
    
    Less:
    Allowance for   (103,136)    (98,370)     (93,982)       5%           10%
    loan and
    lease losses
    
    Loans and       5,967,906    5,995,587    6,067,559      0%           (2)%
    leases, net
    
    Restricted
    equity          15,211       16,491       19,573         (8)%         (22)%
    securities
    
    Premises and
    equipment,      101,883      103,553      105,341        (2)%         (3)%
    net
    
    Mortgage
    servicing       11,552       10,631       10,738         9%           8%
    rights, at
    fair value
    
    Goodwill and
    other           641,759      643,080      760,252        0%           (16)%
    intangibles,
    net
    
    Other real      26,705       36,030       19,753         (26)%        35%
    estate owned
    
    Other assets    188,126      192,193      181,664        (2)%         4%
    
    Total assets    $9,204,346   $8,656,677   $8,327,633     6%           11%
    
    Liabilities:
    
    Deposits        $7,215,821   $6,814,705   $6,493,671     6%           11%
    
    Securities
    sold under      50,031       56,358       52,174         (11)%        (4)%
    agreements to
    repurchase
    
    Fed funds       --           66,000       40,000         (100)%       (100)%
    purchased
    
    Term debt       76,329       106,396      206,694        (28)%        (63)%
    
    Junior
    subordinated    81,992       83,036       101,247        (1)%         (19)%
    debentures,
    at fair value
    
    Junior
    subordinated
    debentures,     103,269      103,349      103,879        0%           (1)%
    at amortized
    cost
    
    Other           70,754       70,410       82,900         0%           (15)%
    liabilities
    
    Total           7,598,196    7,300,254    7,080,565      4%           7%
    liabilities
    
    Shareholders'
    equity:
    
    Preferred       203,779      203,231      --             0%           nm
    stock
    
    Common stock    1,252,786    1,006,660    992,402        24%          26%
    
    Retained        118,204      132,923      264,379        (11)%        (55)%
    earnings
    
    Accumulated
    other           31,381       13,609       (9,713)        131%         (423)%
    comprehensive
    income (loss)
    
    Total
    shareholders'   1,606,150    1,356,423    1,247,068      18%          29%
    equity
    
    Total
    liabilities
    and             $9,204,346   $8,656,677   $8,327,633     6%           11%
    shareholders'
    equity
    
    Common shares
    outstanding     86,780,559   60,237,042   60,124,192     44%          44%
    at period end
    
    Book value
    per common      $16.16       $19.14       $20.74         (16)%        (22)%
    share
    
    Tangible book
    value per       $8.76        $8.47        $8.10          3%           8%
    common share
    
    Tangible
    equity -        $760,612     $510,112     $486,816       49%          56%
    common
    
    Tangible
    common equity   8.88%        6.37%        6.43%
    to tangible
    assets
    
    nm = not
    meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Loan Portfolio
    
    (Unaudited)
    
                                                                            Sequential  Year
                                                                                        over
    
    Dollars in     Sep 30, 2009       Jun 30, 2009       Sep 30, 2008       Quarter     Year
    thousands
    
    Loans and                                                                           %
    leases by      Amount      Mix    Amount      Mix    Amount      Mix    % Change    Change
    class:
    
    Commercial     $3,438,923  57%    $3,373,624  55%    $3,234,180  52%    2%          6%
    real estate
    
    Residential    441,613     7%     429,775     7%     421,062     7%     3%          5%
    real estate
    
    Construction   748,337     12%    797,352     13%    988,452     16%    (6)%        (24)%
    
    Total real     4,628,873   76%    4,600,751   75%    4,643,694   75%    1%          0%
    estate
    
    Commercial     1,381,549   22%    1,429,856   23%    1,446,024   23%    (3)%        (4)%
    
    Leases         36,720      1%     37,806      1%     40,927      1%     (3)%        (10)%
    
    Installment    34,833      1%     36,314      1%     42,757      1%     (4)%        (19)%
    and other
    
    Deferred
    loan fees,     (10,933)    0%     (10,770)    0%     (11,861)    0%     2%          (8)%
    net
    
    Total loans    $6,071,042  100%   $6,093,957  100%   $6,161,541  100%   0%          (1)%
    and leases
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Deposits by Type/Core Deposits
    
    (Unaudited)
    
                                                                                  Sequential  Year
                                                                                              over
    
    Dollars in           Sep 30, 2009       Jun 30, 2009       Sep 30, 2008       Quarter     Year
    thousands
    
                         Amount      Mix    Amount      Mix    Amount      Mix    % Change    %
                                                                                              Change
    
    Demand, non          $1,337,280  19%    $1,316,648  19%    $1,263,520  19%    2%          6%
    interest-bearing
    
    Demand,              3,185,128   44%    2,875,843   43%    2,872,953   44%    11%         11%
    interest-bearing
    
    Savings              294,482     4%     293,972     4%     305,352     5%     0%          (4)%
    
    Time                 2,398,931   33%    2,328,242   34%    2,051,846   32%    3%          17%
    
    Total Deposits       $7,215,821  100%   $6,814,705  100%   $6,493,671  100%   6%          11%
    
    Total Core
    deposits-ending      $5,834,655  81%    $5,465,814  80%    $5,375,170  83%    7%          9%
    (1)
    
    Total Core
    deposits-quarterly   $5,734,243         $5,474,859         $5,305,817         5%          8%
    average (1)
    
    Number of open
    accounts:
    
    Demand, non          156,659            152,251            147,231            3%          6%
    interest-bearing
    
    Demand,              63,483             61,199             60,678             4%          5%
    interest-bearing
    
    Savings              74,421             72,381             70,272             3%          6%
    
    Time                 35,495             33,475             33,085             6%          7%
    
    Total                330,058            319,306            311,266            3%          6%
    
    Average balance
    per account:
    
    Demand, non          $8.5               $8.6               $8.6
    interest-bearing
    
    Demand,              50.2               47.0               47.3
    interest-bearing
    
    Savings              4.0                4.1                4.3
    
    Time                 67.6               69.6               62.0
    
    Total                21.9               21.3               20.9
    
    (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                       Quarter      Year
                               Ended
    
    Dollars in      Sep 30,    Jun 30, 2009   Sep 30, 2008   % Change     % Change
    thousands       2009
    
    Allowance for
    credit
    losses:
    
    Balance
    beginning of    $98,370    $95,086        $73,721
    period
    
    Provision for
    loan and        52,108     29,331         35,454         78%          47%
    lease losses
    
    Charge-offs     (48,443)   (26,508)       (17,108)       83%          183%
    
    Less:           1,101      461            1,915          139%         (43)%
    Recoveries
    
    Net             (47,342)   (26,047)       (15,193)       82%          212%
    charge-offs
    
    Total
    Allowance for   103,136    98,370         93,982         5%           10%
    loan and
    lease losses
    
    Reserve for
    unfunded        841        860            1,059
    commitments
    
    Total
    Allowance for   $103,977   $99,230        $95,041        5%           9%
    credit losses
    
    Net
    charge-offs
    to average      3.07%      1.71%          0.98%
    loans and
    leases
    (annualized)
    
    Recoveries to
    gross           2.27%      1.74%          11.19%
    charge-offs
    
    Allowance for
    credit losses   1.71%      1.63%          1.54%
    to loans and
    leases
    
    Nonperforming
    assets:
    
    Loans on
    non-accrual     $123,714   $104,726       $111,895       18%          11%
    status
    
    Loans past
    due 90+ days    5,614      9,207          6,406          (39)%        (12)%
    & accruing
    interest
    
    Total
    nonperforming   129,328    113,933        118,301        14%          9%
    loans
    
    Other real      26,705     36,030         19,753         (26)%        35%
    estate owned
    
    Total
    nonperforming   $156,033   $149,963       $138,054       4%           13%
    assets
    
    Nonperforming
    loans to        2.13%      1.87%          1.92%
    total loans
    and leases
    
    Nonperforming
    assets to       1.70%      1.73%          1.66%
    total assets
    
    Past due        $46,069    $48,755        $71,684        (6)%         (36)%
    30-89 days
    
    Past due
    30-89 days to   0.76%      0.80%          1.16%
    total loans
    and leases
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Credit Quality (continued)
    
    (Unaudited)
    
                                           Nine Months Ended:
    
    Dollars in thousands                   Sep 30, 2009   Sep 30, 2008   % Change
    
    Allowance for credit losses
    
    Balance beginning of period            $95,865        $84,904
    
    Provision for loan and lease losses    140,531        75,723         86%
    
    Charge-offs                            (135,365)      (69,830)       94%
    
    Less: Recoveries                       2,105          3,185          (34)%
    
    Net charge-offs                        (133,260)      (66,645)       100%
    
    Total Allowance for loan and lease     103,136        93,982         10%
    losses
    
    Reserve for unfunded commitments       841            1,059
    
    Total Allowance for credit losses      $103,977       $95,041        9%
    
    Net charge-offs to average loans and   2.91%          1.46%
    leases (annualized)
    
    Recoveries to gross charge-offs        1.56%          4.56%
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Selected Ratios
    
    (Unaudited)
    
                                                           Sequential   Year over
    
                   Quarter Ended:                          Quarter      Year
    
                   Sep 30,   Jun 30, 2009   Sep 30, 2008   Change       Change
                   2009
    
    Net Interest
    Spread:
    
    Yield on
    loans and      5.77%     5.81%          6.33%          (0.04)       (0.56)
    leases
    
    Yield on
    taxable        4.22%     4.45%          4.67%          (0.23)       (0.45)
    investments
    
    Yield on
    tax-exempt     5.86%     5.75%          5.73%          0.11         0.13
    investments
    (1)
    
    Yield on
    temporary
    investments    0.28%     0.18%          2.08%          0.10         (1.80)
    & interest
    bearing cash
    
    Total yield
    on earning     5.29%     5.56%          6.11%          (0.27)       (0.82)
    assets (1)
    
    Cost of
    interest       1.50%     1.60%          2.32%          (0.10)       (0.82)
    bearing
    deposits
    
    Cost of
    securities
    sold under
    agreements
    to             1.08%     1.06%          2.22%          0.02         (1.14)
    repurchase
    and fed
    funds
    purchased
    
    Cost of term   3.68%     3.63%          3.60%          0.05         0.08
    debt
    
    Cost of
    junior         4.50%     4.93%          5.54%          (0.43)       (1.04)
    subordinated
    debentures
    
    Total cost
    of interest    1.62%     1.75%          2.50%          (0.13)       (0.88)
    bearing
    liabilities
    
    Net interest   3.67%     3.81%          3.61%          (0.14)       0.06
    spread (1)
    
    Net interest
    margin -       4.05%     4.20%          4.12%          (0.15)       (0.07)
    Consolidated
    (1)
    
    Net interest
    margin -       4.15%     4.33%          4.29%          (0.18)       (0.14)
    Bank (1)
    
    As reported
    (GAAP):
    
    Return on
    average        (0.45)%   (4.93)%        0.59%          4.48         (1.04)
    assets
    
    Return on
    average        (0.49)%   (5.40)%        0.65%          4.91         (1.14)
    tangible
    assets
    
    Return on
    average        (3.19)%   (33.95)%       3.94%          30.76        (7.13)
    common
    equity
    
    Return on
    average
    tangible       (6.35)%   (83.57)%       10.08%         77.22        (16.43)
    common
    equity
    
    Efficiency
    ratio -        67.91%    166.97%        52.64%         (99.06)      15.27
    Consolidated
    
    Efficiency     65.21%    179.36%        64.67%         (114.15)     0.54
    ratio - Bank
    
    Excluding
    merger
    expense &
    goodwill
    impairment:
    
    Return on
    average        (0.45)%   0.21%          0.59%          (0.66)       (1.04)
    assets
    
    Return on
    average        (0.49)%   0.22%          0.65%          (0.71)       (1.14)
    tangible
    assets
    
    Return on
    average        (3.19)%   1.41%          3.94%          (4.60)       (7.13)
    common
    equity
    
    Return on
    average
    tangible       (6.35)%   3.48%          10.08%         (9.83)       (16.43)
    common
    equity
    
    Efficiency
    ratio -        67.91%    62.24%         52.64%         5.67         15.27
    Consolidated
    
    Efficiency     65.21%    64.63%         64.67%         0.58         0.54
    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)
    
                                               Nine Months Ended:
    
                                               Sep 30, 2009   Sep 30, 2008   Change
    
    Net Interest Spread:
    
    Yield on loans and leases                  5.79%          6.55%          (0.76)
    
    Yield on taxable investments               4.48%          4.63%          (0.15)
    
    Yield on tax-exempt investments (1)        5.80%          5.63%          0.17
    
    Yield on temporary investments &           0.27%          2.55%          (2.28)
    interest bearing cash
    
    Total yield on earning assets (1)          5.48%          6.29%          (0.81)
    
    Cost of interest bearing deposits          1.63%          2.60%          (0.97)
    
    Cost of securities sold under agreements   1.13%          2.44%          (1.31)
    to repurchase and fed funds purchased
    
    Cost of term debt                          3.56%          3.65%          (0.09)
    
    Cost of junior subordinated debentures     4.91%          5.92%          (1.01)
    
    Total cost of interest bearing             1.78%          2.77%          (0.99)
    liabilities
    
    Net interest spread (1)                    3.70%          3.52%          0.18
    
    Net interest margin - Consolidated (1)     4.11%          4.08%          0.03
    
    Net interest margin - Bank (1)             4.22%          4.27%          (0.05)
    
    As reported (GAAP):
    
    Return on average assets                   (2.06)%        0.76%          (2.82)
    
    Return on average tangible assets          (2.24)%        0.83%          (3.07)
    
    Return on average equity                   (14.20)%       5.02%          (19.22)
    
    Return on average tangible equity          (32.21)%       12.84%         (45.05)
    
    Efficiency ratio - Consolidated            102.51%        52.42%         50.09
    
    Efficiency ratio - Bank                    102.79%        54.93%         47.86
    
    Excluding merger expense & goodwill
    impairment:
    
    Return on average assets                   (0.37)%        0.76%          (1.13)
    
    Return on average tangible assets          (0.40)%        0.83%          (1.23)
    
    Return on average equity                   (2.52)%        5.02%          (7.54)
    
    Return on average tangible equity          (5.72)%        12.84%         (18.56)
    
    Efficiency ratio - Consolidated            65.02%         52.42%         12.60
    
    Efficiency ratio - Bank                    64.06%         54.93%         9.13
    
    (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      Sep 30,     Jun 30, 2009   Sep 30, 2008   % Change     % Change
    thousands       2009
    
    Temporary
    investments &   $291,214    $41,449        $13,182        603%         2109%
    interest
    bearing cash
    
    Investment
    securities,     1,458,333   1,249,218      841,810        17%          73%
    taxable
    
    Investment
    securities,     203,676     198,999        167,132        2%           22%
    tax-exempt
    
    Loans held      39,915      41,273         13,966         (3)%         186%
    for sale
    
    Loans and       6,111,146   6,095,815      6,159,644      0%           (1)%
    leases
    
    Total earning   8,104,284   7,626,754      7,195,734      6%           13%
    assets
    
    Goodwill &
    other           642,315     754,417        760,911        (15)%        (16)%
    intangible
    assets, net
    
    Total assets    9,100,407   8,745,547      8,333,242      4%           9%
    
    Non interest
    bearing         1,325,328   1,303,909      1,267,356      2%           5%
    demand
    deposits
    
    Interest
    bearing         5,866,098   5,499,990      5,154,922      7%           14%
    deposits
    
    Total           7,191,426   6,803,899      6,422,278      6%           12%
    deposits
    
    Interest
    bearing         6,211,237   5,902,284      5,741,816      5%           8%
    liabilities
    
    Shareholders'
    equity -        1,291,218   1,270,439      1,248,357      2%           3%
    common
    
    Tangible        648,903     516,022        487,446        26%          33%
    common equity
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Average Balances
    
    (Unaudited)
    
                                              Nine Months Ended:
    
    Dollars in thousands                      Sep 30, 2009   Sep 30, 2008   % Change
    
    Temporary investments & interest          $129,118       $18,781        587%
    bearing cash
    
    Investment securities, taxable            1,299,791      870,311        49%
    
    Investment securities, tax-exempt         195,492        171,335        14%
    
    Loans held for sale                       41,789         18,827         122%
    
    Loans and leases                          6,114,133      6,105,082      0%
    
    Total earning assets                      7,780,323      7,184,336      8%
    
    Goodwill & other intangible assets, net   717,509        762,427        (6)%
    
    Total assets                              8,854,682      8,314,019      7%
    
    Non interest bearing demand deposits      1,294,005      1,255,403      3%
    
    Interest bearing deposits                 5,607,089      5,193,790      8%
    
    Total deposits                            6,901,094      6,449,193      7%
    
    Interest bearing liabilities              6,009,594      5,724,528      5%
    
    Shareholders' equity - common             1,283,476      1,252,099      3%
    
    Tangible common equity                    565,967        489,672        16%
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Mortgage Banking Activity
    
    (unaudited)
    
                                                             Sequential   Year over
    
                  Quarter Ended:                             Quarter      Year
    
    Dollars in    Sep 30,      Jun 30, 2009   Sep 30, 2008   % Change     % Change
    thousands     2009
    
    Mortgage
    Servicing
    Rights
    (MSR):
    
    Mortgage
    loans         $1,205,528   $1,122,891     $939,876       7%           28%
    serviced
    for others
    
    MSR Asset,
    at fair       $11,552      $10,631        $10,738        9%           8%
    value
    
    MSR as % of
    serviced      0.96%        0.95%          1.14%
    portfolio
    
    Mortgage
    Banking
    Revenue:
    
    Origination   $4,294       $5,889         $1,817         (27)%        136%
    and sale
    
    Servicing     796          738            636            8%           25%
    
    Change in
    fair value    (802)        (368)          (1,426)        118%         (44)%
    of MSR
    asset
    
    Total
    Mortgage      $4,288       $6,259         $1,027         (31)%        318%
    Banking
    Revenue
    
    Closed loan   $158,957     $234,023       $84,554        (32)%        88%
    volume
    
                  Nine Months Ended:
    
    Dollars in    Sep 30,      Sep 30, 2008   % Change
    thousands     2009
    
    Mortgage
    Banking
    Revenue:
    
    Origination   $15,040      $4,953         204%
    and sale
    
    Servicing     2,188        1,839          19%
    
    Change in
    fair value    (2,611)      (1,550)        68%
    of MSR
    asset
    
    Change in
    fair value    --           (2,398)        (100)%
    of MSR
    hedge
    
    Total
    Mortgage      $14,617      $2,844         414%
    Banking
    Revenue
    
    Closed loan   $584,693     $257,897       127%
    volume
    
    
    
    

    Additional detail on credit quality, trends, the loan portfolio by segment and non-performing assets

    The following tables present additional detail covering the following aspects of the Company's loan portfolio:

    • Table 1 - Residential development loan trends by region
    • Table 2 - Residential development loan stratification by size and by region
    • Table 3 - Non-performing asset detail by type and by region
    • Table 4 - Loans past due 30-89 days by type and by region
    • Table 5 - Loans past due 30-89 days trends
    • Table 6 - Commercial real estate loan portfolio by type and by region
    • Table 7 - Commercial real estate loan portfolio by type and by year of maturity
    • Table 8 - Commercial real estate loan portfolio by type and by year of origination
    • Table 9 - Commercial construction loan portfolio by type and by region
    • Table 10 - Commercial loan portfolio by type and by region

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

    
    Table 1- Residential development loan trends by region
    
    (Dollars in thousands)                                     Non-         Accrual
    
                                                    % change   performing   status
    
                 Balance    Balance     Balance     from       loans        loans
    
                 9/30/08    6/30/09     9/30/09     9/30/08    9/30/09      9/30/09
    
    Northwest    $152,686   $120,076    $93,745     (39)%      $6,815       $86,930
    Oregon
    
    Central      37,213     15,493      13,753      (63)%      4,860        8,893
    Oregon
    
    Southern     38,048     26,561      21,852      (43)%      3,951        17,901
    Oregon
    
    Washington   34,327     24,744      17,690      (48)%      4,720        12,970
    
    Greater      126,629    84,522      80,107      (37)%      21,821       58,286
    Sacramento
    
    Northern     66,414     29,894      31,336      (53)%      8,648        22,688
    California
    
    Total        $455,317   $301,290    $258,483    (43)%      $50,815      $207,668
    
    % of total
    loan         7%         5%          4%                                  3%
    portfolio
    
    Quarter      $          $(27,383)   $(42,807)
    change $     (46,348)
    
    Quarter      (9)%       (8)%        (14)%
    change %
    
    
    
    

    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 September 30, 2009:

    
    Table 2 - Residential development loan
    stratification by size and by region
    
    (Dollars in thousands)
    
                           $250k     $1        $3        $5
                                     million   million   million
    
                 $250k     to        to        to        to        $10
                                                                   million
    
                 and       $1        $3        $5        $10       and       Total
                 less      million   million   million   million   greater
    
    Northwest    $4,607    $9,531    $21,289   $19,562   $31,941   $--       $86,930
    Oregon
    
    Central      1,550     3,627     3,716     --        --        --        8,893
    Oregon
    
    Southern     2,105     7,573     8,223     --        --        --        17,901
    Oregon
    
    Washington   --        748       3,770     3,101     5,351     --        12,970
    
    Greater      4,456     8,215     8,793     --        16,572    20,250    58,286
    Sacramento
    
    Northern     2,199     5,393     15,096    --        --        --        22,688
    California
    
    Total        $14,917   $35,087   $60,887   $22,663   $53,864   $20,250   $207,668
    
    % of Total   7%        17%       29%       11%       26%       10%       100%
    
    
    
    

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

    
    Table 3 - Non-performing asset detail by type and by region
    
    (Dollars in thousands)
    
                     Northwest   Central   Southern                Greater      Northern
    
                     Oregon      Oregon    Oregon     Washington   Sacramento   California   Total
    
    Loans 90 days
    past due:
    
    Residential      $--         $--       $--        $--          $--          $--          $--
    development
    
    Commercial       --          --        --         --           --           --           --
    construction
    
    Commercial       --          --        362        --           --           13           375
    real estate
    
    Commercial       --          --        --         --           --           239          240
    
    Other            4,963       --        --         --           36           --           4,999
    
    Total 90 days    $4,963      $--       $362       $466         $37          $252         $5,614
    past due
    
    Non-accrual
    loans:
    
    Residential      $6,815      $4,860    $3,951     $4,720       $21,821      $8,648       $50,815
    development
    
    Commercial       --          648       --         582          10,947       4,059        16,236
    construction
    
    Commercial       1,250       3,398     3,637      --           14,753       12,660       35,698
    real estate
    
    Commercial       54          4,364     287        12,646       120          3,494        20,965
    
    Other            --          --        --         --           --           --           --
    
    Total
    non-accrual      $8,119      $13,270   $7,875     $17,948      $47,641      $28,861      $123,714
    loans
    
    Total
    non-performing   $13,082     $13,270   $8,237     $17,948      $47,678      $29,113      $129,328
    loans
    
    Other real
    estate owned:
    
    Residential      $1,085      $8,122    $1,635     $1,765       $6,455       $395         $19,457
    development
    
    Commercial       414         --        324        --           423          --           1,161
    construction
    
    Commercial       1,810       --        914        551          --           452          3,727
    real estate
    
    Commercial       940         293       --         --           --           196          1,429
    
    Other            931         --        --         --           --           --           931
    
    Total OREO       $5,180      $8,415    $2,873     $2,316       $6,878       $1,043       $26,705
    
    Total
    non-performing   $18,262     $21,685   $11,110    $20,264      $54,556      $30,156      $156,033
    assets
    
    % of total       12%         14%       7%         13%          35%          19%          100%
    
    
    
    

    The Company has aggressively charged-down impaired assets to their disposition values. As of September 30, 2009, the non-performing assets of $156.0 million have been written down by 44%, or $121.4 million, from their original balance of $277.4 million.

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

    
    Table 4 - Loans past due 30-89 days by type and by region
    
    (Dollars in thousands)
    
                   Northwest   Central   Southern                Greater      Northern
    
                   Oregon      Oregon    Oregon     Washington   Sacramento   California   Total
    
    Loans 30-89
    days past
    due:
    
    Residential    $90         $1,035    $2,502     $1,607       $1,146       $2,386       $8,766
    development
    
    Commercial     --          --        566        683          7,867        245          9,361
    construction
    
    Commercial     797         2,500     1,666      2,714        2,608        4,120        14,405
    real estate
    
    Commercial     1,626       213       297        --           4,379        3,779        10,294
    
    Other          2,528       --        --         --           715          --           3,243
    
    Total 30-89
    days past      $5,041      $3,748    $5,031     $5,004       $16,715      $10,530      $46,069
    due
    
    
    
    
    
    Table 5 - Loans past due 30-89 days trends
    
    (Dollars in thousands)                                    Sequential   Year
    
                                                              Quarter      Over Year
    
                                9/30/09   6/30/09   9/30/08   % Change     % Change
    
    Loans 30-89 days past
    due:
    
    Residential development     $8,766    $11,096   $33,445   (21)%        (74)%
    
    Commercial construction     9,361     --        14,880    100%         (37)%
    
    Commercial real estate      14,405    25,712    12,449    (44)%        16%
    
    Commercial                  10,294    8,594     8,800     20%          17%
    
    Other                       3,243     3,353     2,110     (3)%         54%
    
    Total 30-89 days past due   $46,069   $48,755   $71,684   (6)%         (36)%
    
    
    
    

    The following is a distribution of the term commercial real estate portfolio by type and by region as of September 30, 2009:

    
    Table 6 - Commercial real estate loan portfolio - by type and by region
    
    (Dollars in thousands)
    
                       Northwest    Central   Southern                Greater      Northern                  % of
                                                                                                             total
    
                       Oregon       Oregon    Oregon     Washington   Sacramento   California   Total        Portfolio
    
    Non-owner
    occupied:
    
    Commercial         $108,248     $4,450    $38,371    $14,073      $103,537     $106,084     $374,763     11%
    building
    
    Medical office     70,576       1,109     15,812     4,210        16,614       12,231       120,552      4%
    
    Professional       173,952      11,560    54,902     25,825       110,504      70,676       447,419      13%
    office
    
    Storage            24,679       353       18,808     --           17,454       40,433       101,727      3%
    
    Multi-family 5+    61,378       249       10,323     1,433        5,528        19,324       98,235       3%
    
    Resort             2,070        --        5,117      --           --           --           7,187        0%
    
    Retail             228,627      3,565     33,408     11,598       171,870      79,530       528,598      15%
    
    Residential        32,979       353       14,601     6,334        10,725       18,897       83,889       2%
    
    Farm               5,318        226       650        --           205          35,966       42,365       1%
    land/agriculture
    
    Apartments         59,304       --        9,990      --           2,682        23,111       95,087       3%
    
    Assisted living    91,955       --        66,089     --           2,948        8,843        169,835      5%
    
    Hotel/motel        51,415       --        1,049      11,220       18,147       20,241       102,072      3%
    
    Industrial         30,019       3,612     7,859      --           35,140       23,804       100,434      3%
    
    RV park            27,871       675       13,199     --           829          5,893        48,467       1%
    
    Warehouse          11,999       --        239        --           1,209        1,742        15,189       0%
    
    Other              41,642       1,060     3,721      3,568        578          3,875        54,444       2%
    
    Total non-owner    $1,022,032   $27,212   $294,138   $78,261      $497,970     $470,650     $2,390,263   70%
    occupied
    
    Owner occupied:
    
    Commercial         $152,844     $2,654    $31,377    $9,804       $61,675      $104,828     $363,182     11%
    building
    
    Medical office     18,269       3,341     17,690     2,234        1,673        26,870       70,077       2%
    
    Professional       51,140       1,830     12,615     3,346        21,686       16,385       107,002      3%
    office
    
    Storage            14,830       150       --         667          --           5,170        20,817       1%
    
    Multi-family 5+    879          --        62         --           161          586          1,688        0%
    
    Resort             5,767        139       --         --           3,149        1,075        10,130       0%
    
    Retail             60,699       2,956     12,675     4,077        31,730       57,634       169,771      5%
    
    Residential        6,491        --        2,822      --           1,408        2,753        13,474       0%
    
    Farm               9,121        --        830        --           --           35,934       45,885       1%
    land/agriculture
    
    Apartments         204          --        748        --           54           --           1,006        0%
    
    Assisted living    27,834       --        149        --           7,003        15,894       50,880       1%
    
    Hotel/motel        12,308       --        193        716          --           14,825       28,042       1%
    
    Industrial         53,077       1,417     14,104     1,565        9,282        35,736       115,181      3%
    
    RV park            34           --        2,557      --           163          1,264        4,018        0%
    
    Warehouse          11,006       --        413        --           1,152        2,686        15,257       0%
    
    Other              28,802       1,513     --         --           287          1,648        32,250       1%
    
    Total owner        $453,305     $14,000   $96,235    $22,409      $139,423     $323,288     $1,048,660   30%
    occupied
    
    Total commercial   $1,475,337   $41,212   $390,373   $100,670     $636,393     $793,938     $3,438,923   100%
    real estate
    
    % of total         43%          1%        11%        3%           19%          23%          100%
    
    
    
    

    The following is a distribution of the term commercial real estate portfolio by type and by year of maturity as of September 30, 2009:

    
    Table 7 - Commercial real estate loan portfolio - by type and by year of maturity
    
    (Dollars in thousands)
    
                                            2011-      2013-      2015-        2020 &
    
                       2009      2010       2012       2014       2019         Later      Total
    
    Non-owner
    occupied:
    
    Commercial         $8,264    $10,378    $46,322    $68,886    $221,089     $19,824    $374,763
    building
    
    Medical office     --        1,313      2,583      30,259     75,258       11,139     120,552
    
    Professional       15,799    20,347     20,125     114,850    263,221      13,077     447,419
    office
    
    Storage            4,371     1,334      3,251      20,515     68,240       4,016      101,727
    
    Multi-family 5+    2,737     1,387      5,167      17,775     66,320       4,849      98,235
    
    Resort             --        --         --         828        1,936        4,423      7,187
    
    Retail             3,619     27,543     44,819     118,155    324,649      9,813      528,598
    
    Residential        5,270     21,950     14,813     9,263      26,569       6,024      83,889
    
    Farm               --        9,374      1,067      5,020      22,575       4,329      42,365
    land/agriculture
    
    Apartments         --        6,508      4,347      9,022      68,843       6,367      95,087
    
    Assisted living    3,849     21,810     31,055     13,208     97,613       2,300      169,835
    
    Hotel/motel        --        4,865      22,022     24,474     45,724       4,987      102,072
    
    Industrial         2,324     547        9,724      17,632     61,418       8,789      100,434
    
    RV park            1,172     546        2,186      12,024     30,485       2,054      48,467
    
    Warehouse          --        427        831        7,935      4,893        1,103      15,189
    
    Other              11,054    6,429      9,247      11,856     12,341       3,517      54,444
    
    Total non-owner    $58,459   $134,758   $217,559   $481,702   $1,391,174   $106,611   $2,390,263
    occupied
    
    Owner occupied:
    
    Commercial         $11,861   $7,588     $23,959    $33,798    $238,335     $47,641    $363,182
    building
    
    Medical office     --        661        1,274      9,764      40,107       18,271     70,077
    
    Professional       2,282     732        4,254      25,761     67,697       6,276      107,002
    office
    
    Storage            247       518        150        2,640      16,709       553        20,817
    
    Multi-family 5+    --        25         --         1,481      182          --         1,688
    
    Resort             --        --         --         4,089      6,041        --         10,130
    
    Retail             793       1,398      9,623      34,351     110,783      12,823     169,771
    
    Residential        --        1,835      2,002      2,706      5,311        1,620      13,474
    
    Farm               --        1,082      3,045      8,299      29,198       4,261      45,885
    land/agriculture
    
    Apartments         --        --         --         54         952          --         1,006
    
    Assisted living    --        176        --         12,818     35,654       2,232      50,880
    
    Hotel/motel        5,236     --         333        10,327     11,449       697        28,042
    
    Industrial         487       5,448      10,929     15,795     65,463       17,059     115,181
    
    RV park            34        170        72         1,291      2,288        163        4,018
    
    Warehouse          --        1,159      1,853      6,336      5,803        106        15,257
    
    Other              245       1,530      870        33         4,050        25,522     32,250
    
    Total owner        $21,185   $22,322    $58,364    $169,543   $640,022     $137,224   $1,048,660
    occupied
    
    Total commercial   $79,644   $157,080   $275,923   $651,245   $2,031,196   $243,835   $3,438,923
    real estate
    
    % of total         2%        5%         8%         19%        59%          7%         100%
    
    
    
    

    The following is a distribution of the term commercial real estate portfolio by type and by year of origination as of September 30, 2009:

    
    Table 8 - Commercial real estate loan portfolio - by type and by year of origination
    
    (Dollars in thousands)
    
                       Prior to   2000-        2005-        2007-
    
                       2000       2004         2006         2008       2009       Total
    
    Non-owner
    occupied:
    
    Commercial         $14,787    $92,069      $64,150      $149,929   $53,828    $374,763
    building
    
    Medical office     642        48,809       16,613       42,415     12,073     120,552
    
    Professional       13,993     177,603      147,907      84,285     23,631     447,419
    office
    
    Storage            1,981      49,849       27,162       22,380     355        101,727
    
    Multi-family 5+    3,771      26,377       19,322       43,833     4,932      98,235
    
    Resort             740        5,753        --           694        --         7,187
    
    Retail             11,058     186,608      168,414      148,327    14,191     528,598
    
    Residential        1,347      12,933       30,077       27,086     12,446     83,889
    
    Farm               890        9,534        11,942       13,208     6,791      42,365
    land/agriculture
    
    Apartments         866        26,077       23,453       22,034     22,657     95,087
    
    Assisted living    6,918      54,927       80,810       16,350     10,830     169,835
    
    Hotel/motel        12,694     45,232       20,203       23,103     840        102,072
    
    Industrial         3,382      43,482       38,193       14,887     490        100,434
    
    RV park            3,182      17,697       16,108       11,115     365        48,467
    
    Warehouse          1,148      9,083        4,336        622        --         15,189
    
    Other              664        9,988        23,681       15,246     4,865      54,444
    
    Total non-owner    $78,063    $816,021     $692,371     $635,514   $168,294   $2,390,263
    occupied
    
    Owner occupied:
    
    Commercial         $11,918    $80,195      $93,738      $117,944   $59,387    $363,182
    building
    
    Medical office     1,681      22,750       13,211       27,449     4,986      70,077
    
    Professional       5,437      35,924       28,920       31,978     4,743      107,002
    office
    
    Storage            552        5,351        5,318        8,898      698        20,817
    
    Multi-family 5+    182        1,506        --           --         --         1,688
    
    Resort             558        6,450        139          --         2,983      10,130
    
    Retail             6,681      42,044       62,494       55,056     3,496      169,771
    
    Residential        298        5,315        3,858        2,347      1,656      13,474
    
    Farm               1,565      11,451       14,835       13,149     4,885      45,885
    land/agriculture
    
    Apartments         54         --           --           952        --         1,006
    
    Assisted living    5,000      7,898        21,327       14,479     2,176      50,880
    
    Hotel/motel        8,115      12,532       5,791        1,604      --         28,042
    
    Industrial         2,990      41,082       36,934       13,607     20,568     115,181
    
    RV park            920        1,094        --           2,004      --         4,018
    
    Warehouse          116        9,521        2,746        2,425      449        15,257
    
    Other              --         1,920        21,544       7,987      799        32,250
    
    Total owner        $46,067    $285,033     $310,855     $299,879   $106,826   $1,048,660
    occupied
    
    Total commercial   $124,130   $1,101,054   $1,003,226   $935,393   $275,120   $3,438,923
    real estate
    
    % of total         4%         32%          29%          27%        8%         100%
    
    
    
    

    The following is a distribution of the commercial construction portfolio by type and by region as of September 30, 2009:

    
    Table 9 - Commercial construction loan portfolio - by type and by region
    
    (Dollars in thousands)
    
                   Northwest   Central   Southern                Greater      Northern                % of
                                                                                                      total
    
                   Oregon      Oregon    Oregon     Washington   Sacramento   California   Total      Portfolio
    
    Non-owner
    occupied:
    
    Commercial     $19,290     $--       $2,948     $--          $21,917      $7,056       $51,211    11%
    building
    
    Medical        18,944      --        122        --           --           319          19,385     4%
    office
    
    Professional   16,469      --        --         --           23,218       3,500        43,187     9%
    office
    
    Storage        5,504       --        --         --           1,711        3,086        10,301     2%
    
    Multi-family   1,325       --        --         --           5,085        --           6,410      1%
    5+
    
    Retail         18,458      --        --         9,577        25,772       1,648        55,455     12%
    
    Residential    43,345      2,052     3,994      7,744        43,846       13,673       114,654    25%
    
    Apartments     14,434      --        --         --           --           --           14,434     3%
    
    Assisted       26,620      --        --         --           --           --           26,620     6%
    living
    
    Hotel/motel    --          --        --         --           --           1,850        1,850      0%
    
    Industrial     --          648       118        --           3,990        18           4,774      1%
    
    Other          1,324       --        --         --           --           3,000        4,324      1%
    
    Total
    non-owner      $165,713    $2,700    $7,182     $17,321      $125,539     $34,150      $352,605   76%
    occupied
    
    Owner
    occupied:
    
    Commercial     $15,233     $--       $171       $--          $9,837       $9,577       $34,818    8%
    building
    
    Medical        43,672      --        375        --           3,461        379          47,887     10%
    office
    
    Professional   --          --        --         --           --           --           --         0%
    office
    
    Storage        995         --        --         --           --           --           995        0%
    
    Multi-family   --          --        --         --           --           --           --         0%
    5+
    
    Retail         --          --        --         --           --           6,480        6,480      1%
    
    Residential    5,004       --        --         --           4,817        870          10,691     2%
    
    Apartments     678         --        --         --           --           --           678        0%
    
    Assisted       6,500       --        --         --           --           --           6,500      1%
    living
    
    Hotel/motel    --          --        --         --           --           --           --         0%
    
    Industrial     --          --        --         --           --           --           --         0%
    
    Other          2,500       --        --         --           --           --           2,500      1%
    
    Total owner    $74,582     $--       $546       $--          $18,115      $17,306      $110,549   24%
    occupied
    
    Total
    commercial     $240,295    $2,700    $7,728     $17,321      $143,654     $51,456      $463,154   100%
    construction
    
    % of total     52%         1%        2%         3%           31%          11%          100%
    
    
    
    

    The following is a distribution of the commercial loan portfolio by type and by region as of September 30, 2009:

    
    Table 10 - Commercial loan portfolio - by type and by region
    
    (Dollars in thousands)
    
                  Northwest   Central   Southern                Greater      Northern                  % of
                                                                                                       total
    
                  Oregon      Oregon    Oregon     Washington   Sacramento   California   Total        Portfolio
    
    Commercial
    line of       $195,790    $4,817    $32,965    $36,035      $139,701     $95,724      $505,032     37%
    credit
    
    Asset based
    line of       78,500      1,301     760        6,852        1,941        54,524       143,878      10%
    credit
    
    Term loan     162,148     4,010     30,850     10,104       47,455       117,463      372,030      27%
    
    Agriculture   34,634      --        498        --           103          57,094       92,329       7%
    
    Municipal     15,528      --        21,348     --           63,678       7,651        108,205      8%
    
    SBA           --          --        --         --           --           61,910       61,910       4%
    
    Small         45,101      --        --         4,466        48,598       --           98,165       7%
    business
    
    Total
    commercial    $531,701    $10,128   $86,421    $57,457      $301,476     $394,366     $1,381,549   100%
    loans
    
    % of total    38%         20%       6%         4%           22%          29%          100%
    
    
    
    

    
        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