Segment Information

In the first quarter of 2017, the Company realigned its operating segments based on changes in its internal reporting structure to align with the change in the Company's Chief Operating Decision Maker. The Company now reports four primary segments: Commercial Bank, Wealth Management, Retail Bank, and Home Lending with the remainder as Corporate and other. The prior periods have been recast to reflect current presentation of segments.

The Commercial Bank segment includes lending, treasury and cash management services and customer risk management products to small businesses, middle market and larger commercial customers and includes the operations of Financial Pacific Leasing Inc., a commercial leasing company. The Wealth Management segment consists of the operations of Umpqua Investments, which offers a full range of retail brokerage and investment advisory services and products to its clients who consist primarily of individual investors, and Umpqua Private Bank, which serves high net worth individuals with liquid investable assets and provides customized financial solutions and offerings. The Retail Bank segment includes retail lending and deposit services for customers served through the Bank's store network. The Home Lending segment originates, sells and services residential mortgage loans. The Corporate and other segment includes activities that are not directly attributable to one of the four principal lines of business and includes the operations of Pivotus Ventures, Inc. and the parent company, eliminations and the economic impact of certain assets, capital and support functions not specifically identifiable within the other lines of business.

Management monitors the Company's results using an internal performance measurement accounting system, which provides line of business results and key performance measures. A primary objective of this profitability measurement system and related internal financial reporting practices are designed to produce consistent results that reflect the underlying economics of the business, and to support strategic objectives and analysis based on how management views the business. Various methodologies employed within this system to measure performance are based on management's judgment or other subjective factors. Consequently, the information presented is not necessarily comparable with similar information for other financial institutions.

This system uses various techniques to assign balance sheet and income statement amounts to the business segments, including internal funds transfer pricing, allocations of income, expense, the provision for credit losses, and capital. The application and development of these management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable segment may be periodically revised retrospectively, if material.

Funds transfer pricing is used in the determination of net interest income reported by assigning a cost for funds used or credit for funds provided to all assets and liabilities within each business segment. In general, assets and liabilities are match-funded based on their maturity or repricing characteristics, adjusted for estimated prepayments if applicable. The value of funds provided or cost of funds used by the business segments is priced at rates that approximate wholesale market rates of the Company for funds with similar duration and re-pricing characteristics. Market rates are generally based on LIBOR or interest rate swap rates, plus consideration of the Company's incremental credit spread/cost of borrowing. As a result, the business segments are generally insulated from changes in interest rates. This method of funds transfer pricing also serves to transfer interest rate risk to Treasury, which is contained within the Corporate & Other segment. However, the business segments have some latitude to retain certain interest rate exposures related to customer pricing decisions that are within overall Corporate guidelines.

Noninterest income and expenses directly attributable to a business segment are directly recorded within that business unit. To better analyze the total financial performance of each business unit and to consider the total cost to support a segment, management allocates centrally provided support services and other corporate overhead to the business segments based on various methodologies. Examples of these type of expense overhead pools include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing. Expense allocations are based on actual usage where practicably calculated or by management's estimate of such usage. Example of typical expense allocation drivers include number of employees, loan or deposits average balances or counts, origination or transaction volumes, credit quality related indicators, noninterest expense, or other identified drivers.

The provision for loan and lease losses is based on the methodology consistent with our process to estimate our consolidated allowance. The provision for credit losses incorporates the actual net charge-offs recognized related to loans contained within each business segment. The residual provision for credit losses to arrive at the consolidated provision for credit losses is included in Corporate and Other.

The provision for income taxes is allocated to business segments using a 37% effective tax rate. The residual income tax expense or benefit arising from changes in tax rates due to the Tax Act, tax planning strategies or other tax attributes to arrive at the consolidated effective tax rate is retained in Corporate and Other.

Summarized financial information concerning the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables:



(in thousands)	Year Ended December 31, 2017
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Net interest income	$	434,942	$	22,103	$	282,622	$	39,487	$	80,734		$	859,888
Provision for loan and lease losses	37,108		360		7,701		1,692		393			47,254
Non-interest income	52,054		18,697		62,366		142,763		1,316			277,196
Non-interest expense	218,266		32,123		288,236		146,690		62,560			747,875
Income before income taxes	231,622		8,317		49,051		33,868		19,097			341,955
Provision (benefit) for income taxes	85,700		3,077		18,149		12,531		(23,521		)	95,936
Net income	$	145,922	$	5,240	$	30,902	$	21,337	$	42,618		$	246,019

Total assets	$	13,856,963	$	437,873	2,143,830		$	3,355,189	5,947,584			$	25,741,439
Total loans and leases	$	13,683,264	$	423,813	2,054,058		$	2,921,897	(2,848		)	$	19,080,184
Total deposits	$	3,776,080	$	993,559	12,449,568		$	222,494	2,506,599			$	19,948,300



(in thousands)	Year Ended December 31, 2016
	Commercial Bank		Wealth Management		Retail Bank		Home Lending			Corporate & Other			Consolidated
Net interest income	$	422,022	$	21,341	$	254,043	$	41,435		$	105,747		$	844,588
Provision (recapture) for loan and lease losses	35,348		587		8,049		(3,426		)	1,116			41,674
Non-interest income	48,227		19,554		62,726		163,527			5,906			299,940
Non-interest expense	203,233		34,213		293,307		154,922			51,480			737,155
Income before income taxes	231,668		6,095		15,413		53,466			59,057			365,699
Provision for income taxes	85,718		2,255		5,703		19,783			19,300			132,759
Net income	$	145,950	$	3,840	$	9,710	$	33,683		$	39,757		$	232,940

Total assets	$	12,829,249	$	437,058	1,893,433		$	3,243,600		6,409,779			$	24,813,119
Total loans and leases	$	12,640,383	$	415,737	1,806,554		$	2,685,181		(39,192		)	$	17,508,663
Total deposits	$	3,288,837	$	1,011,454	12,032,906		$	229,358		2,458,430			$	19,020,985



(in thousands)	Year Ended December 31, 2015
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Net interest income	$	416,385	$	17,412	$	240,147	$	35,130	$	162,560		$	871,634
Provision for loan and lease losses	25,655		38		8,187		2,709		—			36,589
Non-interest income	38,126		21,152		62,141		144,846		9,459			275,724
Non-interest expense	198,614		37,355		290,230		142,150		95,293			763,642
Income before income taxes	230,242		1,171		3,871		35,117		76,726			347,127
Provision for income taxes	85,190		433		1,432		12,994		24,539			124,588
Net income	$	145,052	$	738	$	2,439	$	22,123	$	52,187		$	222,539

Total assets	$	12,342,117	$	366,438	$	1,720,569	$	3,281,256	$	5,696,001		$	23,406,381
Total loans and leases	$	12,153,712	$	346,905	$	1,624,004	$	2,771,990	$	(30,075	)	$	16,866,536
Total deposits	$	2,955,578	$	813,327	$	11,352,058	$	17,374	$	2,568,852		$	17,707,189