Umpqua Proxy Statement

DEF 14A 1 umpqua_proxy2001.html UMPQUA HOLDINGS PROXY (DEF 14A) Umpqua Proxy Statement

SCHEDULE 14A INFORMATION

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Umpqua Holdings Corporation
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UMPQUA HOLDINGS CORPORATION
445 S.E. Main St.
Roseburg, Oregon 97470
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
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To the shareholders of Umpqua Holdings Corporation:

Notice is hereby given that the annual meeting of shareholders of Umpqua
Holdings Corporation will be held at the Roseburg Country Club located at 5051
Garden Valley Road, Roseburg, Oregon, on Wednesday, April 25, 2001, at 6:00
p.m. for the following purposes:

(1) To elect three directors to serve three-year terms or until their
successors are duly elected and qualified; and

(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.

Only shareholders of record at the close of business on March 23, 2001,
are entitled to vote at the meeting or any adjournments thereof.

Further information regarding voting rights and the business to be
transacted at the meeting is given in the accompanying proxy statement. The
officers and directors who serve you genuinely appreciate your continued
interest as a shareholder in our growth and development.

March 27, 2001

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Julie M. Ryan

Julie M. Ryan
Corporate Secretary

YOUR VOTE IS IMPORTANT
----------------------

You are cordially invited to attend the meeting. It is important that
your shares be represented regardless of the number you own. Even if you
plan to be present, you are urged to complete, sign, date and promptly
return the attached proxy using the envelope provided. If you attend the
meeting and you are the record holder of your shares, you may vote either
in person or by your proxy. If you are the record holder of your shares,
any proxy given may be revoked by you in writing or in person at any time
prior to the exercise thereof. Attendance at the meeting will not, of
itself, revoke a previously given proxy.

UMPQUA HOLDINGS CORPORATION
445 S.E. Main St.
Roseburg, Oregon 97470

PROXY STATEMENT

This proxy statement is being furnished in connection with the
solicitation by the Board of Directors of Umpqua Holdings Corporation of
proxies to be used at the annual meeting of shareholders scheduled for April
25, 2001. This proxy statement and the enclosed form of proxy are being mailed
to shareholders on or about March 27, 2001, together with our 2000 Annual
Report to Shareholders. On November 30, 2000, Umpqua Holdings Corporation
completed a merger (the "Merger") with VRB Bancorp.

Only the holders of common stock as shown on our records as of March 23,
2001, are entitled to notice of, and to vote at, the meeting. A quorum for the
purpose of transacting business requires the presence, in person or by proxy,
of the holders of a majority of the outstanding shares. An abstention from a
given matter will not affect the presence of the shares as to determination of
a quorum. At the close of business on March 15, 2001, there were 14,393,383
shares of common stock issued and outstanding, with each share being entitled
to one vote. In the election of directors, each share is entitled to one vote
for each director position to be filled, and shareholders may not accumulate
votes.

The Board of Directors is soliciting proxies in the form enclosed.
Execution of a proxy will not in any way affect a shareholder's right to
attend the meeting and vote. A proxy may be revoked by a holder of record
prior to its exercise at the meeting by presenting a proxy bearing a later
date or submitting a written revocation to Julie M. Ryan, Corporate Secretary,
at Umpqua Holdings Corporation, 445 S.E. Main St., Roseburg, Oregon, prior to
commencement of the meeting, or by oral request or submission of such an
instrument of revocation at the meeting if the shareholder is present at the
meeting. However, a shareholder who attends the meeting need not revoke his or
her proxy and vote in person unless he or she wishes to do so. Attendance at
the meeting will not, of itself, revoke a proxy.

If your shares are held by a broker, bank or other nominee (in "street
name"), you must give voting instructions to that nominee. If your shares are
held in street name, you must contact the nominee holder of the shares to
revoke a proxy or to change your vote. You will not be able to vote or revoke
a proxy at the meeting if your shares are held in street name.

If a proxy in the enclosed form is executed and returned, the shares
represented will be voted according to your instructions. If no instructions
are given, the proxy will be voted FOR the election of the nominees for
directors, and in the proxy holder's discretion on any other matters that may
properly come before the shareholders at the meeting.

Umpqua Holdings Corporation will bear the cost of this proxy
solicitation. We do not expect to pay any compensation for the solicitation of
proxies, but may reimburse brokers and other persons holding stock in their
names, or in the names of nominees, for their expenses in sending proxy
material to principals and obtaining their proxies. In addition to
solicitation of proxies by mail, we may also use officers and regular
employees to solicit proxies from shareholders, either in person or by
telephone, fax, or letter, without extra compensation.

BUSINESS OF THE MEETING

Agenda Item 1. Election of Directors

Umpqua Holdings Corporation's Articles of Incorporation and Bylaws
provide that directors are elected to serve staggered three-year terms of
office. The Articles of Incorporation of Umpqua Holdings Corporation establish
the number of directors between 6 and 19, with the exact number to be fixed
from time to time by resolution of the Board of Directors. Upon completion of
the Merger, the Board of Directors of the Company was increased to, and
currently consists of, eleven persons. Directors are elected by a plurality of
votes, and shareholders are not entitled to accumulate votes in the election
of directors.

As of the annual meeting, three directors are completing their terms.
These positions are open for election. The Board is nominating Raymond P.
Davis, David B. Frohnmayer, and William A. Haden for reelection to a term that
will expire in three years. Each of the nominees currently serves as a
director of both Umpqua Holdings Corporation and Umpqua Bank.

It is the intention of the persons named in the proxy to vote FOR the
election of the nominees listed above. If any nominee is not available for
election, the proxy will be voted by the individuals named in the proxy for
such substitute nominee as the Board may designate. Management has no reason
to believe any nominee will be unavailable.

The Board recommends a vote FOR the election of all nominees.

Information Regarding Directors and Executive Officers

Directors

Each director also serves as a director of Umpqua Bank. The age, business
experience, and position of each of the nominees for director and directors
currently serving is as follows:

Scott Chambers, age 41, has served as a Director since 1999. Mr. Chambers
is President of Chambers Communication Corp. of Eugene, Oregon--a
telecommunications company that owns and operates cable television systems,
network broadcast television stations, a film and video production company,
and an interest in a computer animation company. Mr. Chambers serves on the
Executive Board for CableLabs and is a board member of the National Cable
Television Association.

James D. Coleman, age 62, has served as a Director since the merger with
VRB Bancorp on December 1, 2000. Mr. Coleman served as Chairman of the VRB
Board of Directors, and was previously a founding director of Medford State
Bank, which VRB acquired in 1987. He is President and owner of Crater Lake
Motors, a Ford and Mercedes automobile dealership in Medford, Oregon.

Raymond P. Davis, age 51, serves as Director, President and Chief
Executive Officer of the Company. Mr. Davis has served as Director of Umpqua
Bank since June, 1994, and previously served as President and Chief Executive
Officer of Umpqua Bank. Prior to joining Umpqua Bank in 1994, he was President
of US Banking Alliance in Atlanta, Georgia, a bank consulting firm. He has
over 20 years experience in banking and banking related industries.

Ronald O. Doan, age 56, has served as a Director since 1995. Mr. Doan
currently is the Operations Officer for Cow Creek Government Offices.
Previously, Mr. Doan served as the General Business Director of Pacific Power
and Light Co., an electric utility company, for Mid and Southern Oregon and
Northern California. Mr. Doan has 31 years of management, sales and human
resources experience. He served as President of the Douglas County Industrial
Development Board and Roseburg Area Chamber of Commerce.

Michael Donovan, age 50, has served as a Director since the merger with
VRB Bancorp. Mr. Donovan served as a director of VRB from 1997 until the
merger. He is co-owner of Chateaulin Restaurant & Wine Shoppe in Ashland,
Oregon.

John O. Dunkin, age 62, has served as a Director since the merger with
VRB Bancorp. Mr. Dunkin served as Vice Chairman of the VRB Board of Directors.
He is Chief Executive Officer of Grants Pass Moulding, Rogue Valley Sash &
Door, and Pacific Lumber, all located in Grants Pass, Oregon.

Allyn C. Ford, age 59, serves as Chairman of the Board of Directors and
has served as a Director since 1971. Mr. Ford is President and General Manager
of Roseburg Forest Products, a company located in Roseburg, Oregon, that is a
fully integrated wood products manufacturer. Mr. Ford has over 30 years of
management experience with Roseburg Forest Products.

David B. Frohnmayer, age 60, has served as a Director since 1996. Mr.
Frohnmayer is the President of the University of Oregon in Eugene, and has
served in that capacity since 1994. He is the former Dean of the University of
Oregon School of Law and former State of Oregon Attorney General.

William A. Haden, age 52, serves as Director and Executive Vice President
of the Company and President and Chief Executive Officer of Umpqua Bank. He
served as President and Chief Executive Officer of VRB and Valley of the Rogue
Bank from January 1996 until the merger and, prior to that time, served as
President of Family Bank of Commerce.

Lynn K. Herbert, age 49, has served as a Director since 1993. Mr. Herbert
is Manager of Herbert Lumber Company in Riddle, Oregon, and has served in that
capacity since 1988. Mr. Herbert has over 20 years of management experience
with Herbert Lumber Company. Mr. Herbert is the son of Milton Herbert, a
significant shareholder and one of the founders of Umpqua Bank.

Larry L. Parducci, age 56, has served as a Director since the merger with
VRB Bancorp. Mr. Parducci is the owner/operator of Holiday RV Park in Phoenix,
Oregon, and serves as mayor for the city of Phoenix.

Executive Officers

The age, business experience, and position of our executive officers
other than Raymond P. Davis, President and Chief Executive Officer, and
William A. Haden, Executive Vice President and President and Chief Executive
Officer of Umpqua Bank, about whom information is provided above, is as
follows:

Daniel A. Sullivan, age 49, serves as Executive Vice President and Chief
Financial Officer of the Company. He has served as Senior Vice President and
Chief Financial Officer of Umpqua Bank since 1997. Prior to that time, Mr.
Sullivan served as Vice President of Finance for Instromedix of Hillsboro,
Oregon (1997) and has also worked as Senior Vice President and Controller for
US Bancorp in Portland, Oregon (1983 to 1996).

Key Management Personnel

Brad Copeland, age 52, serves as Executive Vice President and Chief
Credit Officer of Umpqua Bank. Mr. Copeland served as Executive Vice President
and Credit Administrator of VRB and Valley of the Rogue Bank from January 1998
to the closing of the Merger. He joined Valley of the Rogue Bank in 1996.
Prior to joining Valley of the Rogue Bank, he served as Senior Vice President
and Senior Credit Officer for Bank of America Alaska (1987 to 1996).

Steven A. May, age 47, serves as Executive Vice President/Retail Banking
of Umpqua Bank, a position he has held since 1994. Prior to that time, Mr. May
served as Vice President and District Manager of the US Bank of Oregon from
1988 to 1994, as the administrator of a group of four retail branches.

Jan Jansen, age 54, serves as President of Strand Atkinson Williams &
York, Inc. He has been with Strand Atkinson since November 1994, previously
worked for US Bancorp Securities, and has extensive experience in asset
management and retail-oriented investment services.

Meetings and Committees of the Board of Directors

The Board of Directors met thirteen times during 2000, including one
special meeting and twelve regular meetings. Except as described below, each
director attended at least 75 percent of those meetings, as well as meetings
of committees on which such director served.

Messrs. Haden, Coleman, Parducci, Dunkin, and Donovan became directors
with the closing of the merger with VRB Bancorp on December 1, 2000. Each of
the five new directors attended the December 2000 regular meeting. Neil
Hummel, Harold Ball, and Frances Jean Phelps resigned as directors effective
with the closing of the merger. Messrs. Hummel and Ball and Ms. Phelps
attended at least 75 percent of the meetings held prior to their respective
resignations, as well as meetings of committees on which such directors
served.

The Board of Directors has a standing Audit Committee that meets with our
independent auditors to plan for and review the annual audit reports. The
audit committee meets quarterly and is responsible for overseeing the internal
controls of the company and the financial reporting process.The members of the
audit committee are Messrs. Parducci (Chairman), Donovan, Doan, and Herbert.
Each member of the audit committee is independent, as independence is defined
under Rule 4200(a)(15) of the listing standards of the National Association of
Securities Dealers. The Board has adopted an audit committee charter, a copy
of which is attached as Appendix A to this proxy statement. The audit
committee charter provides that employees of the company are not eligible to
serve on the audit committee. The charter further provides that at least one
member shall have had past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer,
chief financial officer or other senior officer with financial oversight
responsibilities. The Board believes that each of the current members of the
audit committee has employment experience that provides them with appropriate
financial sophistication to serve on the audit committee.

The Budget and Compensation Committee reviews and oversees our budgeting
process, and compensation strategies. On a quarterly basis, the results of
their meetings are reviewed with the entire Board of Directors. The committee
consists of Directors Doan (Chairperson), Coleman, Dunkin, Chambers, Davis and
Haden.

The Loan and Investment Committee approves certain loans, reviews the
adequacy of our allowance for loan losses, maintains an appropriate balance in
the interest rate sensitivity of our loan and investment portfolios, and
determines the liquidity, type and term of investment securities we purchase.
The committee consists of Directors Coleman (Chairperson), Herbert, Chambers,
Haden, Parducci and Davis.

The Strategic Positioning Committee, consisting of directors Frohnmayer
(Chairperson), Dunkin, Donovan, Davis and Haden is responsible for the review
and oversight of strategic planning, and the review of technology and
expansion strategies.

Director Compensation

Each non-employee director received a fee of $2,250 per quarter for the
first two quarters of 2000. The Chairman received $2,750 per quarter for the
first two quarters. Each non-employee director received $2,750 per quarter for
the third and fourth quarters and the Chairman received $3,250 per quarter for
the third and fourth quarters. These amounts are payable in shares of Umpqua
Holdings Corporation stock. Shares of Umpqua Holdings Corporation stock are
purchased quarterly by Ragen MacKenzie brokerage firm for each director.

Former directors Ball, Hummel, and Phelps received a fee for each of the four
quarters and new directors Haden, Dunkin, Coleman, Donovan, and Parducci
received a pro-rated fee of $917 for the fourth quarter. Messrs. Davis and
Haden did not receive additional compensation for their service on the Board
or any of its Committees.

As directors of VRB Bancorp, John Dunkin and Michael Donovan received VRB
Bancorp stock options. With the closing of the Merger, the options converted
into options to purchase Umpqua common stock. Mr. Dunkin has options
exercisable into 22,431 shares of Umpqua common stock. Mr. Donovan has
exercisable options to purchase 3,615 shares of Umpqua common stock. Mr.
Donovan exercised options to purchase 1,827 shares in February 2001. Umpqua
did not grant stock options to its directors in 2000.

Executive Compensation

The following table sets forth all compensation paid during the last
three calendar years to the Chief Executive Officer and the other Executive
Officers of the Company for the past three years. The compensation shown for
William Haden for the years 1998 through 2000 is compensation paid to him in
1998 and 1999, and for the first eleven months of 2000, by VRB Bancorp. During
that time Mr. Haden served as President and CEO of VRB Bancorp.

Other
Annual All
Bonus Compensation Other
Name and Principal Position Year Salary (1) (2) Compensation
-------------------------------------------------------------------------------
Raymond P. Davis 2000 $196,667 $71,400 $10,692 $21,755 (3)
President and
Chief Executive Officer 1999 179,792 55,500 8,520 12,000 (4)
Umpqua Holdings Corporation 1998 166,500 51,750 7,750 16,549 (4)

William A. Haden 2000 $112,275 $260,081(5) $3,900 $18,050 (5)
President and
Chief Executive Officer 1999 105,000 78,750 -- 19,692 (5)
Umpqua Bank 1998 105,000 80,370 -- 17,050 (5)

Daniel A. Sullivan 2000 $120,642 $30,360 $7,662 $12,465 (4)
Executive Vice President 1999 106,325 23,000 6,934 15,468 (4)
and Chief Financial Officer 1998 97,923 20,900 4,486 --

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(1) Includes bonuses paid, or to be paid, during the subsequent year but
attributable to the year indicated.

(2) Perquisites and other personal benefits, if any, did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus for the
named executive officer for any of the periods indicated. The Company has
not paid any long-term compensation; therefore, the long-term
compensation columns have been omitted from the above table.

(3) Includes $7,594 contributed to a SERP and the balance consists of a
contribution to the employees' 401(k) plan for Mr. Davis's benefit.

(4) Consists of contributions to the employees' 401(k) Plan for Mr. Davis'
and Mr. Sullivan's benefit.

(5) Includes $187,893 paid by VRB Bancorp with the closing of the Merger
pursuant to change-in-control provisions in Mr. Haden's employment
agreement with VRB. Includes life insurance premiums of $1,050 paid prior
to the merger for $350,000 face amount insurance above VRB's group
insurance plan and the balance is VRB's contribution prior to the merger
to match employee's salary deferral under the VRB 401(k) Profit Sharing
Plan.

Executive Compensation Plans and Agreements

Employment and Change of Control Agreements.

We have entered into special agreements with certain executive officers.
These agreements are intended to motivate the executives to remain employed by
us. We have entered into an agreement expiring in July 2003 with Raymond P.
Davis that provides for his employment as President and Chief Executive
Officer and further provides for a payment of an amount equal to nine months'
base salary, plus any pro-rated executive incentive bonus if we terminate his
employment for any reason other than "cause." In addition, we agreed to
provide medical benefits to Mr. Davis for the maximum time allowed by law.
Should Mr. Davis' employment terminate as a result of a change in control, the
agreement provides for payment of an amount equal to two times the average of
the total annual compensation (including incentive bonuses) paid to Mr. Davis
during the last two full calendar years of employment. We have entered into an
agreement with Daniel A. Sullivan that provides for his employment as
Executive Vice President and Chief Financial Officer expiring in November 2003
on the same terms.

Stock Option Plan

We have a non-qualified stock option plan that was approved by
shareholders in 1995. The 1995 plan reserved 1,150,000 shares of common stock
for grants to key employees. No further grants will be made under the 1995
Plan.

We have an incentive stock option and non-qualified stock option plan
that was approved by shareholders during 2000. The 2000 Plan reserves an
aggregate of 1,000,000 shares of common stock for grants to key employees. The
Board of Directors designates those key employees who are eligible. The
maximum number of shares which may be issued at any given time is limited to
10% of the shares outstanding at the time the options are granted, excluding
shares issued pursuant to the plan. Options granted under the plan may have a
term not exceeding 10 years from the date of grant and the exercise price of
the options will not be less than the fair market value of the common stock on
the date of grant.

The purpose of the plan is to provide additional incentive to key
employees to enhance shareholder value by giving them an opportunity to
participate in the increase of such value and gain an ownership interest.
Vesting of such options occurs annually based on our financial performance for
each fiscal year measured by the return on equity and return on gross book
value. If such performance standards are not met, the options vest on the
sixth anniversary of the date of grant.

During 2000, options for 75,166 shares of common stock were issued to
employees under the 1995 Stock Option Plan and none were issued under the 2000
Stock Option Plan.

Options Granted in Last Fiscal Year
-------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (1)
---------------------------------------- ------------------

Number of Percentage
Securities of Total
Underlying Options
Options Granted Exercise
Granted to Price
Employees (Dollars Expiration
in Fiscal per Share) Date
Year 5%($) 10%($)
---------- ---------- ---------- -------- ------- ---------

Raymond P. Davis - - - - - -
William A. Haden - - - - - -
Daniel A. Sullivan 15,000 20% $8.375 May $89,236 $232,798
2011
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(1) The potential realizable value of the options granted is calculated by
multiplying the difference between the exercise price of the option and
the market value per share of the underlying stock (assuming a 5% or 10%,
as the case may be, compounded annual increase of the stock price from
the date of grant to the final expiration of the option) by the number of
shares underlying the options granted.

Aggregate Option Exercises Last Fiscal Year and Fiscal Year-End Option Values (1)
---------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at FY-End
Options at FY-End (#) ($) (2)
--------------------- ----------------------------
Shares
Acquired on Value Exercis- Unexercis- Exercis- Unexercis-
Exercise (#) Realized able able able able
------------ -------- -------- -------- -------- --------
Raymond P. Davis 25,000 $116,985 271,425 10,000 $1,343,422 -
William A. Haden - - 39,311 26,207 $ 113,273 $75,516
Daniel A. Sullivan - - 28,250 51,750 - $ 1,875

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(1) All share amounts have been adjusted to reflect subsequent stock
dividends and stock splits through March 20, 2001.

(2) On December 31, 2000, the market price of the Company's Common Stock was
$8.50 per share. For purposes of the foregoing table, all stock options
issued to Mr. Sullivan and Mr. Davis before 1998 have an exercise price
less than that amount and are therefore considered to be "in-the-money"
and have a value equal to the difference between $8.50 and the exercise
price of the stock option, multiplied by the number of shares covered by
the stock option. All stock options issued in 1998 and 1999 to Mr. Davis
and Mr. Sullivan were issued with exercise prices exceeding $8.50 and are
therefore not "in-the-money" at fiscal year end. All stock options issued
to Mr. Sullivan in 2000 have an exercise price less than $8.50 and are
therefore considered to be "in-the-money" and have a value equal to the
difference between $8.50 and the exercise price of the stock option,
multiplied by the number of shares covered by the stock option. Mr.
Haden's options were issued by VRB Bancorp in 1995 and 1997 and such
options were converted into Umpqua options with the closing of the
merger. Mr. Haden's 1995 options have an exercise price less than $8.50
per share and are therefore considered to be "in-the-money" and have a
value equal to the difference between $8.50 and the exercise price of the
stock option, multiplied by the number of shares covered by the stock
option. Mr. Haden's 1997 options have an exercise price exceeding $8.50
and are therefore not "in-the-money" at fiscal year end.

Transactions with Directors and Officers

Some of the directors and officers and members of their immediate
families and firms and corporations with which they are associated have been
parties to transactions with Umpqua Bank, including borrowings and investments
in time deposits. All such loans and investments in time deposits have been
made in the ordinary course of business, have been made on substantially the
same terms, including interest rates paid or charged and collateral required,
as those prevailing at the time for comparable transactions with unaffiliated
persons, and did not involve more than the normal risk of collection or
present other unfavorable features. As of December 31, 2000, the aggregate
outstanding amount of all loans to executive officers, directors, principal
shareholders and their associated and affiliated companies was approximately
$5,464,586 which represented 7.57% of the consolidated shareholders' equity at
that date. All such loans are currently in good standing and are being paid in
accordance with their terms.

COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS

With the public offering in April 1998, Umpqua Bank became subject to the
reporting requirements of the Securities Exchange Act of 1934. As a
state-chartered bank, Umpqua Bank filed its periodic reports, proxy material,
and other information with the FDIC. Upon completion of the holding company
formation and reorganization in March 1999, Umpqua Holdings Corporation
assumed the obligations of Umpqua Bank, and now files its periodic reports,
proxy material, and other information with the Securities and Exchange
Commission (SEC).

Section 16 of the Securities Exchange Act of 1934 requires that all
executive officers, directors and persons who beneficially own more than 10
percent of the common stock file an initial report of their beneficial
ownership of common stock and to periodically report changes in their
ownership. The reports must be made with the Securities and Exchange
Commission with a copy sent to us.

Based solely upon our review of the copies of the Section 16 filings that
we received with respect to the fiscal year ended December 31, 2000, we
believe that all reporting persons made all required Section 16 filings with
respect to such fiscal year on a timely basis.

STOCK PERFORMANCE GRAPH

The chart, shown below, compares the yearly percentage change in the
cumulative shareholder return on Umpqua Holdings Corporation's common stock
during the ten fiscal years ended December 31, 2000, with (i) the Total Return
Index for The Nasdaq Stock Market (U.S. Companies) as reported by the Center
for Research in Securities Prices, and (ii) the Total Return Index for Nasdaq
Bank Stocks as reported by the Center for Research in Securities Prices. This
comparison assumes $100.00 was invested on December 31, 1990, in Umpqua
Holdings Corporation's common stock, and the comparison indices, and assumes
the reinvestment of all cash dividends prior to any tax effect, and retention
of all stock dividends. Prior to April 1998, Umpqua Holdings Corporation
common stock was not quoted on Nasdaq. Prior to its listing on Nasdaq trading
activity was limited. For purposes of computing return information for the
periods being compared, the chart is based on price information for trades
that were reported to Umpqua Holdings Corporation prior to April 1998. Price
information from April 1998 to December 31, 2000, was obtained by using the
Nasdaq quote as of that date.

12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Umpqua $100.00 $118.94 $154.69 $245.92 $301.08 $433.12 $606.35 $1,159.44 $1,150.86 $1,110.23 $1,038.60
Holdings
Corporation
(UMPQ)

Nasdaq Bank $100.00 $163.96 $238.65 $272.29 $271.30 $404.24 $533.73 $ 893.60 $ 887.85 $ 853.49 $ 974.54
Stocks

Nasdaq U.S. $100.00 $160.34 $186.67 $214.24 $209.52 $296.12 $364.34 $ 446.23 $ 629.29 $1,169.45 $ 703.64

S&P
500 $100.00 $130.69 $140.73 $154.46 $156.60 $215.46 $265.40 $ 354.12 $ 456.93 $ 553.38 $ 504.07

SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS

The following table sets forth the shares of common stock beneficially
owned as of February 28, 2001, by each director and each named executive
officer, the directors and executive officers as a group and those persons
known to beneficially own more than 5% of our common stock:

Number of Shares
Beneficially
Name and Position Owned (1) Percentage of
Class
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Lynn K. Herbert, Director 550,050 (3) 3.82%
Raymond P. Davis, Director, President/CEO 321,315 (4) 2.19%
Allyn C. Ford, Chairman 146,106 (5) 1.02%
James D. Coleman, Director 105,763 *
William A. Haden, Director, EVP, 60,197 (6) *
President/CEO of Umpqua Bank
John O. Dunkin, Director 43,843 (7) *
Daniel A. Sullivan, EVP/Chief Financial Officer 41,026 (8) *
Larry L. Parducci, Director 27,528 *
Ronald O. Doan, Director 8,069 (2) *
Scott Chambers, Director 6,962 *
David B. Frohnmayer, Director 6,041 (2) *
Michael Donovan, Director 5,654 (9) *
All directors and executive officers as a group
(12 persons) 1,322,554 (2,10) 8.96%
Milton Herbert, Shareholder, Canyonville, OR 937,007 (2) 6.51%

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* Less than 1.0%.

(1) Shares held directly with sole voting and investment power, unless
otherwise indicated, and shares held in the Dividend Reinvestment Plan
have been rounded down to the nearest whole share.

(2) Includes shares held with or by his spouse.

(3) Includes shares held jointly with his spouse. Includes shares held as
custodian for minor children.

(4) Includes shares held jointly with or by his spouse. Includes 271,425
shares covered by options exercisable within 60 days.

(5) Includes 124,786 shares held as Agent for Ford Family Investment Pool.

(6) Includes 39,311 shares covered by options exercisable within 60 days.

(7) Includes 22,341 shares covered by options exercisable within 60 days.

(8) Includes 37,000 shares covered by options exercisable within 60 days.

(9) Includes 3,615 shares covered by options exercisable within 60 days.

(10) Includes 373,782 shares covered by options exercisable within 60 days.

REPORT OF THE BUDGET AND COMPENSATION COMMITTEE

ON EXECUTIVE COMPENSATION

The Budget and Compensation Committee is responsible for establishing and
administering our executive compensation program.

Compensation Philosophy and Objectives

The philosophy underlying the development and administration of our
compensation plan is the alignment of the interests of executive management
with those of the shareholders. Key elements of this philosophy are:

o Set base compensation at a level to attract and retain competent
executives.

o Establish incentive compensation plans that deliver bonuses based on the
financial performance of the company.

o Provide significant equity based incentives for executives to ensure they
are motivated over the long term to respond to the company's business
challenges and opportunities, as owners rather than just employees.

Incentive Plan for Senior Management

Our Incentive Plan provides for a performance incentive payable to the
President/CEO at least annually. Payment is targeted to be 30% of the
President/CEO's year-end rate of base pay for the year in question if we meet
or exceed our projected financial goals for the preceding year. The amount of
bonuses (which can exceed the target) is solely at the discretion of the Board
of Directors. Distribution normally occurs during the first quarter of the
following year.

The plan for other key executives is payable at least annually, and is
targeted at 20% of the Executive's base pay for the year. Payment of such
performance bonus is contingent upon both our performance and the executive's
personal performance during the year. Distribution normally occurs during the
first quarter of the following year.

Stock Option Plan

The 2000 Stock Option Plan is the vehicle by which executives can earn
additional compensation depending on our financial performance. Grants are
made at the discretion of the Board of Directors and awarded to individual
executives, thereby providing additional incentive for executives to increase
shareholder value. Executives receive value from these options when our stock
appreciates over the long term. The Company previously made grants under the
1995 Stock Option Plan.

Submitted by the Budget and Compensation Committee Members:

Ronald Doan (Chairperson)
James Coleman
John Dunkin
Scott Chambers
William Haden
Raymond Davis

AUDIT COMMITTEE REPORT

The audit committee serves a vital function in overseeing the internal
controls of the company and the financial reporting process, as well as
ensuring that the audits of the company's affairs are being conducted. Each of
the members of the committee satisfies the definition of independent director
as established by the Nasdaq National Market listing standards. In carrying
out its duties, the audit committee:

o Reviews and discusses with management the scope of external audit
activities and the audited financial statements of the company.

o Discusses with the company's independent auditors matters relating to the
Statement on Auditing Standards No. 61.

o Receives disclosures from and discusses with the company's independent
auditors, the auditor's independence in light of Independence Standards
Board Standard No. 1.

o Makes a recommendation to the Board of Directors, based on the
committee's review of the audited financial statements and its
discussions with the company's independent auditors, as to whether the
audited financial statements should be included in the company's annual
report filed with the Securities and Exchange Commission on Form 10-K.

The audit committee has reviewed and discussed with management the
audited financial statements, and has discussed with the company' s
independent auditors the matters required to be discussed by SAS 61. In
addition, the audit committee has received written disclosures and a letter
from the company's independent auditor as required by ISB Standard No. 1, and
has discussed with the company's independent auditor the auditor's
independence.

Based on the foregoing reviews, discussions, and disclosures, the audit
committee has recommended the inclusion of the audited financial statements in
the annual report on Form 10-K for the year ended December 31, 2000 for filing
with the Securities and Exchange Commission.

Submitted by the Audit Committee Members:

Larry Parducci (Chair)
Michael Donovan
Ronald Doan
Lynn Herbert

Agenda Item 2. Other Business

The Board knows of no other matters to be brought before the shareholders
at the meeting. In the event other matters are presented for a vote at the
meeting, the proxy holders will vote shares represented by properly executed
proxies at their discretion in accordance with their judgment on such matters.

At the meeting, management will report on our business and shareholders
will have the opportunity to ask questions.

PROXIES AND VOTING AT THE ANNUAL MEETING

Each copy of this proxy statement sent to shareholders is accompanied by
a proxy solicited by the Board of Directors for use at the 2001 annual meeting
of shareholders and any adjournments thereof. Only holders of record of common
stock at the close of business on March 23, 2001, are entitled to notice of,
and to vote at, the meeting. Shareholders will vote on the election of
directors and consider such other matters as may properly come before the
meeting. Shares represented by properly executed proxies will be voted at the
meeting in accordance with the instructions on the proxy. If no instructions
are given, the shares represented thereby will be voted in favor of the
persons nominated by the Board to serve as directors and in the discretion of
the proxy holders on such other matters that may be considered at the meeting.
Ballots and proxies will be counted by employees appointed by management.

Execution of a proxy will not in any way affect a shareholder's right to
attend the meeting and vote. A proxy may be revoked by the shareholder of
record prior to its exercise at the meeting by presentation of a proxy bearing
a later date or by submitting a written revocation to Julie Ryan, Corporate
Secretary, at 445 S.E. Main St., Roseburg, Oregon, before the meeting, or by
oral request or submission of such an instrument of revocation at the meeting
if the shareholder is present. However, a shareholder who attends need not
revoke his or her proxy and vote in person unless he or she wishes to do so.
Attendance at the meeting will not, of itself, revoke a proxy.

If your shares are held in street name, you must give voting instructions
to the nominee holder. If your shares are held in street name, you must
contact the nominee holder of the shares to revoke a proxy or to change your
vote. You will not be able to vote or revoke a proxy at the meeting if your
shares are held in street name.

Shareholders are requested to complete, date, and sign the accompanying
proxy and return it promptly in the envelope provided even if they are
planning to attend the meeting.

Our authorized capital stock consists of 20,000,000 shares of common
stock, no par value, and 2,000,000 shares of preferred stock. As of March 15,
2001, there were 14,393,383 shares of common stock issued and outstanding and
entitled to vote at the meeting, held by approximately 1,016 shareholders of
record, and no shares of preferred stock issued and outstanding. As of
February 28, 2001 directors, executive officers, and principal shareholders,
together with their affiliates, had beneficial ownership of 1,322,554 shares,
of which 948,772 shares are entitled to vote.

A majority of the outstanding shares of common stock must be represented
at the meeting, in person or by proxy, to constitute a quorum for the
transaction of business. Shares that are not represented in person or by proxy
may not be counted toward a quorum or in favor of any proposition. Shares
represented at the meeting, in person or by proxy, will be counted toward a
quorum, and thereafter, an abstention from a given matter will not affect the
presence of the shares as to determination of a quorum. Other than the
election of directors, any action to be taken by the shareholders must receive
the affirmative vote of the majority of shares represented at the meeting. An
abstention from approval of any matter will not be counted as a vote in favor
of that matter and, except in the election of directors, will thus have the
effect of a vote against that matter. An abstention with respect to the
election of directors will have no effect as a vote for or against any
nominee, because the directors are elected by a plurality of the votes cast;
nominees receiving the most votes will be elected. Each share is entitled to
one vote. Shareholders do not have the right to accumulate votes for
directors.

INFORMATION AVAILABLE TO SHAREHOLDERS

Our annual report is being mailed to shareholders with this proxy
statement. Additional copies of the Annual Report may be obtained without
charge by writing to Investor Relations, Umpqua Holdings Corporation, 445 S.E.
Main St., Roseburg, Oregon 97470. Umpqua Bank was required to file periodic
reports and other information with the FDIC pursuant to the Securities
Exchange Act of 1934 and the rules thereunder. The reporting obligations of
Umpqua Bank became our obligations with the reorganization of Umpqua Bank as
our subsidiary, in March 1999. Our reports are filed with the SEC.

Copies of the public portions of reports to the FDIC may be inspected and
copied at the office of the FDIC, 550 17th St. N.W., Washington, D.C. Certain
financial information filed by Umpqua Bank with the FDIC is available
electronically at the FDIC's internet web site at www.fdic.gov.

Copies of the public portions of reports to the SEC may be inspected and
copied at the headquarters of the SEC, 450 Fifth Street, NW, Washington, D.C.
20549. Certain information is available electronically at the SEC's internet
web site at www.sec.gov.

INDEPENDENT PUBLIC ACCOUNTANTS

Deloitte & Touche, independent Certified Public Accountants, audited
the consolidated financial statements of the Company for the year ended
December 31, 2000. Representatives of Deloitte & Touche are expected to be
present at the annual meeting, will be given the opportunity to make a
statement, and will be available to respond to any appropriate questions.

On April 5, 2000, the Audit Committee recommended and approved a change
in the Company's independent accountants for the fiscal year ended December
31, 2000, from KPMG LLP to Deloitte & Touche. The Board of Directors
approved the decision to change accountants. KPMG LLP's report on the
financial statements for the years ended December 31, 1999 and 1998, contained
no adverse opinion or disclaimer of opinion, nor was any such report qualified
as to uncertainty, audit scope, or accounting principles. During the fiscal
years ended December 31, 1999 and 1998, and during the interim period between
January 1, 2000, and April 5, 2000, there were no disagreements with KPMG LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of KPMG LLP, would have caused it to make a
reference to the subject matter of the disagreements in connection with its
reports. The Form 8-K reporting the change in accountants filed on April 10,
2000, is incorporated herein by reference.

Audit Fees

Deloitte & Touche billed us aggregate fees of approximately $100,000
for professional services rendered for the audit of our annual financial
statements and for the reviews of the financial statements included in our
Forms 10-Q for the fiscal year ended December 31, 2000.

Financial Information Systems Design and Implementation Fees

Deloitte & Touche did not perform any financial information system
design or implementation work for us during the fiscal year ended December 31,
2001.

All Other Fees

Deloitte & Touche billed us aggregate fees of $43,000 for all other
professional services rendered for the fiscal year ended December 31, 2000.

Our Audit Committee considered whether, and has determined that, the
provision of these other professional services is compatible with maintaining
the independent auditor's independence.

PROPOSALS OF SHAREHOLDERS

Any shareholder who wishes to submit a proposal for consideration at the
Bank's next annual meeting must submit the proposal no later than November 19,
2001.

APPENDIX A

UMPQUA HOLDINGS CORPORATION

CHARTER OF
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Membership

As permitted by the Bylaws of the Company, the Board of Directors of
Umpqua Holdings Corporation has elected to select a committee of the Board of
Directors to be called the "Umpqua Holdings Corporation Audit Committee." The
Audit Committee will consist of not less than three members of the Board of
Directors, one of whom will be designated to serve as Chairperson. Members of
the Audit Committee may be appointed from time to time by the Board and will
be appointed or re-appointed at its first meeting following the Annual Meeting
of the Shareholders of the Company. Members of the Audit Committee will serve
a similar function for each of the Company's subsidiary companies. No member
of this Committee may be an employee of the Company or its subsidiaries. At
least one member shall have had past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.

Meetings

The Audit Committee will meet at such times as the Committee Chairperson
shall determine or any Committee member may reasonably request. Minutes of the
Audit Committee shall be prepared and a copy provided to all members of the
Committee, the Board of Directors and the Secretary of the Company and such
subsidiaries for whom the Audit Committee may be performing its services.

Purpose

The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:

o Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.

o Monitor the independence and performance of the Company's independent
auditors and internal auditors.

o Provide an avenue of communication among the independent auditors,
management, the internal auditors and the Board of Directors.

Access to Audit Committee Members

As the Audit Committee serves a vital function in ensuring that the books
and records of the Company and its subsidiary companies accurately reflect its
condition and operations, auditors of the Company, as well as any employee of
the Company or its subsidiaries, shall have direct access to the Audit
Committee to discuss the results of any examination, the adequacy of internal
accounting controls and the integrity of the financial reports.

Selection of Independent Accountants

Management of the Company may, from time to time, recommend the selection
of independent auditors to conduct an audit of the Company's financial
statements. The Audit Committee will consider the selection and provide a
recommendation to the full Board of Directors as to the formal approval and
engagement of the Company's independent auditors.

Regulatory Examinations

The Audit Committee will review all regulatory examinations of federal
and state banking regulatory agencies for the Company and its subsidiaries,
including management's response to such examinations.

Audit Review

The Audit Committee will meet periodically with management, the Company's
internal audit staff and representatives of the Company's independent auditors
to ensure that appropriate audits of the Company's affairs are being
conducted. The Audit Committee will review with management and staff any audit
plans submitted to the Company and the recommendations contained in and the
appropriate response to any Management Letter or Letter of Recommendation
issued by the Company's independent accountants as a result of any audit
conducted.

Further, for fiscal year 2000 and forward, the Audit Committee shall:

o Review and discuss with management the scope of internal and external
audit activities and the audited financial statements of the Company.

o Discuss with the Company's auditors matters relating to the Statement on
Auditing Standard No. 61.

o Secure disclosures from and discuss with the Company's auditors, the
auditor's independence in light of Independence Standards Board Standard
No. 1.

o Issue a statement to the Board of Directors whether, based upon the
review and discussions identified above, the committee recommends that
the audited financial statements be included in the Company Annual Report
filed with the SEC on Form 10-K.

o Submit a report as required by Item 306 of Regulation S-K for inclusion
in the Company's Proxy Statement in connection with its annual
shareholders meeting.

o Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.

Reports to the Full Board of Directors

The Chairperson shall report to the full Board of Directors a summary of
the Audit Committee's activities and may submit or refer to the full Board any
matter which the Committee believes warrants the attention of the Board of
Directors.