• Umpqua Holdings Corporation
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  • Umpqua Holdings Reports First Quarter 2010 Results
    Company Release - 04/22/2010 08:00

    First quarter net income of $9.7 million, up from prior year's net loss of $15.2 million

    Repurchased the preferred stock and common stock warrant issued to the U.S. Treasury under the TARP CPP

    TARP redemption led to net loss available to common shareholders of $2.5 million, or $0.03 per share

    FDIC-assisted assumptions of EvergreenBank and Rainier Pacific Bank during first quarter of 2010

    Raised $288 million net proceeds through a public offering of common and preferred stock

    Non-covered, non-performing assets declined 6% during the first quarter, to 1.99% of total assets

    PORTLAND, Ore.--(BUSINESS WIRE)-- Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc., today announced first quarter 2010 net income of $9.7 million, compared to a net loss of $15.2 million for the same period in the prior year. Including preferred stock dividends of $12.2 million, the net loss available to common shareholders for the first quarter of 2010 was $2.5 million, or $0.03 per diluted common share, compared to a net loss available to common shareholders of $18.4 million, or $0.31 per diluted common share, for the same period in the prior year.

    Operating loss, defined as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, was $10.1 million, or $0.11 per diluted common share for the first quarter of 2010, compared to an operating loss of $18.7 million, or $0.31 per diluted common share for the same period in the prior year. Operating income or loss is considered a "non-GAAP" financial measure. More information regarding this measurement and reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.

    Significant financial statement items for the first quarter of 2010 include:

        --  Provision for loan losses of $42.1 million, a 39% decrease on a
            sequential quarter basis, and a 29% decrease from the same period in the
            prior year;
        --  Total net charge-offs of $39.0 million, a 39% decrease on a sequential
            quarter basis, and a 35% decrease from the same period in the prior
            year;
        --  The allowance for credit losses increased from 1.81% to 1.91% of
            non-covered total loans during the first quarter;
        --  Non-covered, non-performing assets ended the quarter at $209.6 million,
            representing a decrease from 2.38% to 1.99% of total assets on a
            sequential quarter basis;
        --  Total deposits increased $767 million, or 10%, on a sequential quarter
            basis and 21% over March 31, 2009. Organic deposit growth, excluding the
            effects of the acquisitions, was 2% on a sequential quarter basis, and
            11% over March 31, 2009;
        --  Net interest income of $87.1 million, an increase of 3% on a sequential
            quarter basis, and an increase of 15% over the same period in the prior
            year;
        --  Net interest margin, on a tax equivalent basis, decreased two basis
            points on a sequential quarter basis to 4.04%, related to interest
            reversals on new non-accrual loans of $1.1 million, or 5 basis points;
        --  The cost of interest bearing deposits for the first quarter of 2010 was
            1.19%, a decrease of 16 basis points on a sequential quarter basis;
        --  Bargain purchase gain of $8.5 million relating to the EvergreenBank
            acquisition;
        --  Gain on fair value of junior subordinated debentures of $6.1 million;
        --  Tangible common equity ratio of 7.82% as of March 31, 2010, with a
            proforma tangible common equity ratio of 9.84%, reflecting the
            conversion of the Common Stock Equivalents in April 2010; and
        --  Total risk-based capital of 17.68%.
    
    

    "This past quarter the company experienced meaningful improvement in our credit quality metrics as non-covered, non-performing assets once again dropped under 2%. We were also pleased to report that we exited the government's TARP program during the quarter while also accessing the public capital markets with a capital raise in February which netted the Company $288 million in additional capital," said Ray Davis, president and CEO of Umpqua Holdings Corporation. "With the acquisitions of two Puget Sound financial institutions through FDIC-assisted transactions we have also greatly expanded our Washington state presence which now includes 27 stores and 3 commercial banking centers."

    FDIC-assisted acquisitions

    On January 22, 2010, the Washington Department of Financial Institutions closed EvergreenBank ("Evergreen"), Seattle, Washington and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. That same date, Umpqua Bank assumed the banking operations of Evergreen from the FDIC under a whole bank purchase and assumption agreement with loss sharing. After purchase accounting fair value adjustments, Umpqua Bank acquired assets totaling $355 million, including $252 million of loans, and assumed liabilities of $347 million, including $286 million of deposits. The net assets acquired of $8 million represent a bargain purchase gain that is recognized in non-interest income. With this acquisition, Umpqua Bank added seven store locations in the greater Seattle, Washington market.

    On February 26, 2010, the Washington Department of Financial Institutions closed Rainier Pacific Bank ("Rainier"), Tacoma, Washington and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. That same date, Umpqua Bank assumed the banking operations of Rainier from the FDIC under a whole bank purchase and assumption agreement with loss sharing. After purchase accounting fair value adjustments, Umpqua Bank acquired assets totaling $721 million, including $461 million of loans, and assumed $426 million of deposits. In connection with this acquisition, the Company recorded $34 million in goodwill. With this acquisition, Umpqua Bank now operates fourteen additional store locations in Pierce County and surrounding areas.

    The loss sharing agreements for both acquisitions will substantially cover the future losses of the loan portfolios and other real estate owned acquired. We refer to the acquired loan portfolios and other real estate owned as "covered loans" and "covered other real estate owned," respectively, and these are presented as separate line items in our consolidated balance sheet. Collectively these balances will be referred to as "covered assets." The loss sharing agreements and acquisition-date fair value adjustments significantly mitigate the risk of future financial losses being recognized as a result of credit losses on the covered assets acquired.

    The acquisitions of Evergreen and Rainier have been immediately accretive to operating earnings per share. Evergreen has contributed operating earnings of approximately $1.5 million and Rainier has contributed operating earnings of approximately $0.8 million since their respective acquisition dates. We expect to integrate the systems and to complete the rebranding of the acquired banking locations to Umpqua standards in the second quarter of 2010.

    Please refer to table 7 on page 23 of this release for additional information related to the fair values of assets acquired and liabilities assumed with the Evergreen and Rainier acquisitions.

    Asset quality - Non-covered loan portfolio

    Non-performing assets were $209.6 million, or 1.99% of total assets, as of March 31, 2010, compared to $223.6 million, or 2.38% of total assets as of December 31, 2009, and $159.5 million, or 1.82% of total assets as of March 31, 2009. Of this amount, $183.5 million represented non-accrual loans, $7.2 million represented loans past due greater than 90 days and still accruing interest, and $18.9 million was other real estate owned (OREO).

    The Company has aggressively charged-down impaired assets to their disposition values, and they are expected to be resolved at those levels, absent further declines in market prices. As of March 31, 2010, the non-performing assets of $209.6 million have been written down by 45%, or $172.3 million, from their original balance of $381.9 million.

    The provision for loan losses for the first quarter of 2010 was $42.1 million. Total net charge-offs for the first quarter of 2010 were $39.0 million. The annualized net charge-off rate of 2.66% for the first quarter represents a 36% decline in this rate as compared to the fourth quarter 2009. The allowance for credit losses increased to 1.91% of total loans as of March 31, 2010, compared to 1.81% of total loans as of December 31, 2009 and 1.58% of total loans as of March 31, 2009.

    Loans past due 30-89 days were $53.9 million, or 0.93% of total loans as of March 31, 2010, as compared to $41.5 million, or 0.69% of total loans as of December 31, 2009, and $89.7 million, or 1.47% of total loans as of March 31, 2009.

    Since 2007, the Company has been aggressively resolving problems arising from the current economic downturn. The following table recaps the Company's credit quality trends since the start of 2007 as it relates to the non-covered loan portfolio:

    
    Credit quality trends - Non-covered loans
    
    (Dollars in thousands)
    
                                      Allowance                      Non-covered,
    
             Provision  Net           for credit losses              non-performing
    
             for        charge-offs   to non-covered     30-89 days  assets to
    
             loan loss  (recoveries)  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%
    
    Q4 2009  68,593     64,072        1.81%              0.69%       2.38%
    
    Q1 2010  42,106     38,979        1.91%              0.93%       1.99%
    
    Total    $400,638   $355,022
    
    
    
    

    Non-covered construction loan portfolio

    Total non-covered construction loans as of March 31, 2010 were $555 million and decreased 10% from December 31, 2009, and decreased 35% from March 31, 2009. Within this portfolio, the residential development loan segment was $202 million, or 3% of the total non-covered loan portfolio. Of this amount, $33 million represented non-performing loans, and $168 million represented performing loans, which were 3% of the total non-covered loan portfolio. The residential development loan segment has decreased $126.9 million, or 39%, since March 31, 2009.

    The remaining $353 million in non-covered construction loans as of March 31, 2010 primarily represents commercial construction projects. Total non-covered non-performing commercial construction loans were $31.9 million at March 31, 2010 and $4.9 million were past due 30-89 days as of March 31, 2010.

    Non-covered commercial real estate loan portfolio

    The total non-covered term commercial real estate loan portfolio was $3.5 billion as of March 31, 2010. Of this total, $2.3 billion are non-owner occupied and $1.2 billion are owner occupied. Of the total term commercial real estate portfolio, $21.7 million, or 0.62%, are past due 30-89 days as of March 31, 2010. Of the total non-covered commercial real estate portfolio, 5% matures in 2010, 4% in 2011, 14% in years 2012-2013, and 21% in years 2014-2015. The remaining 56% of the portfolio matures in or after the year 2016.

    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 unidentified risks, 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 believe we are well positioned to manage the exposure and work with our customers until the economic climate improves.

    Non-covered restructured loans

    Restructured loans were $98.0 million as of March 31, 2010, down 27% from $134 million as of December 31, 2009. The decrease during the first quarter primarily resulted from reclassifications of loans previously restructured to non-accrual status. 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 generally 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 information

    Additional tables can be found at the end of this earnings release covering the following aspects of the Company's non-covered loan portfolio, including: 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, and restructured loans by type and by region.

    Asset quality - Covered loan portfolio

    Covered non-performing assets were $43.7 million, or 0.42% of total assets, as of March 31, 2010. Of this amount, $34.7 million represented non-accrual loans, and $9.0 million was OREO. These covered non-performing assets were written-down to their estimated fair value on their acquisition date, incorporating our estimate of future expected cash flows until the ultimate resolution of these credits. The estimated credit losses embedded in these acquired non-performing loan portfolios were based on management's and third-party consultants' credit reviews of the portfolios performed during the due diligence process related to the Evergreen and Rainier transactions. To the extent actual or projected cash flows are less than originally estimated, additional provisions for loan losses on the covered loan portfolio will be recognized; however, these provisions would be mostly offset by a corresponding increase in the FDIC indemnification (loss sharing) asset.

    Net interest margin

    The Company reported a tax equivalent net interest margin of 4.04% for the first quarter of 2010, compared to 4.06% for the fourth quarter of 2009, and 4.07% for the first quarter of 2009. The decrease in net interest margin resulted primarily from interest reversals of new non-accrual loans, a decline in non-covered loans outstanding, and the impact of holding much higher levels of interest bearing cash, partially offset by the declining costs of interest bearing deposits. Interest reversals on new non-accrual loans during the first quarter of 2010 were $1.1 million, negatively impacting the net interest margin by 5 basis points. Excluding the reversals of interest, the net interest margin would have been 4.09% during the quarter. The Company continues to drive down the cost of interest bearing deposits. As a result of these efforts, the cost of interest bearing deposits was 16 basis points lower than the fourth quarter of 2009 at 1.19%.

    Mortgage banking revenue

    The Company generated $3.5 million in total mortgage banking revenue during the first quarter of 2010, on closed loan volume of $127 million. As of March 31, 2010, the Company serviced $1.3 billion of mortgage loans for others, and the related mortgage servicing right asset was valued at $13.6 million, or 1.01% of the total serviced portfolio.

    Fair value of junior subordinated debentures

    The Company recognized a gain from the change in fair value of junior subordinated debentures of $6.1 million during the first quarter of 2010. The Company utilizes a pricing service along with internal models to determine the valuation of this liability. The majority of the fair value difference over par value 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 March 31, 2010, the credit risk adjusted interest spread for potential new issuances was forecasted to be significantly higher than the contractual spread. The difference between these 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. The gain recognized in the current quarter results from the increase in the credit risk adjusted spread. The cumulative fair value adjustment will reverse and be recognized as a reduction in non-interest income over the remaining period to maturity of each related instrument. As of March 31, 2010, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $79.6 million.

    Non-interest expense

    Total non-interest expense for the first quarter of 2010 was $69.9 million, compared to $72.5 million for the fourth quarter of 2009. Included in non-interest expense are several categories which are outside of the operational control of the Company, including FDIC deposit insurance assessments, gain or loss on other real estate owned, and infrequently occurring expenses such as merger-related costs and goodwill impairments. Excluding these non-controllable or infrequently occurring items, the remaining non-interest expense items totaled $62.2 million for the first quarter of 2010, compared to $60.2 million for the fourth quarter of 2009. This increase related primarily to increases in variable expenses related to the assumption of Evergreen's and Rainier's banking operations, and various other growth initiatives underway.

    Total FDIC deposit insurance assessments during the first quarter of 2010 were $3.4 million. The increase over the prior period is a result of the deposit growth in the first quarter, largely resulting from the FDIC-assisted acquisitions of Evergreen and Rainier in the quarter.

    Income taxes

    The Company recorded an income tax benefit of $2.6 million in the first quarter of 2010, related to the benefit of tax-exempt investments, tax related credits, and other permanent differences.

    Balance sheet

    Total consolidated assets as of March 31, 2010 were $10.5 billion, compared to $9.4 billion on December 31, 2009 and $8.8 billion a year ago. Total gross loans and leases (covered and non-covered), and deposits, were $6.5 billion and $8.2 billion, respectively, as of March 31, 2010, compared to $6.1 and $6.8 billion, respectively, as of March 31, 2009.

    The following table presents the year-to-date 2010 organic growth rates, which excludes the effects of the Evergreen and Rainier FDIC-assisted acquisitions and the related run-off of assumed brokered time deposits, which the Bank is not renewing upon maturity:

    
                                           Non-covered
    
    (dollars in thousands)                 loans and leases  Deposits    Assets
    
    As reported, 3/31/10                   $5,831,858        $8,207,267  $10,511,002
    
    Less: 12/31/09 balances                5,999,267         7,440,434   9,381,372
    
    Total growth year-to-date              (167,409)         766,833     1,129,630
    
    Less: Evergreen acquisition (1)        --                272,142     355,298
    
    Less: Rainier acquisition (1)          --                416,430     721,161
    
    Add back: run-off of assumed brokered  --                35,200      35,200
    time deposits not renewed
    
    Organic growth                         $(167,409)        $113,416    $88,371
    
    Annualized organic growth rate         (11.3)%           6.2%        3.8%
    
    (1) Excludes run-off of non-brokered deposits occurring within the first quarter
    of acquisition.
    
    
    
    

    Total loans held for investment increased $529 million during the first quarter of 2010. This increase is principally attributable to the $713 million of covered loans assumed through the Evergreen and Rainier acquisitions, partially offset by charge-offs of $40 million and transfers to other real estate owned of $6 million. The remaining decline in loan balances represents loan payments in excess of disbursements.

    Total deposits increased $767 million, or 10%, over the fourth quarter of 2010. The deposits acquired from the Evergreen and Rainier acquisitions included $134 million of brokered time deposits as of the acquisition date. The Bank is not renewing these brokered deposits as they mature. Excluding the impact of the deposits assumed and the run-off of brokered time deposits that have matured, total deposits increased $113 million in the first quarter, representing a 6.2% annualized organic growth rate.

    Due to unattractive bond market conditions since the second half of 2009, the Company has been holding larger levels of interest bearing cash rather than investing in the bond market. At March 31, 2010, the Company had $895 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 both a return and duration standpoint. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $3.2 billion as of March 31, 2010, representing 30% of total assets and 39% of total deposits.

    Capital

    As of March 31, 2010, total shareholders' equity was $1.6 billion, comprised of $198 million in preferred stock, and common equity available to common shareholders of $1.4 billion. Book value per common share was $15.16, tangible book value per common share was $8.05 and the ratio of tangible common equity to tangible assets was 7.82%.

    In February 2010, the Company completed an underwritten public offering raising $303.6 million by issuing 8,625,000 shares of the Company's common stock, including 1,125,000 shares pursuant to the underwriters' over-allotment option, at a price of $11.00 per share; and 18,975,000 depository shares, including 2,475,000 depository shares pursuant to the underwriter's over-allotment option, also at a price of $11.00 per share. The depository shares represent a 1/100th interest in a share of Umpqua Holdings Corporation's preferred stock, Series B, common stock equivalent. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $288.2 million. The net proceeds from the common stock offering qualify and the net proceeds of the depository shares offering will (when converted into common stock) qualify, as tangible common equity and Tier 1 capital, and were used to redeem the preferred stock issued to the United States Department of the Treasury (U.S. Treasury) under the TARP Capital Purchase Program (CPP), to fund FDIC-assisted acquisition opportunities, and for general corporate purposes.

    Preferred stock (Common Stock Equivalent Series B) of $198.3 million as of March 31, 2010 converted into common stock in April 2010, following the Company's annual shareholder meeting at which shareholders of the Company approved, among other items, an increase in authorized total common shares from 100 million to 200 million. Including this conversion, on a pro forma basis, the Company's tangible common equity ratio as of March 31, 2010 would have increased from 7.82% to 9.84%, compared to 8.27% as of December 31, 2009 and 6.36% as of March 31, 2009.

    In February 2010, the Company repurchased all of the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury under the TARP CPP for an aggregate purchase price of $214.2 million. As a result of the repurchase of the Series A preferred stock, the Company incurred a one-time deemed dividend of $9.7 million due to the accelerated amortization of the remaining issuance discount on the preferred stock. In March 2010, the Company repurchased the common stock warrant issued to the U.S. Treasury pursuant to the TARP CPP, for $4.5 million. The redemption of the preferred stock and repurchase of the common stock warrant represents full repayment of all TARP obligations and cancellation of all equity interests in the Company held by the U.S. Treasury.

    The Company's estimated total risk-based capital ratio as of March 31, 2010 is 17.68%, and has increased from 17.16% as of December 31, 2009, and has increased from 14.38% as of March 31, 2009. 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 March 31, 2010 is an estimate pending completion and filing of the Company's regulatory reports.

    There were no repurchases of common stock during the first three months of 2010. The total remaining available common shares authorized for repurchase is approximately 1.5 million as of March 31, 2010.

    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 recognizes gains or losses on our junior subordinated debentures carried at fair value resulting from changes in interest rates and the estimated market credit risk adjusted spread that do not directly correlate with the Company's operating performance. Also, Umpqua incurs significant expenses related to the completion and integration of mergers and acquisitions. 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. Lastly, Umpqua may recognize one-time bargain purchase gains on certain FDIC-assisted acquisitions that are not reflective of Umpqua's on-going earnings power. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of gains or losses on junior subordinated debentures measured at fair value, net of tax, merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains, net of tax. We define operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.

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

    
                                                               Sequential  Year over
    
                              Quarter ended:                   Quarter     Year
    
    (Dollars in thousands,    3/31/10    12/31/09   3/31/09    % Change    % Change
    except per share data)
    
    Loss available to common  $(2,482)   $(29,924)  $(18,448)  (92)%       (87)%
    shareholders
    
    Adjustments:
    
    Net (gain) loss on
    junior subordinated       (3,653)    2,215      (348)      (265)%      950%
    debentures carried at
    fair value, net of tax
    
    Bargain purchase gain on  (5,074)    --         --         nm          nm
    acquisitions, net of tax
    
    Merger related expenses,  1,144      --         120        nm          853%
    net of tax
    
    Operating loss            $(10,065)  $(27,709)  $(18,676)  (64)%       (46)%
    
    Loss per diluted share:
    
    Net loss available to     $(0.03)    $(0.34)    $(0.31)    (91)%       (90)%
    common shareholders
    
    Operating loss            $(0.11)    $(0.32)    $(0.31)    (66)%       (65)%
    
    
    
    

    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 data  3/31/10      12/31/09    3/31/09
    
    Total shareholders' equity                   $1,646,858   $1,566,517  $1,469,844
    
    Subtract:
    
    Preferred stock                              198,289      204,335     202,692
    
    Goodwill and other intangible assets, net    679,255      639,634     756,468
    
    Tangible common shareholders' equity         $769,314     $722,548    $510,684
    
    Total assets                                 $10,511,002  $9,381,372  $8,782,533
    
    Subtract:
    
    Goodwill and other intangible assets, net    679,255      639,634     756,468
    
    Tangible assets                              $9,831,747   $8,741,738  $8,026,065
    
    Common shares outstanding at period end      95,527,427   86,785,588  60,198,057
    
    Tangible common equity ratio                 7.82%        8.27%       6.36%
    
    Tangible book value per common share         $8.05        $8.33       $8.48
    
    
    
    

    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 176 locations between San Francisco, Calif., and Seattle, 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 serves high-net-worth individuals and non-profits providing customized financial solutions and offerings. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.

    Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, April 22, 2010, at 10:00 a.m. PDT (1:00 p.m. EDT) during which the Company will discuss first quarter 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 800-784-9386 a few minutes before 10:00 a.m. The conference ID is "66260724." 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 our success in resolving remaining credit issues, the mitigating effect of FDIC loss sharing agreements, our expectation that any weakness in our CRE portfolio will arise from local market weakness and not a systemic weakness, conversion of the Evergreen and Rainier operating systems to our platform in Q2 2010, valuations of junior subordinated debentures and our plans to hold a large interest bearing cash position. 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, our inability to effectively manage problem credits, certain loan assets become ineligible for loss sharing, unanticipated deterioration in the commercial real estate loan portfolio, delays or problems in converting the operating systems of acquired banks and continued negative pressure on interest income associated with our large cash position.

    
    Umpqua Holdings Corporation
    
    Consolidated Statements of Operations
    
    (Unaudited)
    
                     Quarter Ended:
    
                                                               Sequential  Year over
    
                                                               Quarter     Year
    
    Dollars in
    thousands,       Mar 31, 2010  Dec 31, 2009  Mar 31, 2009  % Change    % Change
    except per
    share data
    
    Interest income
    
    Loans and        $90,708       $88,608       $88,173       2%          3%
    leases
    
    Interest and
    dividends on
    investments:
    
    Taxable          16,075        16,570        14,371        (3)%        12%
    
    Exempt from
    federal income   2,187         2,039         1,800         7%          22%
    tax
    
    Temporary
    investments &    399           268           32            49%         1147%
    interest
    bearing cash
    
    Total interest   109,369       107,485       104,376       2%          5%
    income
    
    Interest
    expense
    
    Deposits         18,789        20,190        24,463        (7)%        (23)%
    
    Repurchase
    agreements and   123           153           184           (20)%       (33)%
    fed funds
    purchased
    
    Junior
    subordinated     1,885         1,957         2,560         (4)%        (26)%
    debentures
    
    Term debt        1,520         641           1,756         137%        (13)%
    
    Total interest   22,317        22,941        28,963        (3)%        (23)%
    expense
    
    Net interest     87,052        84,544        75,413        3%          15%
    income
    
    Provision for
    loan and lease   42,106        68,593        59,092        (39)%       (29)%
    losses
    
    Non-interest
    income
    
    Service charges  8,365         8,392         7,701         0%          9%
    
    Brokerage fees   2,639         2,480         1,379         6%          91%
    
    Mortgage
    banking          3,478         4,071         4,070         (15)%       (15)%
    revenue, net
    
    Net (loss) gain
    on investment    (288)         (600)         35            (52)%       (923)%
    securities
    
    Gain (loss) on
    junior
    subordinated     6,088         (3,691)       580           (265)%      950%
    debentures
    carried at fair
    value
    
    Bargain
    purchase gain    8,456         --            --            nm          nm
    on acquisitions
    
    Change in FDIC
    indemnification  610           --            --            nm          nm
    asset
    
    Other income     2,718         2,372         1,752         15%         55%
    
    Total
    non-interest     32,066        13,024        15,517        146%        107%
    income
    
    Non-interest
    expense
    
    Salaries and     36,240        32,153        31,073        13%         17%
    benefits
    
    Occupancy and    10,676        10,407        9,621         3%          11%
    equipment
    
    Intangible       1,308         2,122         1,362         (38)%       (4)%
    amortization
    
    FDIC             3,444         3,180         2,625         8%          31%
    assessments
    
    Net loss on
    other real       2,311         9,094         2,299         (75)%       1%
    estate owned
    
    Merger related   1,906         --            200           nm          853%
    expenses
    
    Other            13,986        15,544        12,771        (10)%       10%
    
    Total
    non-interest     69,871        72,500        59,951        (4)%        17%
    expense
    
    (Loss) income
    before (benefit
    from) provision  7,141         (43,525)      (28,113)      (116)%      (125)%
    for income
    taxes
    
    (Benefit from)
    provision for    (2,584)       (16,843)      (12,864)      (85)%       (80)%
    income taxes
    
    Net income       9,725         (26,682)      (15,249)      (136)%      (164)%
    (loss)
    
    Dividends and
    undistributed
    earnings         15            8             8             88%         88%
    allocated to
    participating
    securities
    
    Preferred stock  12,192        3,234         3,191         277%        282%
    dividend
    
    Net (loss)
    earnings
    available to     $(2,482)      $(29,924)     $(18,448)     (92)%       (87)%
    common
    shareholders
    
    Weighted
    average shares   92,176,174    86,782,397    60,175,868    6%          53%
    outstanding
    
    Weighted
    average diluted  92,176,174    86,782,397    60,175,868    6%          53%
    shares
    outstanding
    
    (Loss) earnings
    per common       $(0.03)       $(0.34)       $(0.31)       (91)%       (90)%
    share - Basic
    
    (Loss) earnings
    per common       $(0.03)       $(0.34)       $(0.31)       (91)%       (90)%
    share - Diluted
    
    nm = not meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Consolidated Balance Sheets
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                                                               Quarter     Year
    
    Dollars in
    thousands,       Mar 31, 2010  Dec 31, 2009  Mar 31, 2009  % Change    % Change
    except per
    share data
    
    Assets:
    
    Cash and due
    from banks,      $125,909      $113,353      $119,817      11%         5%
    non-interest
    bearing
    
    Cash and due
    from banks,      895,905       491,462       16,218        82%         nm
    interest
    bearing
    
    Temporary        600           598           70,565        0%          (99)%
    investments
    
    Investment
    securities:
    
    Trading          2,047         2,273         1,485         (10)%       38%
    
    Available for    1,782,744     1,795,616     1,435,293     (1)%        24%
    sale
    
    Held to          6,062         6,061         13,783        0%          (56)%
    maturity
    
    Loans held for   34,068        33,715        34,013        1%          0%
    sale
    
    Non-covered
    loans and        5,831,858     5,999,267     6,082,480     (3)%        (4)%
    leases
    
    Less: Allowance
    for loan and     (110,784)     (107,657)     (95,086)      3%          17%
    lease losses
    
    Loans and        5,721,074     5,891,610     5,987,394     (3)%        (4)%
    leases, net
    
    Covered loans    696,782       --            --            nm          nm
    and leases
    
    Restricted
    equity           31,996        15,211        16,491        110%        94%
    securities
    
    Premises and     101,686       103,266       103,712       (2)%        (2)%
    equipment, net
    
    Mortgage
    servicing        13,628        12,625        8,732         8%          56%
    rights, at fair
    value
    
    Goodwill and
    other            679,255       639,634       756,468       6%          (10)%
    intangibles,
    net
    
    Non-covered
    other real       18,872        24,566        32,766        (23)%       (42)%
    estate owned
    
    Covered other
    real estate      8,995         --            --            nm          nm
    owned
    
    FDIC
    indemnification  147,206       --            --            nm          nm
    asset
    
    Other assets     244,173       251,382       185,796       (3)%        31%
    
    Total assets     $10,511,002   $9,381,372    $8,782,533    12%         20%
    
    Liabilities:
    
    Deposits         $8,207,222    $7,440,434    $6,792,534    10%         21%
    
    Securities sold
    under            42,043        45,180        50,274        (7)%        (16)%
    agreements to
    repurchase
    
    Term debt        363,828       76,274        206,458       377%        76%
    
    Junior
    subordinated     79,563        85,666        91,682        (7)%        (13)%
    debentures, at
    fair value
    
    Junior
    subordinated     103,108       103,188       103,430       0%          0%
    debentures, at
    amortized cost
    
    Other            68,380        64,113        68,311        7%          0%
    liabilities
    
    Total            8,864,144     7,814,855     7,312,689     13%         21%
    liabilities
    
    Shareholders'
    equity:
    
    Preferred stock  198,289       204,335       202,692       (3)%        (2)%
    
    Common stock     1,339,627     1,253,288     1,006,199     7%          33%
    
    Retained         75,344        83,939        243,447       (10)%       (69)%
    earnings
    
    Accumulated
    other            33,598        24,955        17,506        35%         92%
    comprehensive
    income
    
    Total
    shareholders'    1,646,858     1,566,517     1,469,844     5%          12%
    equity
    
    Total
    liabilities and  $10,511,002   $9,381,372    $8,782,533    12%         20%
    shareholders'
    equity
    
    Common shares
    outstanding at   95,527,427    86,785,588    60,198,057    10%         59%
    period end
    
    Book value per   $15.16        $15.70        $21.05        (3)%        (28)%
    common share
    
    Tangible book
    value per        $8.05         $8.33         $8.48         (3)%        (5)%
    common share
    
    Tangible equity  $769,314      $722,548      $510,684      6%          51%
    - common
    
    Tangible common
    equity to        7.82%         8.27%         6.36%
    tangible assets
    
    nm = not
    meaningful
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Non-covered Loan & Lease Portfolio
    
    (Unaudited)
    
                                                                        Sequential  Year
                                                                                    over
    
    Dollars in    Mar 31, 2010      Dec 31, 2009      Mar 31, 2009      Quarter     Year
    thousands
    
                  Amount      Mix   Amount      Mix   Amount      Mix   % Change    %
                                                                                    Change
    
    Commercial    $3,519,965  60%   $3,523,104  59%   $3,268,762  54%   0%          8%
    real estate
    
    Residential   451,628     8%    443,731     7%    431,592     7%    2%          5%
    real estate
    
    Construction  554,688     10%   618,974     10%   855,697     14%   (10)%       (35)%
    
    Total real    4,526,281   78%   4,585,809   76%   4,556,051   75%   (1)%        (1)%
    estate
    
    Commercial    1,252,418   21%   1,354,469   23%   1,458,792   24%   (8)%        (14)%
    
    Leases        32,740      1%    34,528      1%    39,953      1%    (5)%        (18)%
    
    Installment   31,451      1%    35,863      1%    38,360      1%    (12)%       (18)%
    and other
    
    Deferred
    loan fees,    (11,032)    0%    (11,402)    0%    (10,676)    0%    (3)%        3%
    net
    
    Total loans   $5,831,858  100%  $5,999,267  100%  $6,082,480  100%  (3)%        (4)%
    and leases
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Covered Loan & Lease Portfolio
    
    (Unaudited)
    
    Dollars in thousands    Mar 31, 2010
    
                            Amount    Mix
    
    Commercial real estate  $469,385  68%
    
    Residential real estate 118,033   17%
    
    Construction            51,251    7%
    
    Total real estate       638,669   92%
    
    Commercial              43,854    6%
    
    Leases                  --        0%
    
    Installment and other   14,316    2%
    
    Deferred loan fees, net (57)      0%
    
    Total loans and leases  $696,782  100%
    
    Covered loan & lease portfolio balances represent the loan portfolios
    acquired through the assumption of EvergreenBank on January 22, 2010,
    and Rainier Pacific Bank on February 26, 2010, from the FDIC through
    whole bank purchase and assumption agreements with loss sharing.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Deposits by Type/Core Deposits
    
    (Unaudited)
    
                                                                            Sequential  Year
                                                                                        over
    
    Dollars in       Mar 31, 2010       Dec 31, 2009      Mar 31, 2009      Quarter     Year
    thousands
    
                     Amount      Mix    Amount      Mix   Amount      Mix   % Change    %
                                                                                        Change
    
    Demand,
    non-interest     $1,472,408  18%    $1,398,332  19%   $1,292,512  19%   5%          14%
    bearing
    
    Demand,
    interest         3,690,025   45%    3,388,696   46%   2,902,691   43%   9%          27%
    bearing
    
    Savings          342,883     4%     297,293     4%    295,895     4%    15%         16%
    
    Time             2,701,906   33%    2,356,113   32%   2,301,436   34%   15%         17%
    
    Total deposits   $8,207,222  100%   $7,440,434  100%  $6,792,534  100%  10%         21%
    
    Total core
    deposits-ending  $6,405,105  78%    $5,837,024  78%   $5,490,094  81%   10%         17%
    (1)
    
    Number of open
    accounts:
    
    Demand,
    non-interest     177,152            157,199           150,191           13%         18%
    bearing
    
    Demand,
    interest         70,082             62,883            61,133            11%         15%
    bearing
    
    Savings          95,367             74,884            70,966            27%         34%
    
    Time             40,269             34,249            33,654            18%         20%
    
    Total            382,870            329,215           315,944           16%         21%
    
    Average balance
    per account:
    
    Demand,
    non-interest     $8.3               $8.9              $8.6
    bearing
    
    Demand,
    interest         52.7               53.9              47.5
    bearing
    
    Savings          3.6                4.0               4.2
    
    Time             67.1               68.8              68.4
    
    Total            21.4               22.6              21.5
    
    (1) Core deposits are defined as total deposits less time deposits greater than $100,000.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Credit Quality - Non-performing Assets
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                                  Quarter Ended                Quarter     Year
    
    Dollars in      Mar 31, 2010  Dec 31, 2009   Mar 31, 2009  % Change    % Change
    thousands
    
    Non-covered
    non-performing
    assets:
    
    Non-covered
    loans on        $183,510      $193,118       $112,949      (5)%        62%
    non-accrual
    status
    
    Non-covered
    loans past due  7,200         5,909          13,780        22%         (48)%
    90+ days &
    accruing
    
    Total
    non-performing  190,710       199,027        126,729       (4)%        50%
    loans
    
    Non-covered
    other real      18,872        24,566         32,766        (23)%       (42)%
    estate owned
    
    Total
    non-covered     $209,582      $223,593       $159,495      (6)%        31%
    non-performing
    assets
    
    Performing
    restructured    $97,971       $134,439       $43,390       (27)%       126%
    loans
    
    Past due 30-89  $53,947       $41,458        $89,699       30%         (40)%
    days
    
    Past due 30-89
    days to total   0.93%         0.69%          1.47%
    loans and
    leases
    
    Non-covered
    non-performing
    loans to        3.27%         3.32%          2.08%
    non-covered
    loans and
    leases
    
    Non-covered
    non-performing  1.99%         2.38%          1.82%
    assets to
    total assets
    
    Covered
    non-performing
    assets:
    
    Covered loans
    on non-accrual  $34,676       $--            $--           nm          nm
    status
    
    Total
    non-performing  34,676        --             --            nm          nm
    loans
    
    Covered other
    real estate     8,995         --             --            nm          nm
    owned
    
    Total covered
    non-performing  $43,671       $--            $--           nm          nm
    assets
    
    Covered
    non-performing
    loans to        4.98%         --             --
    covered loans
    and leases
    
    Covered
    non-performing  0.42%         --             --
    assets to
    total assets
    
    Total
    non-performing
    assets:
    
    Loans on
    non-accrual     $218,186      $193,118       $112,949      13%         93%
    status
    
    Loans past due
    90+ days &      7,200         5,909          13,780        22%         (48)%
    accruing
    
    Total
    non-performing  225,386       199,027        126,729       13%         78%
    loans
    
    Other real      27,867        24,566         32,766        13%         (15)%
    estate owned
    
    Total
    non-performing  $253,253      $223,593       $159,495      13%         59%
    assets
    
    Non-performing
    loans to loans  3.45%         3.32%          2.08%
    and leases
    
    Non-performing
    assets to       2.41%         2.38%          1.82%
    total assets
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Credit Quality - Allowance for Credit Losses
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                                  Quarter Ended                Quarter     Year
    
    Dollars in      Mar 31, 2010  Dec 31, 2009   Mar 31, 2009  % Change    % Change
    thousands
    
    Allowance for
    credit losses:
    
    Balance
    beginning of    $107,657      $103,136       $95,865
    period
    
    Provision for
    loan and lease  42,106        68,593         59,092        (39)%       (29)%
    losses
    
    Charge-offs     (39,759)      (65,502)       (60,414)      (39)%       (34)%
    
    Recoveries      780           1,430          543           (45)%       44%
    
    Net             (38,979)      (64,072)       (59,871)      (39)%       (35)%
    charge-offs
    
    Total
    allowance for   110,784       107,657        95,086        3%          17%
    loan and lease
    losses
    
    Reserve for
    unfunded        765           731            935
    commitments
    
    Total
    allowance for   $111,549      $108,388       $96,021       3%          16%
    credit losses
    
    Net
    charge-offs to
    average
    non-covered     2.66%         4.19%          3.96%
    loans and
    leases
    (annualized)
    
    Recoveries to
    gross           1.96%         2.18%          0.90%
    charge-offs
    
    Allowance for
    credit losses
    to non-covered  1.91%         1.81%          1.58%
    loans and
    leases
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Selected Ratios
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
                     Mar 31, 2010  Dec 31, 2009  Mar 31, 2009  Change      Change
    
    Net interest
    spread:
    
    Yield on
    non-covered      5.75%         5.75%         5.79%         (0.00)      (0.04)
    loans and
    leases
    
    Yield on
    covered loans    6.97%         N/A           N/A           nm          nm
    and leases
    
    Yield on
    taxable          3.99%         4.03%         4.83%         (0.04)      (0.84)
    investments
    
    Yield on
    tax-exempt       5.84%         5.81%         5.79%         0.03        0.05
    investments (1)
    
    Yield on
    temporary
    investments &    0.24%         0.28%         0.25%         (0.04)      (0.01)
    interest
    bearing cash
    
    Total yield on
    earning assets   5.07%         5.15%         5.61%         (0.08)      (0.54)
    (1)
    
    Cost of
    interest         1.19%         1.35%         1.82%         (0.16)      (0.63)
    bearing
    deposits
    
    Cost of
    securities sold
    under
    agreements to    1.02%         1.09%         1.26%         (0.07)      (0.24)
    repurchase and
    fed funds
    purchased
    
    Cost of term     3.41%         3.33%         3.45%         0.08        (0.04)
    debt
    
    Cost of junior
    subordinated     4.05%         4.19%         5.30%         (0.14)      (1.25)
    debentures
    
    Total cost of
    interest         1.33%         1.45%         1.99%         (0.12)      (0.66)
    bearing
    liabilities
    
    Net interest     3.74%         3.70%         3.62%         0.04        0.12
    spread (1)
    
    Net interest
    margin -         4.04%         4.06%         4.07%         (0.02)      (0.03)
    Consolidated
    (1)
    
    Net interest
    margin - Bank    4.12%         4.15%         4.20%         (0.03)      (0.08)
    (1)
    
    As reported
    (GAAP):
    
    Return on        (0.10)%       (1.27)%       (0.86)%       1.17        0.76
    average assets
    
    Return on
    average          (0.11)%       (1.37)%       (0.94)%       1.26        0.83
    tangible assets
    
    Return on
    average common   (0.71)%       (8.41)%       (5.80)%       7.70        5.09
    equity
    
    Return on
    average          (1.30)%       (15.39)%      (14.07)%      14.09       12.77
    tangible common
    equity
    
    Efficiency
    ratio -          58.15%        73.57%        65.32%        (15.42)     (7.17)
    Consolidated
    
    Efficiency       58.53%        67.99%        62.41%        (9.46)      (3.88)
    ratio - Bank
    
    Operating basis
    (non-GAAP): (2)
    
    Return on        (0.41)%       (1.18)%       (0.87)%       0.77        0.46
    average assets
    
    Return on
    average          (0.44)%       (1.26)%       (0.95)%       0.82        0.51
    tangible assets
    
    Return on
    average common   (2.86)%       (7.78)%       (5.88)%       4.92        3.02
    equity
    
    Return on
    average          (5.27)%       (14.25)%      (14.24)%      8.98        8.97
    tangible common
    equity
    
    Efficiency
    ratio -          64.35%        70.91%        65.51%        (6.56)      (1.16)
    Consolidated
    
    Efficiency       61.44%        67.99%        62.20%        (6.55)      (0.76)
    ratio - Bank
    
    (1) Tax exempt interest has been adjusted to a taxable equivalent basis using a
    35% tax rate.
    
    (2) Operating earnings is calculated as earnings available to common
    shareholders excluding gain (loss) on junior subordinated debentures carried at
    fair value, net of tax, bargain purchase gain on acquisitions, net of tax,
    goodwill impairment, and merger related expenses, net of tax.
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Average Balances
    
    (Unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
    Dollars in       Mar 31, 2010  Dec 31, 2009  Mar 31, 2009  % Change    % Change
    thousands
    
    Temporary
    investments &    $678,930      $384,492      $52,063       77%         1204%
    interest
    bearing cash
    
    Investment
    securities,      1,610,407     1,645,629     1,188,859     (2)%        35%
    taxable
    
    Investment
    securities,      221,405       207,984       183,581       6%          21%
    tax-exempt
    
    Loans held for   24,141        43,662        44,226        (45)%       (45)%
    sale
    
    Non-covered
    loans and        5,934,805     6,072,606     6,135,710     (2)%        (3)%
    leases
    
    Covered loans    363,967       N/A           N/A           N/A         N/A
    and leases
    
    Total earning    8,833,655     8,354,373     7,604,439     6%          16%
    assets
    
    Goodwill &
    other            653,336       640,995       757,055       2%          (14)%
    intangible
    assets, net
    
    Total assets     9,977,816     9,332,737     8,713,845     7%          15%
    
    Non-interest
    bearing demand   1,448,668     1,392,988     1,251,971     4%          16%
    deposits
    
    Interest
    bearing          6,389,091     5,943,110     5,450,614     8%          17%
    deposits
    
    Total deposits   7,837,759     7,336,098     6,702,585     7%          17%
    
    Interest
    bearing          6,807,375     6,260,408     5,911,972     9%          15%
    liabilities
    
    Shareholders'    1,427,352     1,412,324     1,288,744     1%          11%
    equity - common
    
    Tangible common  774,016       771,329       531,689       0%          46%
    equity (1)
    
    (1) Average tangible common equity is a non-GAAP financial measure. Average
    tangible common equity is calculated as average common shareholders' equity less
    average goodwill and other intangible assets, net (excluding MSRs).
    
    
    
    
    
    Umpqua Holdings Corporation
    
    Mortgage Banking Activity
    
    (unaudited)
    
                                                               Sequential  Year over
    
                     Quarter Ended:                            Quarter     Year
    
    Dollars in       Mar 31, 2010  Dec 31, 2009  Mar 31, 2009  % Change    % Change
    thousands
    
    Mortgage
    Servicing
    Rights (MSR):
    
    Mortgage loans
    serviced for     $1,345,550    $1,277,832    $1,038,715    5%          30%
    others
    
    MSR Asset, at    $13,628       $12,625       $8,732        8%          56%
    fair value
    
    MSR as % of
    serviced         1.01%         0.99%         0.84%
    portfolio
    
    Mortgage
    Banking
    Revenue:
    
    Origination and  $2,704        $3,804        $4,857        (29)%       (44)%
    sale
    
    Servicing        903           805           654           12%         38%
    
    Change in fair
    value of MSR     (129)         (538)         (1,441)       (76)%       (91)%
    asset
    
    Total Mortgage   $3,478        $4,071        $4,070        (15)%       (15)%
    Banking Revenue
    
    Closed loan      $127,314      $172,303      $191,713      (26)%       (34)%
    volume
    
    nm = not
    meaningful
    
    
    
    

    Additional tables

    The following tables present additional detail covering the following aspects of the Company's non-covered loan portfolio, and other significant transactions occurring during the quarter.

        --  Table 1 - Non-covered residential development loan trends by region
        --  Table 2 - Non-covered residential development loan stratification by
            size and by region
        --  Table 3 - Non-covered, non-performing asset detail by type and by region
        --  Table 4 - Non-covered loans past due 30-89 days by type and by region
        --  Table 5 - Non-covered loans past due 30-89 days trends
        --  Table 6 - Non-covered restructured loans by type and by region
        --  Table 7 - Fair values of assets acquired and liabilities assumed through
            FDIC-assisted transactions
    
    

    The following is a geographic distribution of the non-covered residential development portfolio as of March 31, 2010, December 31, 2009 and March 31, 2009:

    
    Table 1 - Non-covered residential development loan trends by region
    
    (Dollars in thousands)                                 Non-
    
                                                 % change  performing  Performing
    
                Balance    Balance    Balance    from      loans       Loans
    
                3/31/09    12/31/09   3/31/10    3/31/09   3/31/10     3/31/10
    
    Northwest   $120,460   $88,762    $81,409    (32)%     $1,389      $80,020
    Oregon
    
    Central     20,951     9,059      4,962      (76)%     936         4,026
    Oregon
    
    Southern    29,738     19,006     17,149     (42)%     4,145       13,004
    Oregon
    
    Washington  26,514     8,616      8,462      (68)%     --          8,462
    
    Greater     92,744     74,993     67,676     (27)%     19,011      48,665
    Sacramento
    
    Northern    38,266     25,373     22,140     (42)%     7,829       14,311
    California
    
    Total       $328,673   $225,809   $201,798   (39)%     $33,310     $168,488
    
    % of total
    loan        5%         4%         3%                               3%
    portfolio
    
    Quarter     $(55,486)  $(32,674)  $(24,011)
    change $
    
    Quarter     (14)%      (13)%      (11)%
    change %
    
    
    
    

    The following is a stratification by size and region of the remaining non-covered performing residential development loans as of March 31, 2010:

    
    Table 2 - Non-covered 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 less  $1       $3       $5       $10         and      Total
                          million  million  million  million     greater
    
    Northwest   $4,717    $10,150  $19,628  $14,672  $16,134     $14,719  $80,020
    Oregon
    
    Central     512       1,051    2,463    --       --          --       4,026
    Oregon
    
    Southern    1,090     6,728    5,186    --       --          --       13,004
    Oregon
    
    Washington  --        687      7,775    --       --          --       8,462
    
    Greater     3,961     5,359    2,073    4,817    11,455      21,000   48,665
    Sacramento
    
    Northern    1,265     2,575    10,471   --       --          --       14,311
    California
    
    Total       $11,545   $26,550  $47,596  $19,489  $27,589     $35,719  $168,488
    
    % of Total  7%        16%      28%      12%      16%         21%      100%
    
    
    
    

    The following is a distribution of non-covered, non-performing assets by type and by region as of March 31, 2010:

    
    Table 3 - Non-covered, non-performing asset detail by type and by region
    
    (Dollars in thousands)
    
                    Northwest  Central  Southern              Greater     Northern
    
                    Oregon     Oregon   Oregon    Washington  Sacramento  California  Total
    
    Non-accrual
    loans:
    
    Residential     $1,389     $936     $4,145    $--         $19,011     $7,829      $33,310
    development
    
    Commercial      10,267     --       --        2,676       14,896      4,059       31,898
    construction
    
    Commercial      25,233     3,857    3,858     --          15,114      18,011      66,073
    real estate
    
    Commercial      23,667     3,635    811       13,113      264         10,739      52,229
    
    Other           --         --       --        --          --          --          --
    
    Total
    non-accrual     $60,556    $8,428   $8,814    $15,789     $49,285     $40,638     $183,510
    loans
    
    Loans 90 days
    past due:
    
    Residential     $--        $--      $--       $--         $--         $--         $--
    development
    
    Commercial      --         --       --        --          --          --          --
    construction
    
    Commercial      --         --       --        --          203         448         651
    real estate
    
    Commercial      --         --       --        --          51          121         172
    
    Other           6,192      --       --        --          185         --          6,377
    
    Total 90 days   $6,192     $--      $--       $--         $439        $569        $7,200
    past due
    
    Total
    non-performing  $66,748    $8,428   $8,814    $15,789     $49,724     $41,207     $190,710
    loans
    
    Other real
    estate owned:
    
    Residential     $636       $4,320   $968      $1,457      $2,674      $566        $10,621
    development
    
    Commercial      359        978      --        426         2,426       --          4,189
    construction
    
    Commercial      821        --       348       --          651         --          1,820
    real estate
    
    Commercial      191        867      --        --          --          117         1,175
    
    Other           1,067      --       --        --          --          --          1,067
    
    Total OREO      $3,074     $6,165   $1,316    $1,883      $5,751      $683        $18,872
    
    Total
    non-performing  $69,822    $14,593  $10,130   $17,672     $55,475     $41,890     $209,582
    assets
    
    % of total      33%        7%       5%        8%          27%         20%         100%
    
    
    
    

    The Company has aggressively charged-down impaired assets to their disposition values. As of March 31, 2010, the non-covered, non-performing assets of $209.6 million have been written down by 45%, or $172.3 million, from their original balance of $381.9 million.

    The following is a distribution of non-covered loans past due 30-89 days by loan type by region as of March 31, 2010:

    
    Table 4 - Non-covered 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   $13,583    $--      $--       $--         $--         $--         $13,583
    development
    
    Commercial    4,751      --       --        --          --          110         4,861
    construction
    
    Commercial    10,467     231      655       --          2,237       8,082       21,672
    real estate
    
    Commercial    4,462      465      156       200         1,212       1,811       8,306
    
    Other         3,951      --       --        --          1,574       --          5,525
    
    Total 30-89
    days past     $37,214    $696     $811      $200        $5,023      $10,003     $53,947
    due
    
    
    
    
    
    Table 5 - Non-covered loans past due 30-89 days trends
    
    (Dollars in thousands)                                  Sequential  Year
    
                                                            Quarter     Over Year
    
                                3/31/10  12/31/09  3/31/09  % Change    % Change
    
    Loans 30-89 days past due:
    
    Residential development     $13,583  $8,950    $17,740  52%         (23)%
    
    Commercial construction     4,861    1,235     2,120    294%        129%
    
    Commercial real estate      21,672   18,645    16,697   16%         30%
    
    Commercial                  8,306    8,385     49,446   (1)%        (83)%
    
    Other                       5,525    4,243     3,696    30%         49%
    
    Total 30-89 days past due   $53,947  $41,458   $89,699  30%         (40)%
    
    
    
    

    The following is a distribution of non-covered restructured loans by loan type by region as of March 31, 2010:

    
    Table 6 - Non-covered restructured loans by type and by region
    
    (Dollars in thousands)
    
                  Northwest  Central  Southern              Greater     Northern
    
                  Oregon     Oregon   Oregon    Washington  Sacramento  California  Total
    
    Restructured
    loans,
    accrual
    basis:
    
    Residential   $26,476    $--      $305      $7,775      $32,814     $--         $67,370
    development
    
    Commercial    --         --       --        --          --          --          --
    construction
    
    Commercial    5,263      --       5,788     --          9,723       3,830       24,604
    real estate
    
    Commercial    189        --       --        --          53          1,239       1,481
    
    Other         4,481      --       --        --          35          --          4,516
    
    Total
    restructured  $36,409    $--      $6,093    $7,775      $42,625     $5,069      $97,971
    loans
    
    
    
    

    The following table summarizes the purchase price allocation, including the estimated fair values of the assets acquired and liabilities assumed from the FDIC-assisted assumption of EvergreenBank and Rainier Pacific Bank, at the date of acquisition. The fair values are preliminary estimates and are subject to refinement. Additionally, the Company has the option to purchase the owned and assume the leased bank premises, furniture and equipment at fair value. These purchase options expire 90 days following the assumption date. The Company has not yet determined which assets we will assume, and therefore, these balances are not yet reflected in the table below.

    
    Table 7 - Fair values of assets acquired and liabilities assumed through
    FDIC-assisted transactions
    
    (Dollars in thousands)
    
                                                                 Rainier
    
                                               EvergreenBank     Pacific Bank
    
                                               January 22, 2010  February 26, 2010
    
    Assets Acquired:
    
    Cash and equivalents                       $18,919           $94,067
    
    Investment securities                      3,850             26,478
    
    Covered loans                              251,528           461,417
    
    Premises and equipment                     -                 17
    
    Restricted equity securities               3,073             13,712
    
    Goodwill                                   -                 34,317
    
    Other intangible assets                    440               6,253
    
    Mortgage servicing rights                  -                 62
    
    Covered other real estate owned            2,421             6,580
    
    FDIC indemnification asset                 73,774            72,821
    
    Other assets                               1,293             5,437
    
    Total assets acquired                      $355,298          $721,161
    
    Liabilities Assumed:
    
    Deposits                                   $285,775          $425,758
    
    Term debt                                  60,813            294,063
    
    Other liabilities                          254               1,340
    
    Total liabilities assumed                  $346,842          $721,161
    
    Net assets acquired/bargain purchase gain  $8,456            $ -
    
    
    
    

    
        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