EX-99.1 2 f8kuhc3qeaex991.htm EXHIBIT 99.1 f8kuhc3qeaex991.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contacts:
Ray Davis
President/CEO
Umpqua Holdings Corporation
503-727-4101
raydavis@umpquabank.com
                                                             




Ron Farnsworth
SVP/Finance
Umpqua Holdings Corporation
503-727-4108
ronfarnsworth@umpquabank.com


UMPQUA HOLDINGS REPORTS THIRD QUARTER EARNINGS
Third quarter earnings impacted by California housing market

PORTLAND, Ore. – October 18, 2007 – Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Strand, Atkinson, Williams & York, Inc., today announced third quarter 2007 operating earnings of $13.3 million, or $0.22 per diluted share, compared to $24.3 million, or $0.42 per diluted share, for the third quarter of 2006. Operating earnings exclude merger related expenses, net of tax.

Including merger related expenses, net income for the third quarter of 2007 was $13.2 million, or $0.22 per diluted share, compared to $22.9 million, or $0.39 per diluted share for the third quarter of 2006.

Significant items for the third quarter include:

  • Increase in non-performing loans to $68.9 million, or 1.13% of total loans, related primarily to the residential development portfolio in our northern California operation;
  • Provision for loan losses of $20.4 million, representing a $0.17 per diluted share additional charge over the second quarter;
  • Reversal of $1.3 million in interest income related to $20.8 million net increase in non-accrual loans;
  • Other real estate owned increased to $10.3 million, which was sold with no loss subsequent to quarter end;
  • Net charge-offs of $806 thousand year to date, represents 0.02% of average loans;
  • Year to date annualized organic loan growth of 7%, excluding the acquisition;
  • Year to date annualized organic deposit growth of 5%, excluding the acquisition;
  • Core deposits increased 3% during the third quarter in the Oregon/Washington region;
  • Net interest margin, on a tax equivalent basis, declined 14 basis points during the third quarter, to 4.20%, of which 7 basis points related to interest reversal on new non-accrual loans noted above;
  • Cost of interest bearing deposits increased 3 basis points during third quarter, but declined 10 basis points during the month of September;
  • Issued $60 million of new junior subordinated debentures during the third quarter, with a weighted average adjustable interest rate of 3 month LIBOR plus 182 basis points;
  • Total non-interest income increased 16% on a sequential quarter basis, related primarily to positive fair value adjustments related to junior subordinated debentures;
  • Bank efficiency ratio, excluding merger related expenses, of 55.3% in the third quarter;

Umpqua Holdings Corporation Announces Third Quarter 2007 Results
October 18, 2007
Page 2 of 17

The following is a comparison of net income to operating earnings for all periods presented:

                                       
        Quarter ended:            Sequential      Year over    
Quarter      Year  
(Dollars in thousands, except per share data)        9/30/07        6/30/07    9/30/06    % Change     % Change  
Net Income    $   13,177    $   19,913        $    22,856    (34 )%    (42 )% 
Add Back: Merger related expenses, net of tax        158        1,430               1,471    (89 )%    (89 )% 
     Operating Earnings    $   13,335    $   21,343        $    24,327    (38 )%    (45 )% 
 
Earnings per diluted share:                                         
     Net Income    $   0.22    $   0.32        $          0.39    (31 )%    (44 )% 
     Operating Earnings    $   0.22    $   0.35        $          0.42    (37 )%    (48 )% 
                                       
        Nine months ended:             Year over            
 Year            
(Dollars in thousands, except per share data)        9/30/07        9/30/06        % Change        
Net Income    $   53,752    $   59,914        (10 )%       
Add Back: Merger related expenses, net of tax        1,920        2,615        (27 )%       
     Operating Earnings    $   55,672    $   62,529        (11 )%       
 
Earnings per diluted share:                                         
     Net Income    $   0.89    $   1.17        (24 )%       
     Operating Earnings    $   0.92    $   1.23        (25 )%       

"During this past quarter, the California housing down-turn negatively impacted Umpqua. I have instructed our credit professionals to take an aggressive posture in identifying, reserving for, and resolving problem loans. Accordingly, we believe the third quarter provision for loan losses will be adequate for subsequent charge-offs related to these non-performing assets,” said Umpqua Holdings Corporation president and CEO, Ray Davis.

During the third quarter, the Company experienced an increase in non-performing assets related primarily to deterioration in the northern California residential development market. Non-performing loans increased $21 million during the quarter, to $68.9 million. Non-performing assets increased $31 million during the quarter, to $79.2 million. Subsequent to quarter end, the Company sold $10 million of other real estate owned with no loss recognized. This other real estate owned was recorded as a non-accrual loan in the second quarter. The residential development segment represents $66.7 million, or 84% of the total $79.2 million in non-performing assets.

Umpqua Holdings Corporation Announces Third Quarter 2007 Results
October 18, 2007
Page 3 of 17

The following represents a summary of non-performing assets by region as of September 30, 2007:

Non-performing assets
        Oregon/                      
(dollars in thousands)        Washington         California         Total  
 
90 days past due and accruing:                               
   Residential development    $   --     $   166     $   166  
   Commercial real estate        --         346         346  
   Commercial        --         496         496  
   Other        153         327         480  
     Total    $   153     $   1,335     $   1,488  
 
Non-accrual loans:                               
   Residential development    $   9,984     $   46,581     $   56,565  
   Commercial real estate        1,474         537         2,011  
   Commercial        6,456         2,387         8,843  
   Other        --          --          --   
     Total    $   17,914     $   49,505     $   67,419  
 
     Total non-performing loans    $   18,067     $   50,840     $   68,907  
 
Other real estate owned:                               
   Residential development    $   10,000     $   --     $   10,000  
   Commercial real estate        --         --         --  
   Commercial        --         --         --  
   Other        --         310         310  
     Total    $   10,000     $   310     $   10,310  
 
     Total non-performing assets    $   28,067     $   51,150     $   79,217  
 
Total Loans and leases    $   3,452,645     $   2,626,790     $   6,079,435  
Non-performing loans to total loans and                               
leases        0.52 %        1.94 %        1.13 % 

Within the allowance for credit losses, the Company has identified $16.2 million of impairment reserve related to $67.4 million of non-accrual loans, which are specifically measured for impairment. This impairment reserve increased $11.2 million during the quarter. The net increase in impairment reserve, combined with downgrades within the portfolio related primarily to residential development, led to the $20.4 million provision for loan losses during the third quarter. The third quarter provision for loan losses is expected to cover subsequent charge-offs on these non-performing loans.

Umpqua Holdings Corporation Announces Third Quarter 2007 Results
October 18, 2007
Page 4 of 17

The following represents a summary of our non-accrual loan impairment estimate as of September 30, 2007:

Non-accrual loan impairment estimate
                    Impairment 
(dollars in thousands)    # of Loans        Balance        Estimate 
 
Non-accrual loans:                     
   Residential development    47    $   56,565    $   14,761 
   Commercial real estate    13        2,011        98 
   Commercial    23        8,843        1,385 
     Total non-accrual loans    83    $   67,419    $   16,244 

During the first nine months of 2007, the Company had net charge-offs of $806 thousand, compared to net charge-offs of $64 thousand for the first nine months of 2006. Non-performing loans and leases were $68.9 million at September 30, 2007, representing 1.13% of total loans and leases. The allowance for credit losses was 1.47% of total loans and leases at September 30, 2007, compared to 1.17% of total loans and leases at June 30, 2007.

The Company completed its acquisition of North Bay Bancorp on April 26, 2007 by issuing 5,163,573 shares in connection with this acquisition, with a total deal value of $142.3 million. The system integration with North Bay Bancorp was completed in May 2007.

The following table presents the year to date 2007 organic growth rates, which exclude the effects of the North Bay Bancorp acquisition:

(dollars in thousands)        Loans and Leases         Deposits         Assets  
As reported, 9/30/07    $   6,079,435     $   6,518,217     $   8,225,811  
less: 12/31/06 balances        5,361,862         5,840,294         7,344,236  
   Total growth        717,573         677,923         881,575  
 
less: acquisition        442,950         462,624         727,799  
   Organic growth    $   274,623     $   215,299     $   153,776  
 
Annualized organic growth rate        7 %        5 %        3 % 

Total consolidated assets as of September 30, 2007 were $8.2 billion, compared to $7.2 billion a year ago. Total gross loans and leases, and deposits, were $6.1 billion and $6.5 billion, respectively, as of September 30, 2007, compared to $5.4 billion and $5.7 billion, respectively, a year ago.

The Company reported a tax equivalent net interest margin of 4.20% for the third quarter of 2007, compared to 4.83% for the third quarter of 2006, and 4.34% for the second quarter of 2007. The decrease in net interest margin over these time periods resulted from increases in short-term market interest rates and the competitive climate, characterized by increasing deposit costs combined with declining earning asset yields, which was partially attributed to the interest income reversal discussed previously. The $1.3 million interest reversal on new non-accrual loans noted above resulted in a 7 basis point decline in the tax equivalent net interest margin during the quarter.

Umpqua Holdings Corporation Announces Third Quarter 2007 Results
October 18, 2007
Page 5 of 17

Excluding merger related expenses, the Bank efficiency ratio was 55.15% for the nine months ended September 30, 2007, compared to 52.08% for the same period a year ago. The increase related primarily to the decline in net interest margin discussed previously.

During the first quarter of 2007, the Company elected early adoption of Statements of Financial Accounting Standard (SFAS) 157 and 159, effective January 1, 2007. SFAS 159, which was issued in February 2007, permits the measurement of selected financial instruments at fair value as of specified election dates. Upon adoption of SFAS 159, the Company selected the fair value measurement option only on certain junior subordinated debentures. During the third quarter, the Company issued $60 million in new junior subordinated debentures (net of common stock investment), carrying a weighted adjustable interest rate of 3 month LIBOR plus 182 basis points. The Company elected fair value measurement on these debentures. As a result, the Company recognized a $4.1 million gain in fair value on junior subordinated debentures during the third quarter, as market interest rate spreads increased significantly on like instruments. This compares to a $279 thousand fair value increase during the second quarter. Also during the third quarter, the Company redeemed a $25 million junior subordinated debenture (net of common stock investment) prior to its maturity.

As of September 30, 2007, total shareholders’ equity was $1.2 billion. Book value per share was $20.60 and tangible book value per share was $7.78. During the third quarter, the Company repurchased 1.65 million shares of stock at a weighted average price of $21.23 per share. For the first nine months of 2007, the company repurchased 4.01 million shares of stock at a weighted average price of $23.73 per share. The total remaining available common shares authorized for repurchase is approximately 1.54 million.

We have expanded disclosure of our loan, deposit and core deposit portfolios by region within the financial tables of this earnings release.

Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Umpqua believes that non-GAAP financial measures provide investors with information useful in understanding Umpqua’s financial performance. Umpqua provides measures based on “operating earnings,” which exclude merger-related expenses. Operating earnings per diluted share is calculated by dividing operating earnings by the same diluted share total used in determining diluted earnings per share. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent is included in the attached financial tables or where the non-GAAP measure is presented.

Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about identification and management of problem loans, the level of expected gross loan charge-offs and the adequacy of the provision for loan losses taken in the third quarter.

Umpqua Holdings Corporation Announces Third Quarter 2007 Results
October 18, 2007
Page 6 of 17

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 146 locations between Napa, Calif. and Bellevue, Wash., along the Oregon and Northern California Coast and in Central Oregon. Umpqua Holdings also owns a retail brokerage subsidiary Strand, Atkinson, Williams & York, Inc., which has locations in Umpqua Bank stores and in dedicated offices throughout Oregon and Southwest Washington. Umpqua Bank's Private Client Services Division provides tailored financial services and products to individual customers. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.

Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, October 18, 2007, at 10:00 a.m. PST (1:00 p.m. EST) during which the Company will discuss third quarter 2007 results and provide an update on recent activities. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 800-752-8363 a few minutes before 10:00 a.m. The conference ID is “18219442.” Information to be discussed in the teleconference will be available on the Company’s website prior to the call at www.umpquaholdingscorp.com. A rebroadcast can be found approximately two hours after the conference call by dialing 800-642-1687, or by visiting the Company’s website.

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                      
October 18, 2007                                         
Page 7 of 17                                         
 
 
Umpqua Holdings Corporation
 
Consolidated Statements of Income
(Unaudited)
                  Quarter Ended:             
   
                                Sequential     Year over  
                                Quarter     Year  
Dollars in thousands, except per share data        Sept 30, 2007         Jun 30, 2007         Sept 30, 2006    % Change     % Change  
Interest income                                         
 Loans and leases    $   116,111     $   111,797     $   106,320    4 %    9 % 
 Interest and dividends on investments:                                         
     Taxable        9,137         8,720         6,797    5 %    34 % 
     Exempt from federal income tax        1,588         1,335         1,142    19 %    39 % 
     Dividends        96         88         105    9 %    (9 )% 
 Temporary investments        929         616         374    51 %    148 % 
   Total interest income        127,861         122,556         114,738    4 %    11 % 
 
Interest expense                                         
 Deposits        48,138         44,581         34,121    8 %    41 % 
 Repurchase agreements and                                         
   fed funds purchased        530         824         2,155    (36 )%    (75 )% 
 Junior subordinated debentures        4,444         4,022         3,971    10 %    12 % 
 Term debt        874         813         692    8 %    26 % 
   Total interest expense        53,986         50,240         40,939    7 %    32 % 
Net interest income        73,875         72,316         73,799    2 %    0 % 
Provision for loan and lease losses        20,420         3,413         2,352    498 %    768 % 
Non-interest income                                         
 Service charges        8,448         8,148         7,606    4 %    11 % 
 Brokerage fees        2,498         2,679         2,506    (7 )%    0 % 
 Mortgage banking revenue        1,366         2,607         1,445    (48 )%    (5 )% 
 Loss on sale of securities        (13 )        (2 )      --    nm     nm  
 Other income        6,244         2,498         1,919    150 %    225 % 
Total non-interest income        18,543         15,930         13,476    16 %    38 % 
 
Non-interest expense                                         
 Salaries and benefits        28,005         28,898         26,387    (3 )%    6 % 
 Occupancy and equipment        9,166         8,782         8,540    4 %    7 % 
 Intangible amortization        1,767         1,490         1,195    19 %    48 % 
 Other        13,692         12,392         12,113    10 %    13 % 
 Merger related expenses        263         2,383         2,451    (89 )%    (89 )% 
Total non-interest expense        52,893         53,945         50,686    (2 )%    4 % 
Income before provision for income taxes        19,105         30,888         34,237    (38 )%    (44 )% 
Provision for income tax        5,928         10,975         11,381    (46 )%    (48 )% 
Net income    $   13,177     $   19,913     $   22,856    (34 )%    (42 )% 
 
 
Weighted average shares outstanding        60,489,522         60,679,485         57,802,381    0 %    5 % 
Weighted average diluted shares outstanding        61,065,401         61,397,575         58,452,461    (1 )%    4 % 
 
Earnings per share – Basic    $   0.22     $   0.33     $   0.40    (33 )%    (45 )% 
Earnings per share – Diluted    $   0.22     $   0.32     $   0.39    (31 )%    (44 )% 
 
nm = not meaningful                                         

Umpqua Holdings Corporation Announces Third Quarter 2007 Results        
October 18, 2007                           
Page 8 of 17                           
 
 
Umpqua Holdings Corporation
 
Consolidated Statements of Income
(Unaudited)
        Nine months ended:        
Dollars in thousands, except per share data        Sept 30, 2007         Sept 30, 2006     % Change  
Interest income                           
 Loans and leases    $   331,889     $   265,444     25 % 
 Interest and dividends on investments:                           
     Taxable        25,376         20,201     26 % 
     Exempt from federal income tax        4,151         2,740     51 % 
     Dividends        249         205     21 % 
 Temporary investments        2,439         837     191 % 
 
   Total interest income        364,104         289,427     26 % 
Interest expense                           
 Deposits        133,750         81,112     65 % 
 Repurchase agreements and                           
   fed funds purchased        1,757         6,346     (72 )% 
 Trust preferred securities        12,329         10,359     19 % 
 Other borrowings        1,767         2,775     (36 )% 
   Total interest expense        149,603         100,592     49 % 
Net interest income        214,501         188,835     14 % 
Provision for loan and lease losses        23,916         2,427     885 % 
Non-interest income                           
 Service charges        23,648         19,540     21 % 
 Brokerage fees        7,594         7,408     3 % 
 Mortgage banking revenue        5,772         5,792     0 % 
 Loss on sale of securities        (10 )        (1 )    nm  
 Other income        11,434         6,745     70 % 
Total non-interest income        48,438         39,484     23 % 
Non-interest expense                           
 Salaries and benefits        85,172         71,525     19 % 
 Occupancy and equipment        26,774         22,907     17 % 
 Intangible amortization        4,400         2,533     74 % 
 Other        37,304         31,586     18 % 
 Merger related expenses        3,200         4,358     (27 )% 
 
Total noninterest expense        156,850         132,909     18 % 
Income before income taxes        82,173         92,983     (12 )% 
Provision for income tax        28,421         33,069     (14 )% 
Net income    $   53,752     $   59,914     (10 )% 
 
Weighted average shares outstanding        59,790,297         50,377,923     19 % 
Weighted average diluted shares outstanding        60,450,412         51,010,413     19 % 
 
Earnings per share – Basic    $   0.90     $   1.19     (24 )% 
Earnings per share – Diluted    $   0.89     $   1.17     (24 )% 
 
nm = not meaningful                           

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                        
October 18, 2007                                           
Page 9 of 17                                           
 
Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
                                         
                                  Sequential      Year over    
 		 Quarter    Year    
Dollars in thousands, except per share data        Sept 30, 2007         Jun 30, 2007         Sept 30, 2006     % Change     % Change  
Assets:                                           
 Cash and due from banks    $   148,434     $   182,739     $   151,334     (19 )%    (2 )% 
 Temporary investments        46,787         40,904         40,700     14 %    15 % 
 Investment securities:                                           
     Trading        4,144         3,090         682     34 %    nm  
     Available for sale        911,883         893,125         689,841     2 %    32 % 
     Held to maturity        7,116         8,333         9,494     (15 )%    (25 )% 
 Loans held for sale        19,964         16,953         18,951     18 %    5 % 
 Loans and leases        6,079,435         5,981,750         5,385,262     2 %    13 % 
 Less: Allowance for loan and lease losses        (88,278 )        (68,723 )        (60,475 )    28 %    46 % 
   		          
   Loans and leases, net        5,991,157         5,913,027         5,324,787     1 %    13 % 
 Restricted equity securities        15,297         16,715         15,255     (8 )%    0 % 
 Premises and equipment, net        107,189         108,656         99,251     (1 )%    8 % 
 Other real estate owned        10,310       --         31     nm     nm  
 Mortgage servicing rights, net        9,474         9,966         10,427     (5 )%    (9 )% 
 Goodwill and other intangibles        767,210         767,710         680,722     0 %    13 % 
 Other assets        186,846         183,340         157,373     2 %    19 % 
          
 
Total assets    $   8,225,811     $   8,144,558     $   7,198,848     1 %    14 % 
 
Liabilities:                                           
 Deposits    $   6,518,217     $   6,414,425     $   5,650,338     2 %    15 % 
 Securities sold under agreements                                           
   to repurchase        52,883         59,553         65,471     (11 )%    (19 )% 
 Fed funds purchased        20,000         48,000         --     (58 )%    nm  
 Term debt        75,010         75,095         57,072     0 %    31 % 
 Junior subordinated debentures, at fair value        131,984         99,808         --     32 %    nm  
 Junior subordinated debentures, at amortized cost        104,947         105,213         203,955     0 %    (49 )% 
 Other liabilities        89,580         86,426         80,332     4 %    12 % 
          
   Total liabilities        6,992,621         6,888,520         6,057,168     2 %    15 % 
 
Shareholders' equity:                                           
 Common stock        987,543         1,019,618         929,893     (3 )%    6 % 
 Retained earnings        253,487         251,715         220,726     1 %    15 % 
 Accumulated other comprehensive loss        (7,840 )        (15,295 )        (8,939 )    (49 )%    (12 )% 
          
   Total shareholders' equity        1,233,190         1,256,038         1,141,680     (2 )%    8 % 
          
 
Total liabilities and shareholders' equity    $   8,225,811     $   8,144,558     $   7,198,848     1 %    14 % 
 
 
Common shares outstanding at period end        59,864,335         61,315,960         58,028,555     (2 )%    3 % 
Book value per share    $   20.60     $   20.48     $   19.67     1 %    5 % 
Tangible book value per share    $   7.78     $   7.96     $   7.94     (2 )%    (2 )% 
Tangible equity    $   465,980     $   488,328     $   460,958     (5 )%    1 % 
Tangible equity to tangible assets        6.25 %        6.62 %        7.07 %             
nm = not meaningful                                           

Umpqua Holdings Corporation Announces Third Quarter 2007 Results              
October 18, 2007                                           
Page 10 of 17                                           
 
 
Umpqua Holdings Corporation
 
Loan Portfolio – Total and by Region
(Unaudited)
                                  Sequential     Year over  
Dollars in thousands                                  Quarter     Year  
Loans and leases by class:        Sept 30, 2007         Jun 30, 2007         Sept 30, 2006     % Change     % Change  
 
Total Consolidated:                                           
 Commercial real estate    $   3,071,588     $   3,058,774     $   2,697,218     0.4 %    13.9 % 
 Residential real estate        379,657         371,894         312,639     2.1 %    21.4 % 
 Construction        1,191,757         1,148,726         1,238,369     3.7 %    (3.8 )% 
   Total real estate        4,643,002         4,579,394         4,248,226     1.4 %    9.3 % 
 Commercial        1,365,786         1,323,640         1,085,014     3.2 %    25.9 % 
 Leases        37,095         35,477         19,514     4.6 %    90.1 % 
 Installment and other        44,970         54,504         45,119     (17.5 )%    (0.3 )% 
 Deferred loan fees, net        (11,418 )        (11,265 )        (12,611 )    1.4 %    (9.5 )% 
     Total loans and leases    $   6,079,435     $   5,981,750     $   5,385,262     1.6 %    12.9 % 
 
Oregon/Washington region:                                           
 Commercial real estate    $   1,710,224     $   1,672,094     $   1,594,723     2.3 %    7.2 % 
 Residential real estate        250,751         244,654         202,228     2.5 %    24.0 % 
 Construction        631,087         595,264         515,064     6.0 %    22.5 % 
   Total real estate        2,592,062         2,512,012         2,312,015     3.2 %    12.1 % 
 Commercial        799,598         826,760         766,913     (3.3 )%    4.3 % 
 Leases        37,005         35,333         19,134     4.7 %    93.4 % 
 Installment and other        31,216         36,770         25,907     (15.1 )%    20.5 % 
 Deferred loan fees, net        (7,236 )        (7,012 )        (7,966 )    3.2 %    (9.2 )% 
     Total loans and leases    $   3,452,645     $   3,403,863     $   3,116,003     1.4 %    10.8 % 
     % of consolidated total        57 %        57 %        58 %             
 
California region:                                           
 Commercial real estate    $   1,361,364     $   1,386,680     $   1,102,495     (1.8 )%    23.5 % 
 Residential real estate        128,906         127,240         110,411     1.3 %    16.8 % 
 Construction        560,670         553,462         723,305     1.3 %    (22.5 )% 
   Total real estate        2,050,940         2,067,382         1,936,211     (0.8 )%    5.9 % 
 Commercial        566,188         496,880         318,101     13.9 %    78.0 % 
 Leases        90         144         380     (37.5 )%    (76.3 )% 
 Installment and other        13,754         17,734         19,212     (22.4 )%    (28.4 )% 
 Deferred loan fees, net        (4,182 )        (4,253 )        (4,645 )    (1.7 )%    (10.0 )% 
     Total loans and leases    $   2,626,790     $   2,577,887     $   2,269,259     1.9 %    15.8 % 
     % of consolidated total        43 %        43 %        42 %             

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                        
October 18, 2007                                           
Page 11 of 17                                           
 
 
Umpqua Holdings Corporation
 
Credit Quality
(Unaudited)
                                  Sequential Year over  
        Quarter Ended         Quarter Ended         Quarter Ended     Quarter     Year  
Dollars in thousands        Sept 30, 2007         Jun 30, 2007         Sept 30, 2006    

 % Change

% Change  
Allowance for credit losses                                           
Balance beginning of period    $   68,723     $   60,263     $   58,516              
   Provision for loan and lease losses        20,420         3,413         2,352              
   Acquisitions        --         5,078         184              
 
Charge-offs        (1,414 )        (870 )        (1,027 )    63 %    38 % 
Less: Recoveries        549         839         450     (35 )%    22 % 
Net charge-offs        (865 )        (31 )        (577 )    2690 %    50 % 
 
Total Allowance for loan and lease losses        88,278         68,723         60,475     28 %    46 % 
Reserve for unfunded commitments        1,246         1,273         2,021              
 Total Allowance for credit losses    $   89,524     $   69,996     $   62,496     28 %    43 % 
 
Net charge-offs to average                                           
 loans and leases (annualized)        0.06 %        0.00 %        0.04 %             
Recoveries to gross charge-offs        39 %        96 %        44 %             
Allowance for credit losses to                                           
 loans and leases        1.47 %        1.17 %        1.16 %             
Allowance for credit losses to                                           
 nonperforming loans        130 %        146 %        591 %             
 
 
Nonperforming loans to total loans and leases        1.13 %        0.80 %        0.20 %             
Nonperforming assets to total assets        0.96 %        0.59 %        0.15 %             
 
Nonperforming assets:                                           
 Loans on non-accrual status    $   67,419     $   46,642     $   10,158     45 %    564 % 
 Loans past due 90+ days & accruing        1,488         1,313         416     13 %    258 % 
Total nonperforming loans    $   68,907     $   47,955     $   10,574     44 %    552 % 
 Other real estate owned        10,310         --         31     nm     nm  
Total nonperforming assets    $   79,217     $   47,955     $   10,605     65 %    647 % 
nm = not meaningful                                           

Umpqua Holdings Corporation Announces Third Quarter 2007 Results        
October 18, 2007                           
Page 12 of 17                           
 
Umpqua Holdings Corporation
 
Credit Quality (continued)
(Unaudited)
                             Nine Months ended:        
Dollars in thousands        Sept 30, 2007         Sept 30, 2006     % Change  
Allowance for credit losses                           
Balance beginning of period    $   60,090     $   43,885        
   Provision for loan and lease losses        23,916         2,427        
   Acquisitions        5,078         14,227        
 
Charge-offs        (2,997 )        (2,587 )    16 % 
Less: Recoveries        2,191         2,523     (13 )% 
     Net charge-offs        (806 )        (64 )    1159 % 
 
Total Allowance for loan and lease losses        88,278         60,475        
 
Reserve for unfunded commitments        1,246         2,021        
 Total Allowance for credit losses    $   89,524     $   62,496        
 
Net charge-offs to average                           
 loans and leases (annualized)        0.02 %        0.00 %       
Recoveries to gross charge-offs        73 %        98 %       

Umpqua Holdings Corporation
 
Deposits by Type
(Unaudited)
                                               % Change      
           Sept 30, 2007         Jun 30, 2007         Sept 30, 2006     Sequential        Year over   
Quarter         Year    
Dollars in thousands        Amount    Mix         Amount    Mix         Amount    Mix     % Change      % Change
Demand, non interest-bearing    $   1,294,334    20 %    $   1,358,235    21 %    $   1,246,499    22 %    (4.7 )%    3.8 % 
Demand, interest-bearing        2,950,605    45 %        2,801,455    44 %        2,420,474    43 %    5.3 %    21.9 % 
Savings        358,825    6 %        373,438    6 %        380,587    7 %    (3.9 )%    (5.7 )% 
Time        1,914,453    29 %        1,881,297    29 %        1,602,778    28 %    1.8 %    19.4 % 
 Total Deposits    $   6,518,217    100 %    $   6,414,425    100 %    $   5,650,338    100 %    1.6 %    15.4 % 

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                    
October 18, 2007                                                             
Page 13 of 17                                                             
 
Umpqua Holdings Corporation
 
Deposits/Core Deposits by Region
(Unaudited)
                                                           
           Sept 30, 2007         Jun 30, 2007         Sept 30, 2006     Sequential       Year over  
Quarter    Year    
Dollars in thousands        Amount     Mix         Amount     Mix         Amount     Mix     % Change    % Change
 
Deposits by region:                                                             
Oregon/Washington    $   3,700,826     57 %    $   3,604,939     56 %    $   3,426,675     61 %    2.7 %    8.0 % 
California        2,817,391     43 %        2,809,486     44 %        2,223,663     39 %    0.3 %    26.7 % 
 Total Deposits    $   6,518,217     100 %    $   6,414,425     100 %    $   5,650,338     100 %    1.6 %    15.4 % 
 
Core deposits by region (1):                                                             
Oregon/Washington    $   3,183,550     58 %    $   3,095,630     58 %    $   3,006,830     62 %    2.8 %    5.9 % 
California        2,270,478     42 %        2,277,890     42 %        1,864,027     38 %    (0.3 )%    21.8 % 
 Total Core deposits    $   5,454,028     100 %    $   5,373,520     100 %    $   4,870,857     100 %    1.5 %    12.0 % 
 % of total deposits        84 %              84 %              86 %                   
 
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.                    

Umpqua Holdings Corporation
Organic Growth by Region
(Unaudited)
        Oregon/Washington         California         Total  
Dollars in thousands        Loans         Deposits         Loans         Deposits         Loans         Deposits  
Balance, 9/30/07    $   3,452,645     $   3,700,826     $   2,626,790     $   2,817,391     $   6,079,435     $   6,518,217  
 
Less: 12/31/06 balance        3,168,596         3,500,965         2,193,266         2,339,329         5,361,862         5,840,294  
     Total growth year to date        284,049         199,861         433,524         478,062         717,573         677,923  
 
Less: acquisition        16,166         3,559         426,784         459,065         442,950         462,624  
Organic Growth    $   267,883     $   196,302     $   6,740     $   18,997     $   274,623     $   215,299  
 
Year to date organic growth %        8.5 %        5.6 %        0.3 %        0.8 %        5.1 %        3.7 % 
Year to date acquisition growth %        0.5 %        0.1 %        19.5 %        19.6 %        8.3 %        7.9 % 
Total year to date growth %        9.0 %        5.7 %        19.8 %        20.4 %        13.4 %        11.6 % 
 
Annualized organic growth rate - 2007        11.3 %        7.5 %        0.4 %        1.1 %        6.8 %        4.9 % 
Organic growth rate – 2006        18.1 %        16.3 %        (5.4 )%        3.7 %        10.7 %        12.6 % 
Organic growth rate – 2005        13.3 %        12.9 %        12.7 %        12.7 %        13.1 %        12.8 % 
Organic growth rate – 2004        17.7 %        8.0 %        4.7 %        3.2 %        20.2 %        9.6 % 

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                    
October 18, 2007                               
Page 14 of 17                               
 
Umpqua Holdings Corporation
 
Selected Ratios
(Unaudited)
                           
          Quarter Ended:           Sequential       Year over  
Quarter    Year    
    Sept 30, 2007     Jun 30, 2007     Sept 30, 2006     Change     Change  
Net Interest Spread:                               
 Yield on loans and leases    7.62 %    7.74 %    7.88 %    (0.12 )    (0.26 ) 
 Yield on taxable investments    4.83 %    4.72 %    4.53 %    0.11     0.30  
 Yield on tax-exempt investments (1)    5.62 %    5.06 %    6.08 %    0.56     (0.46 ) 
 Yield on temporary investments    5.18 %    5.13 %    3.99 %    0.05     1.19  
   Total yield on earning assets (1)    7.24 %    7.33 %    7.49 %    (0.09 )    (0.25 ) 
 
 Cost of interest bearing deposits    3.69 %    3.66 %    3.19 %    0.03     0.50  
 Cost of securities sold under agreements                               
     to repurchase and fed funds purchased    3.28 %    3.74 %    4.45 %    (0.46 )    (1.17 ) 
 Cost of term debt    4.62 %    4.63 %    4.81 %    (0.01 )    (0.19 ) 
 Cost of junior subordinated debentures    7.59 %    7.62 %    7.72 %    (0.03 )    (0.13 ) 
   Total cost of interest bearing liabilities    3.86 %    3.84 %    3.45 %    0.02     0.41  
 
Net interest spread (1)    3.38 %    3.49 %    4.04 %    (0.11 )    (0.66 ) 
     Net interest margin – Consolidated (1)    4.20 %    4.34 %    4.83 %    (0.14 )    (0.63 ) 
 
     Net interest margin – Bank (1)    4.45 %    4.57 %    5.08 %    (0.12 )    (0.63 ) 
 
As reported:                               
Return on average assets    0.64 %    1.02 %    1.27 %    (0.38 )    (0.63 ) 
Return on average tangible assets    0.70 %    1.13 %    1.41 %    (0.43 )    (0.71 ) 
Return on average equity    4.20 %    6.44 %    8.06 %    (2.24 )    (3.86 ) 
Return on average tangible equity    10.92 %    16.11 %    20.50 %    (5.19 )    (9.58 ) 
Efficiency ratio – Consolidated    56.83 %    60.76 %    57.75 %    (3.93 )    (0.92 ) 
Efficiency ratio – Bank    55.57 %    56.98 %    53.95 %    (1.41 )    1.62  
 
Excluding merger related expense (2):                               
Return on average assets    0.65 %    1.09 %    1.35 %    (0.44 )    (0.70 ) 
Return on average tangible assets    0.71 %    1.21 %    1.50 %    (0.50 )    (0.79 ) 
Return on average equity    4.25 %    6.91 %    8.58 %    (2.66 )    (4.33 ) 
Return on average tangible equity    11.05 %    17.26 %    21.82 %    (6.21 )    (10.77 ) 
Efficiency ratio – Consolidated    56.54 %    58.08 %    54.95 %    (1.54 )    1.59  
Efficiency ratio – Bank    55.30 %    54.32 %    51.20 %    0.98     4.10  

(1)      Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
(2)      Excludes merger related expense, net of tax.
 
Umpqua Holdings Corporation Announces Third Quarter 2007 Results              
October 18, 2007                   
Page 15 of 17                   
 
Umpqua Holdings Corporation
 
Selected Ratios
(Unaudited)
    Nine Months Ended:        
    Sept 30, 2007     Sept 30, 2006     Change  
Net Interest Spread:                   
 Yield on loans and leases    7.72 %    7.65 %    0.07  
 Yield on taxable investments    4.72 %    4.50 %    0.22  
 Yield on tax-exempt investments (1)    5.49 %    5.77 %    (0.28 ) 
 Yield on temporary investments    5.20 %    4.09 %    1.11  
   Total yield on earning assets (1)    7.33 %    7.25 %    0.08  
 
 Cost of interest bearing deposits    3.66 %    2.94 %    0.72  
 Cost of securities sold under                   
   agreements to repurchase and fed funds purchased    3.40 %    4.23 %    (0.83 ) 
 Cost of term debt    4.58 %    4.97 %    (0.39 ) 
 Cost of junior subordinated debentures    7.60 %    7.59 %    0.01  
   Total cost of interest bearing liabilities    3.83 %    3.25 %    0.58  
 
Net interest spread (1)    3.50 %    4.00 %    (0.50 ) 
     Net interest margin – Consolidated (1)    4.33 %    4.74 %    (0.41 ) 
 
     Net interest margin – Bank (1)    4.57 %    4.99 %    (0.42 ) 
 
As reported:                   
Return on average assets    0.93 %    1.29 %    (0.36 ) 
Return on average tangible assets    1.02 %    1.41 %    (0.39 ) 
Return on average equity    5.91 %    8.80 %    (2.89 ) 
Return on average tangible equity    14.79 %    20.87 %    (6.08 ) 
Efficiency ratio – Consolidated    59.27 %    57.91 %    1.36  
Efficiency ratio – Bank    56.35 %    53.94 %    2.41  
 
Excluding merger related expense (2):                   
Return on average assets    0.96 %    1.35 %    (0.39 ) 
Return on average tangible assets    1.06 %    1.47 %    (0.41 ) 
Return on average equity    6.12 %    9.18 %    (3.06 ) 
Return on average tangible equity    15.32 %    21.78 %    (6.46 ) 
Efficiency ratio – Consolidated    58.06 %    56.01 %    2.05  
Efficiency ratio – Bank    55.15 %    52.08 %    3.07  

(1)      Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
(2)      Excludes merger related expense, net of tax.
 
Umpqua Holdings Corporation Announces Third Quarter 2007 Results                       
October 18, 2007                                       
Page 16 of 17                                       
 
Umpqua Holdings Corporation
 
Average Balances
(Unaudited)
                                     
                Quarter Ended:              Sequential      Year over    
Quarter    Year    
Dollars in thousands        Sept 30, 2007        Jun 30, 2007        Sept 30, 2006     % Change     % Change  
 
 Temporary investments    $   71,165    $   48,142    $   37,225     48 %    91 % 
 Investment securities, taxable        765,346        746,721        609,131     2 %    26 % 
 Investment securities, tax-exempt        159,998        148,071        107,851     8 %    48 % 
 Loans held for sale        10,732        15,468        19,258     (31 )%    (44 )% 
 Loans and leases        6,032,388        5,777,447        5,333,728     4 %    13 % 
      Total earning assets        7,039,629        6,735,849        6,107,193     5 %    15 % 
 Goodwill & other intangibles        766,591        743,801        681,988     3 %    12 % 
 Total assets        8,190,032        7,840,422        7,135,488     4 %    15 % 
 
 Non interest bearing demand deposits        1,319,280        1,271,311        1,235,838     4 %    7 % 
 Interest bearing deposits        5,171,123        4,881,499        4,248,328     6 %    22 % 
 Total deposits        6,490,403        6,152,810        5,484,166     5 %    18 % 
 Interest bearing liabilities        5,542,587        5,252,179        4,701,582     6 %    18 % 
 
 Total shareholders’ equity        1,245,390        1,239,691        1,124,398     0 %    11 % 
 Tangible equity        478,799        495,890        442,410     (3 )%    8 % 
 
 
Umpqua Holdings Corporation                       
 
                   Average Balances                       
                    (Unaudited)                           
        Nine Months Ended:                       
Dollars in thousands        Sept 30, 2007        Sept 30, 2006        % Change              
 
 Temporary investments    $   62,680    $   27,360        129 %             
 Investment securities, taxable        723,978        604,448        20 %             
 Investment securities, tax-exempt        142,444        91,027        56 %             
 Loans held for sale        13,719        14,512        (5 )%             
 Loans and leases        5,733,639        4,623,013        24 %             
Total earning assets        6,676,460        5,360,360        25 %             
 Goodwill & other intangibles        729,979        526,459        39 %             
 Total assets        7,765,832        6,198,868        25 %             
 
 Non interest bearing demand deposits        1,250,188        1,085,161        15 %             
 Interest bearing deposits        4,884,775        3,683,415        33 %             
 Total deposits        6,134,963        4,768,576        29 %             
 Interest bearing liabilities        5,222,253        4,141,511        26 %             
 
 Total shareholders’ equity        1,215,730        910,311        34 %             
 Tangible equity        485,751        383,852        27 %             

Umpqua Holdings Corporation Announces Third Quarter 2007 Results                  
October 18, 2007                                               
Page 17 of 17                                               
 
Umpqua Holdings Corporation
 
Mortgage Banking Activity
(unaudited)
                                             
                  Quarter Ended:                   Sequential      Year over  
Quarter   Year    
Dollars in thousands        Sept 30, 2007         Jun 30, 2007         Sept 30, 2006         % Change     % Change  
 
Mortgage Servicing Rights (MSR):                                               
Mortgage loans serviced for others    $   877,648     $   897,696     $   978,723         (2 )%    (10 )% 
 
MSR Asset    $   9,474     $   9,966     $   13,668         (5 )%    (31 )% 
Less: Valuation reserve (1)        --         --         (3,241 )        --     (100 )% 
MSR Asset net    $   9,474     $   9,966     $   10,427         (5 )%    (9 )% 
 
 
MSR net as % of serviced portfolio        1.08 %        1.11 %        1.07 %                 
 
 
Mortgage Banking Revenue:                                               
Origination and sale    $   1,468     $   1,700     $   2,141         (14 )%    (31 )% 
Servicing        546         670         652         (19 )%    (16 )% 
Amortization of MSR (1)        --         --         (292 )        --     (100 )% 
MSR valuation reserve change        --         --         (1,056 )        --     (100 )% 
Change in fair value of MSR        (648 )        237         --         (373 )%    100 % 
 Total Mortgage Banking Revenue    $   1,366     $   2,607     $   1,445         (48 )%    (5 )% 
 
 
        Nine Months Ended:                            
Dollars in thousands        Sept 30, 2007         Sept 30, 2006         % Change                  
 
Mortgage Banking Revenue:                                               
Origination and sale    $   4,896     $   5,601         (13 )%                 
Servicing        1,853         1,992         (7 )%                 
Amortization of MSR (1)        --         (934 )        (100 )%                 
MSR valuation reserve change        --         (867 )        (100 )%                 
Change in fair value of MSR        (977 )        --         100 %                 
 Total Mortgage Banking Revenue    $   5,772     $   5,792         0 %                 

(1) The Company adopted SFAS No. 156 effective January 1, 2007, resulting in elimination of the mortgage servicing right valuation reserve and MSR amortization.

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