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Umpqua Holdings Corporation$20.76$.13.63%

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 Umpqua Reports Second Quarter 2017 Results
   Wednesday, July 19, 2017 4:16:51 PM ET

Net earnings of $56.8 million, or $0.26 per common share

Strong quarterly loan and lease growth of $491.5 million, or 11% annualized

Net interest margin of 3.91%, up 6 basis points from the prior quarter

Umpqua Holdings Corporation (UMPQ ) (the "Company") reported net earnings available to common shareholders of $56.8 million for the second quarter of 2017, increased from $46.0 million for the first quarter of 2017 and from $54.3 million for the second quarter of 2016. Earnings per diluted common share increased to $0.26 for the second quarter of 2017, compared to $0.21 for the first quarter of 2017 and $0.25 for the second quarter of 2016.

"Our performance during the second quarter reflects the success in executing on the key priorities and strategic initiatives we outlined earlier this year," said Cort O’Haver, president and CEO of Umpqua Holdings Corporation. "We delivered another quarter of strong loan and deposit growth, highlighted by 20% annualized growth in our commercial loan portfolio. This balanced growth, along with a higher net interest margin and seasonally stronger mortgage banking revenues, drove the improvement in our second quarter financial results. Looking ahead, we’ll continue to focus on initiatives that enhance the customer experience, diversify our revenue and deliver improved financial performance for shareholders."

Notable items that impacted the second quarter 2017 financial results included:

-- $8.3 million negative adjustment related to the fair value change of the MSR asset, compared to negative adjustments of $7.7 million in the prior quarter and $13.9 million in the same period of the prior year.

-- $756,000 negative adjustment related to the fair value change of the debt capital market swap derivatives, compared to negative adjustments of $727,000 in the prior quarter and $1.5 million in the same period of the prior year.

-- $1.6 million in merger-related expenses, compared to $1.0 million in the prior quarter and $6.6 million in the same period of the prior year.

-- $742,000 of exit or disposal costs, compared to $468,000 in the prior quarter and $1.4 million in the same period of the prior year.

-- $1.6 million net loss on junior subordinated debentures carried at fair value, consistent with the level in the prior quarter and with the same period of the prior year.

Second Quarter 2017 Highlights (compared to prior quarter):

-- Net interest income increased by $5.4 million, driven by growth in interest-earning assets and a 6 basis point increase in net interest margin;

-- Provision for loan and lease losses decreased by $1.0 million to $10.7 million, and net charge-offs remained at 0.22% of average loans and leases (annualized);

-- Non-interest income increased by $10.9 million, driven primarily by higher revenues from the origination and sale of residential mortgages;

-- Non-interest expense increased by $1.3 million, driven primarily by higher salaries and employee benefits expense, reflecting higher mortgage banking-related compensation, consistent with the increase in mortgage originations, and annual merit increases;

-- Gross loan and lease growth of $491.5 million, or 11% annualized;

-- Deposit growth of $292.7 million, or 6% annualized;

-- Non-performing assets to total assets decreased to 0.23%;

-- Estimated total risk-based capital ratio of 14.1% and estimated Tier 1 common to risk weighted assets ratio of 11.1%;

-- Declared quarterly cash dividend of $0.16 per common share; and

-- Repurchased 225,000 shares of common stock for $3.9 million.

Balance Sheet

Total consolidated assets were $25.3 billion as of June 30, 2017, compared to $24.9 billion as of March 31, 2017 and $24.1 billion as of June 30, 2016. Including secured off-balance sheet lines of credit at the Company, total available liquidity was $9.3 billion as of June 30, 2017, representing 37% of total assets and 48% of total deposits.

Gross loans and leases were $18.3 billion as of June 30, 2017, an increase of $491.5 million, or 11% annualized, from $17.8 billion as of March 31, 2017. This increase reflects balanced growth across the Company’s commercial, multi-family and consumer loan portfolios. During the second quarter of 2017, the Company sold $14.6 million of leases and equipment finance loans and $28.8 million of portfolio residential mortgage loans.

Total deposits were $19.5 billion as of June 30, 2017, an increase of $292.7 million, or 6% annualized, from $19.2 billion as of March 31, 2017. This increase was primarily attributable to growth in demand and time accounts.

Net Interest Income

Net interest income was $212.1 million for the second quarter of 2017, an increase of $5.4 million, or 3%, from the prior quarter. This increase was primarily attributable to the strong growth in average interest-earning assets, both in loans and leases and investment securities, along with a 6 basis point increase in net interest margin. Accretion of the credit discount recorded on acquired loans from Sterling Financial Corporation ("Sterling") decreased by $494,000 from the prior quarter level.

The Company’s net interest margin was 3.91% for the second quarter of 2017, up 6 basis points from 3.85% for the first quarter of 2017. The linked quarter increase was driven primarily by a lower mix of interest-bearing cash along with higher average yields on loans and leases and interest-bearing cash.

Credit Quality

The allowance for loan and lease losses was $136.9 million, or 0.75% of loans and leases, as of June 30, 2017. During the second quarter of 2017, the Company recorded $5.9 million of accretion related to the credit discount on acquired loans from Sterling, compared to $6.4 million in the prior quarter. As of June 30, 2017, the Sterling purchased non-credit impaired loans had approximately $34.1 million of remaining credit discount that will accrete into interest income over the life of the loans, and the Sterling purchased credit impaired loan pools had approximately $28.0 million of remaining total discount.

The provision for loan and lease losses was $10.7 million for the second quarter of 2017, a $1.0 million decrease from the prior quarter level, and net charge-offs remained at 0.22% of average loans and leases (annualized). As of June 30, 2017, non-performing assets represented 0.23% of total assets, down from 0.24% as of March 31, 2017 and from 0.27% as of June 30, 2016.

Non-interest Income

Non-interest income was $71.1 million for the second quarter of 2017, up $10.9 million from the prior quarter. The current quarter’s non-interest income included negative adjustments of $8.3 million and $756,000 related to fair value changes of the MSR asset and the debt capital market swap derivatives, respectively, both primarily attributable to the decrease in long-term interest rates during the quarter. This compares to fair value losses of $7.7 million and $727,000 for the MSR asset and debt capital market swap derivatives, respectively, during the first quarter of 2017.

Net revenue from the origination and sale of residential mortgages was $32.4 million for the second quarter of 2017, up $7.7 million from the prior quarter. This increase was driven primarily by a 22% linked quarter increase in for-sale mortgage origination volume, along with a 26 basis point increase in home lending gain on sale margin to 3.53% for the second quarter of 2017. Of the current quarter’s mortgage production, 77% related to purchase activity, as compared to 67% for the prior quarter and 70% for the same period in the prior year.

Other income increased by $1.7 million from the prior quarter, reflecting stronger debt capital markets swap activity, and gain on loan sales increased by $1.6 million from the prior quarter, driven by a higher level of portfolio loans sales compared to the prior quarter.

Non-interest Expense

Non-interest expense was $184.0 million for the second quarter of 2017, up $1.3 million from the prior quarter level. This increase was driven primarily by higher salaries and employee benefits, reflecting higher mortgage banking-related compensation, consistent with the increase in mortgage originations, and annual merit increases which took effect in April. These were partially offset by a decrease in seasonal payroll taxes and lower occupancy and equipment expense.

Capital

As of June 30, 2017, the Company’s book value per share increased to $17.98, from $17.84 in the prior quarter, and its tangible book value per common shareincreased to $9.71, from $9.57 in the prior quarter. During the second quarter of 2017, the Company repurchased 225,000 shares of common stock for $3.9 million.

The Company’s estimated total risk-based capital ratio was 14.1% and its estimated Tier 1 common to risk weighted assets ratio was 11.1% as of June 30, 2017. The Company remains above current "well-capitalized" regulatory minimums. The regulatory capital ratios as of June 30, 2017 are estimates, pending completion and filing of the Company’s regulatory reports.

"Non-GAAP" financial measure. More information regarding this measurement and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.

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. The Company believes that these non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this document are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

Management believes tangible common equity and the tangible common equity ratio are useful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in assessing the capital of the Company and the ability to absorb potential losses. Tangible common equity is calculated as total shareholders’ equity less goodwill and other intangible assets, net (excluding MSRs). Tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets.

The following table provides reconciliations of ending shareholders’ equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP).

(In thousands, except per share data)    Jun 30, 2017          Mar 31, 2017          Dec 31, 2016          Sep 30, 2016          Jun 30, 2016
Total shareholders’ equity               $    3,958,845        $    3,931,150        $    3,916,795        $    3,920,208        $    3,902,158
Subtract:
Goodwill                                 1,787,651             1,787,651             1,787,651             1,787,651             1,787,651
Other intangible assets, net             33,508                35,197                36,886                38,753                40,620
Tangible common shareholders’ equity     $    2,137,686        $    2,108,302        $    2,092,258        $    2,093,804        $    2,073,887
Total assets                             $    25,257,784       $    24,861,458       $    24,813,119       $    24,744,214       $    24,132,507
Subtract:
Goodwill                                 1,787,651             1,787,651             1,787,651             1,787,651             1,787,651
Other intangible assets, net             33,508                35,197                36,886                38,753                40,620
Tangible assets                          $    23,436,625       $    23,038,610       $    22,988,582       $    22,917,810       $    22,304,236
Common shares outstanding at period end  220,205               220,349               220,177               220,207               220,482
Common equity ratio                      15.67           %     15.81           %     15.79           %     15.84           %     16.17           %
Tangible common equity ratio             9.12            %     9.15            %     9.10            %     9.14            %     9.30            %
Book value per common share              $    17.98            $    17.84            $    17.79            $    17.80            $    17.70
Tangible book value per common share     $    9.71             $    9.57             $    9.50             $    9.51             $    9.41

About Umpqua Holdings Corporation

Umpqua Holdings Corporation (UMPQ ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative customer experience, and distinctive banking solutions. Umpqua Bank has locations across Oregon, Washington, California, Idaho and Nevada. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon, and Pivotus Ventures, an innovation studio headquartered in Silicon Valley focused on creating key technologies and business models that transform finance and commerce. Umpqua Holdings Corporation is headquartered in Portland, Oregon. For more information, visit umpquabank.com.

Earnings Conference Call Information

The Company will host its second quarter 2017 earnings conference call on Thursday, July 20, 2017, at 10:00 a.m. PDT (1:00 p.m. EDT). During the call, the Company will provide an update on recent activities and discuss its second quarter 2017 financial results. There will be a live question-and-answer session following the presentation. To join the call, please dial (877) 440-5784 ten minutes prior to the start time and enter conference ID: 5028748. A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 5028748. The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at umpquabank.com.

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 fee revenue and operating efficiency initiatives and the credit discount accretion related to loans acquired from Sterling. Risks that could cause results to differ from forward-looking statements we make are set forth in our filings with the SEC and include, without limitation, prolonged low interest rate environment; the effect of interest rate increases on the cost of deposits; unanticipated weakness in loan demand or loan pricing; deterioration in the economy; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; our inability to successfully implement efficiency initiatives; our ability to successfully develop and market new products and technology; and changes in laws or regulations.

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
                                                                            Quarter Ended                                                                   % Change
(In thousands, except per share data)                                       Jun 30,         Mar 31,         Dec 31,         Sep 30,         Jun 30,         Seq.      Year
                                                                            2017            2017            2016            2016            2016            Quarter   over
                                                                                                                                                                      Year
Interest income:
Loans and leases                                                            $   212,998     $   205,996     $   209,812     $   212,037     $   210,290     3    %    1   %
Interest and dividends on investments:
Taxable                                                                     15,220          13,931          10,630          10,779          11,963          9    %    27  %
Exempt from federal income tax                                              2,237           2,242           2,229           2,181           2,183           0    %    2   %
Dividends                                                                   360             388             336             332             365             (7   )%   (1  )%
Temporary investments and interest bearing deposits                         324             1,557           1,696           1,090           652             (79  )%   (50 )%
Total interest income                                                       231,139         224,114         224,703         226,419         225,453         3    %    3   %
Interest expense:
Deposits                                                                    10,641          9,648           9,288           8,999           8,540           10   %    25  %
Repurchase agreements and federal funds purchased                           321             30              32              32              32              970  %    903 %
Term debt                                                                   3,662           3,510           3,413           3,558           3,848           4    %    (5  )%
Junior subordinated debentures                                              4,437           4,201           4,174           3,938           3,835           6    %    16  %
Total interest expense                                                      19,061          17,389          16,907          16,527          16,255          10   %    17  %
Net interest income                                                         212,078         206,725         207,796         209,892         209,198         3    %    1   %
Provision for loan and lease losses                                         10,657          11,672          13,171          13,091          10,589          (9   )%   1   %
Non-interest income:
Service charges on deposits                                                 15,478          14,729          15,323          15,762          15,667          5    %    (1  )%
Brokerage revenue                                                           3,903           4,122           4,230           4,129           4,580           (5   )%   (15 )%
Residential mortgage banking revenue, net                                   33,894          26,834          58,448          47,206          36,783          26   %    (8  )%
Gain (loss) on investment securities, net                                   35              (2          )   --              --              162             nm        (78 )%
Gain on loan sales                                                          3,310           1,754           4,060           1,285           5,640           89   %    (41 )%
Loss on junior subordinated debentures carried at fair value                (1,572      )   (1,555      )   (1,589      )   (1,590      )   (1,572      )   1    %    0   %
BOLI income                                                                 2,089           2,069           2,107           2,116           2,152           1    %    (3  )%
Other income                                                                13,982          12,274          16,041          11,802          11,247          14   %    24  %
Total non-interest income                                                   71,119          60,225          98,620          80,710          74,659          18   %    (5  )%
Non-interest expense:
Salaries and employee benefits                                              108,561         106,473         105,406         105,341         107,545         2    %    1   %
Occupancy and equipment, net                                                36,955          38,673          37,618          38,181          37,850          (4   )%   (2  )%
Intangible amortization                                                     1,689           1,689           1,867           1,867           2,328           0    %    (27 )%
FDIC assessments                                                            4,447           4,087           3,985           4,109           3,693           9    %    20  %
(Gain) loss on other real estate owned, net                                 (457        )   82              (197        )   (14         )   (1,457      )   (657 )%   (69 )%
Merger related expenses                                                     1,640           1,020           3,218           2,011           6,634           61   %    (75 )%
Other expense                                                               31,186          30,690          31,571          29,692          31,918          2    %    (2  )%
Total non-interest expense                                                  184,021         182,714         183,468         181,187         188,511         1    %    (2  )%
Income before provision for income taxes                                    88,519          72,564          109,777         96,324          84,757          22   %    4   %
Provision for income taxes                                                  31,707          26,561          40,502          34,515          30,470          19   %    4   %
Net income                                                                  56,812          46,003          69,275          61,809          54,287          23   %    5   %
Dividends and undistributed earnings allocated to participating securities  14              12              33              31              32              17   %    (56 )%
Net earnings available to common shareholders                               $   56,798      $   45,991      $   69,242      $   61,778      $   54,255      23   %    5   %
Weighted average basic shares outstanding                                   220,310         220,287         220,190         220,291         220,421         0    %    0   %
Weighted average diluted shares outstanding                                 220,753         220,779         220,756         220,751         220,907         0    %    0   %
Earnings per common share - basic                                           $   0.26        $   0.21        $   0.31        $   0.28        $   0.25        24   %    4   %
Earnings per common share - diluted                                         $   0.26        $   0.21        $   0.31        $   0.28        $   0.25        24   %    4   %
nm = not meaningful
Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
                                                              Six Months Ended                      % Change
(In thousands, except per share data)                         Jun 30, 2017       Jun 30, 2016       Year
                                                                                                    over
                                                                                                    Year
Interest income
Loans and leases                                              $    418,994       $    428,218       (2   )%
Interest and dividends on investments:
Taxable                                                       29,151             25,018             17   %
Exempt from federal income tax                                4,479              4,418              1    %
Dividends                                                     748                731                2    %
Temporary investments and interest bearing deposits           1,881              1,132              66   %
Total interest income                                         455,253            459,517            (1   )%
Interest expense
Deposits                                                      20,289             16,953             20   %
Repurchase agreements and federal funds purchased             351                68                 416  %
Term debt                                                     7,172              8,034              (11  )%
Junior subordinated debentures                                8,638              7,562              14   %
Total interest expense                                        36,450             32,617             12   %
Net interest income                                           418,803            426,900            (2   )%
Provision for loan and lease losses                           22,329             15,412             45   %
Non-interest income
Service charges on deposits                                   30,207             30,183             0    %
Brokerage revenue                                             8,025              8,674              (7   )%
Residential mortgage banking revenue, net                     60,728             52,209             16   %
Gain on investment securities, net                            33                 858                (96  )%
Gain on loan sales                                            5,064              8,011              (37  )%
Loss on junior subordinated debentures carried at fair value  (3,127       )     (3,144       )     (1   )%
BOLI Income                                                   4,158              4,291              (3   )%
Other income                                                  26,256             19,528             34   %
Total non-interest income                                     131,344            120,610            9    %
Non-interest expense
Salaries and employee benefits                                215,034            214,083            0    %
Occupancy and equipment, net                                  75,628             76,145             (1   )%
Intangible amortization                                       3,378              4,888              (31  )%
FDIC assessments                                              8,534              7,414              15   %
Gain on other real estate owned, net                          (375         )     (68          )     451  %
Merger related expenses                                       2,660              10,084             (74  )%
Goodwill impairment                                           --                 142                nm
Other expense                                                 61,876             59,812             3    %
Total non-interest expense                                    366,735            372,500            (2   )%
Income before provision for income taxes                      161,083            159,598            1    %
Provision for income taxes                                    58,268             57,742             1    %
Net income                                                    102,815            101,856            1    %
Dividends and undistributed earnings
allocated to participating securities                         26                 61                 (57  )%
Net earnings available to common shareholders                 $    102,789       $    101,795       1    %
Weighted average basic shares outstanding                     220,298            220,324            0    %
Weighted average diluted shares outstanding                   220,790            221,001            0    %
Earnings per common share - basic                             $    0.47          $    0.46          2    %
Earnings per common share - diluted                           $    0.47          $    0.46          2    %
nm = not meaningful
Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
                                                                                                                                                                         % Change
(In thousands, except per share data)                 Jun 30, 2017           Mar 31, 2017           Dec 31, 2016           Sep 30, 2016           Jun 30, 2016           Seq.       Year
                                                                                                                                                                         Quarter    over
                                                                                                                                                                                    Year
Assets:
Cash and due from banks                               $     320,027          $     262,655          $     331,994          $     364,013          $     369,535          22    %    (13   )%
Interest bearing cash and temporary investments       295,937                421,991                1,117,438              1,102,428              535,828                (30   )%   (45   )%
Investment securities:
Trading, at fair value                                11,467                 11,241                 10,964                 10,866                 10,188                 2     %    13    %
Available for sale, at fair value                     3,132,566              3,243,408              2,701,220              2,520,037              2,482,072              (3    )%   26    %
Held to maturity, at amortized cost                   4,017                  4,121                  4,216                  4,302                  4,382                  (3    )%   (8    )%
Loans held for sale                                   451,350                372,073                387,318                565,624                552,681                21    %    (18   )%
Loans and leases                                      18,321,142             17,829,638             17,508,663             17,392,051             17,355,240             3     %    6     %
Allowance for loan and lease losses                   (136,867         )     (136,292         )     (133,984         )     (133,692         )     (131,042         )     0     %    4     %
Loans and leases, net                                 18,184,275             17,693,346             17,374,679             17,258,359             17,224,198             3     %    6     %
Restricted equity securities                          45,511                 45,522                 45,528                 47,537                 47,542                 0     %    (4    )%
Premises and equipment, net                           288,853                293,133                303,882                306,287                312,647                (1    )%   (8    )%
Goodwill                                              1,787,651              1,787,651              1,787,651              1,787,651              1,787,651              0     %    0     %
Other intangible assets, net                          33,508                 35,197                 36,886                 38,753                 40,620                 (5    )%   (18   )%
Residential mortgage servicing rights, at fair value  141,832                142,344                142,973                114,446                112,095                0     %    27    %
Other real estate owned                               4,804                  6,518                  6,738                  8,309                  16,437                 (26   )%   (71   )%
Bank owned life insurance                             303,894                301,777                299,673                297,561                295,444                1     %    3     %
Deferred tax assets, net                              --                     8,464                  34,322                 27,587                 63,038                 (100  )%   (100  )%
Other assets                                          252,092                232,017                227,637                290,454                278,149                9     %    (9    )%
Total assets                                          $     25,257,784       $     24,861,458       $     24,813,119       $     24,744,214       $     24,132,507       2     %    5     %
Liabilities:
Deposits                                              $     19,459,950       $     19,167,293       $     19,020,985       $     18,918,780       $     18,258,474       2     %    7     %
Securities sold under agreements to repurchase        330,189                304,280                352,948                309,463                360,234                9     %    (8    )%
Term debt                                             852,219                852,308                852,397                902,678                902,999                0     %    (6    )%
Junior subordinated debentures, at fair value         265,423                263,605                262,209                260,114                258,660                1     %    3     %
Junior subordinated debentures, at amortized cost     100,770                100,851                100,931                101,012                101,093                0     %    0     %
Deferred tax liability, net                           34,296                 --                     --                     --                     --                     100   %    100   %
Other liabilities                                     256,092                241,971                306,854                331,959                348,889                6     %    (27   )%
Total liabilities                                     21,298,939             20,930,308             20,896,324             20,824,006             20,230,349             2     %    5     %
Shareholders’ equity:
Common stock                                          3,514,094              3,516,537              3,515,299              3,514,858              3,517,240              0     %    0     %
Retained earnings                                     454,802                433,417                422,839                388,678                362,258                5     %    26    %
Accumulated other comprehensive (loss) income         (10,051          )     (18,804          )     (21,343          )     16,672                 22,660                 (47   )%   (144  )%
Total shareholders’ equity                            3,958,845              3,931,150              3,916,795              3,920,208              3,902,158              1     %    1     %
Total liabilities and shareholders’ equity            $     25,257,784       $     24,861,458       $     24,813,119       $     24,744,214       $     24,132,507       2     %    5     %
Common shares outstanding at period end               220,205                220,349                220,177                220,207                220,482                0     %    0     %
Book value per common share                           $     17.98            $     17.84            $     17.79            $     17.80            $     17.70            1     %    2     %
Tangible book value per common share                  $     9.71             $     9.57             $     9.50             $     9.51             $     9.41             1     %    3     %
Tangible equity - common                              $     2,137,686        $     2,108,302        $     2,092,258        $     2,093,804        $     2,073,887        1     %    3     %
Tangible common equity to tangible assets             9.12             %     9.15             %     9.10             %     9.14             %     9.30             %     (0.03 )    (0.18 )
Umpqua Holdings Corporation
Loan and Lease Portfolio
(Unaudited)
(Dollars in thousands)                 Jun 30, 2017          Mar 31, 2017          Dec 31, 2016          Sep 30, 2016          Jun 30, 2016          % Change
                                       Amount                Amount                Amount                Amount                Amount                Seq.     Year
                                                                                                                                                     Quarter  over
                                                                                                                                                              Year
Loans and leases:
Commercial real estate:
Non-owner occupied term, net           $    3,401,679        $    3,410,914        $    3,330,442        $    3,280,660        $    3,377,464        0   %    1  %
Owner occupied term, net               2,593,395             2,584,183             2,599,055             2,573,942             2,581,786             0   %    0  %
Multifamily, net                       2,964,851             2,885,164             2,858,956             2,968,019             3,004,890             3   %    (1 )%
Commercial construction, net           464,690               471,007               463,625               388,934               367,879               (1  )%   26 %
Residential development, net           165,956               145,479               142,984               127,447               111,941               14  %    48 %
Commercial:
Term, net                              1,686,597             1,620,311             1,508,780             1,480,173             1,440,704             4   %    17 %
Lines of credit and other, net         1,153,409             1,114,160             1,116,259             1,142,946             1,116,876             4   %    3  %
Leases and equipment finance, net      1,082,651             1,000,376             950,588               927,857               884,506               8   %    22 %
Residential real estate:
Mortgage, net                          3,021,331             2,916,924             2,887,971             2,868,337             2,882,076             4   %    5  %
Home equity lines and loans, net       1,056,848             1,015,138             1,011,844             1,008,219             989,814               4   %    7  %
Consumer and other, net                729,735               665,982               638,159               625,517               597,304               10  %    22 %
Total, net of deferred fees and costs  $    18,321,142       $    17,829,638       $    17,508,663       $    17,392,051       $    17,355,240       3   %    6  %
Loan and leases mix:
Commercial real estate:
Non-owner occupied term, net           19              %     19              %     19              %     19              %     19              %
Owner occupied term, net               14              %     14              %     15              %     15              %     15              %
Multifamily, net                       16              %     16              %     16              %     17              %     17              %
Commercial construction, net           3               %     3               %     3               %     2               %     2               %
Residential development, net           1               %     1               %     1               %     1               %     1               %
Commercial:
Term, net                              9               %     9               %     9               %     8               %     8               %
Lines of credit and other, net         6               %     6               %     6               %     7               %     6               %
Leases and equipment finance, net      6               %     6               %     5               %     5               %     6               %
Residential real estate:
Mortgage, net                          16              %     16              %     16              %     16              %     17              %
Home equity lines and loans, net       6               %     6               %     6               %     6               %     6               %
Consumer and other, net                4               %     4               %     4               %     4               %     3               %
Total                                  100             %     100             %     100             %     100             %     100             %
Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
(Dollars in thousands)        Jun 30, 2017          Mar 31, 2017          Dec 31, 2016          Sep 30, 2016          Jun 30, 2016          % Change
                              Amount                Amount                Amount                Amount                Amount                Seq.     Year
                                                                                                                                            Quarter  over
                                                                                                                                                     Year
Deposits:
Demand, non-interest bearing  $    6,112,480        $    6,021,585        $    5,861,469        $    5,993,793        $    5,475,986        2   %    12 %
Demand, interest bearing      2,371,386             2,327,226             2,296,532             2,218,782             2,186,164             2   %    8  %
Money market                  6,755,707             6,784,442             6,932,717             6,841,700             6,782,232             0   %    0  %
Savings                       1,427,677             1,400,330             1,325,757             1,303,816             1,254,675             2   %    14 %
Time                          2,792,700             2,633,710             2,604,510             2,560,689             2,559,417             6   %    9  %
Total                         $    19,459,950       $    19,167,293       $    19,020,985       $    18,918,780       $    18,258,474       2   %    7  %
Total core deposits (1)       $    17,561,956       $    17,427,832       $    17,318,003       $    17,257,663       $    16,598,065       1   %    6  %
Deposit mix:
Demand, non-interest bearing  32              %     31              %     31              %     31              %     30              %
Demand, interest bearing      12              %     12              %     12              %     12              %     12              %
Money market                  35              %     36              %     36              %     36              %     37              %
Savings                       7               %     7               %     7               %     7               %     7               %
Time                          14              %     14              %     14              %     14              %     14              %
Total                         100             %     100             %     100             %     100             %     100             %
Number of open accounts:
Demand, non-interest bearing  389,767               385,859               384,040               382,687               379,996
Demand, interest bearing      80,594                81,570                82,520                83,501                84,434
Money market                  55,795                55,903                56,031                56,128                56,492
Savings                       161,369               160,323               159,080               158,760               157,849
Time                          47,339                47,365                47,705                47,689                47,850
Total                         734,864               731,020               729,376               728,765               726,621
Average balance per account:
Demand, non-interest bearing  $    15.7             $    15.6             $    15.3             $    15.7             $    14.4
Demand, interest bearing      29.4                  28.5                  27.8                  26.6                  25.9
Money market                  121.1                 121.4                 123.7                 121.9                 120.1
Savings                       8.8                   8.7                   8.3                   8.2                   7.9
Time                          59.0                  55.6                  54.6                  53.7                  53.5
Total                         $    26.5             $    26.2             $    26.1             $    26.0             $    25.1

(1) Core deposits are defined as total deposits less time deposits greater than $100,000.

Umpqua Holdings Corporation
Credit Quality - Non-performing Assets
(Unaudited)
                                                                Quarter Ended                                                              % Change
(Dollars in thousands)                                          Jun 30,        Mar 31,        Dec 31,        Sep 30,        Jun 30,        Seq.     Year
                                                                2017           2017           2016           2016           2016           Quarter  over
                                                                                                                                                    Year
Non-performing assets:
Loans and leases on non-accrual status                          $   26,566     $   28,915     $   27,765     $   27,791     $   25,136     (8  )%   6   %
Loans and leases past due 90+ days and accruing (1)             27,252         23,421         28,369         26,189         23,076         16  %    18  %
Total non-performing loans and leases                           53,818         52,336         56,134         53,980         48,212         3   %    12  %
Other real estate owned                                         4,804          6,518          6,738          8,309          16,437         (26 )%   (71 )%
Total non-performing assets                                     $   58,622     $   58,854     $   62,872     $   62,289     $   64,649     0   %    (9  )%
Performing restructured loans and leases                        $   52,861     $   43,029     $   40,667     $   36,645     $   40,848     23  %    29  %
Loans and leases past due 31-89 days                            $   31,153     $   49,530     $   30,425     $   39,708     $   29,640     (37 )%   5   %
Loans and leases past due 31-89 days to total loans and leases  0.17       %   0.28       %   0.17       %   0.23       %   0.17       %
Non-performing loans and leases to total loans and leases (1)   0.29       %   0.29       %   0.32       %   0.31       %   0.28       %
Non-performing assets to total assets (1)                       0.23       %   0.24       %   0.25       %   0.25       %   0.27       %

(1) Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $16.3 million, $5.3 million, $10.9 million, $7.3 million, and $11.3 million at June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016, and June 30, 2016, respectively.

Umpqua Holdings Corporation
Credit Quality - Allowance for Loan and Lease Losses
(Unaudited)
                                                          Quarter Ended                                                                   % Change
(Dollars in thousands)                                    Jun 30,         Mar 31,         Dec 31,         Sep 30,         Jun 30,         Seq.     Year over
                                                          2017            2017            2016            2016            2016            Quarter  Year
Allowance for loan and lease losses:
Balance beginning of period                               $   136,292     $   133,984     $   133,692     $   131,042     $   130,243
Provision for loan and lease losses                       10,657          11,672          13,171          13,091          10,589          (9  )%   1    %
Charge-offs                                               (13,944     )   (13,002     )   (16,303     )   (13,088     )   (12,682     )   7   %    10   %
Recoveries                                                3,862           3,638           3,424           2,647           2,892           6   %    34   %
Net charge-offs                                           (10,082     )   (9,364      )   (12,879     )   (10,441     )   (9,790      )   8   %    3    %
Total allowance for loan and lease losses                 136,867         136,292         133,984         133,692         131,042         0   %    4    %
Reserve for unfunded commitments                          3,816           3,495           3,611           3,536           3,531           9   %    8    %
Total allowance for credit losses                         $   140,683     $   139,787     $   137,595     $   137,228     $   134,573     1   %    5    %
Net charge-offs to average loans and leases (annualized)  0.22        %   0.22        %   0.29        %   0.24        %   0.23        %
Recoveries to gross charge-offs                           27.70       %   27.98       %   21.00       %   20.22       %   22.80       %
Allowance for loan and lease losses to loans and leases   0.75        %   0.76        %   0.77        %   0.77        %   0.76        %
Allowance for credit losses to loans and leases           0.77        %   0.78        %   0.79        %   0.79        %   0.78        %
Umpqua Holdings Corporation
Credit Quality - Allowance for Loan and Lease Losses
(Unaudited)
                                                          Six Months Ended                      % Change
(Dollars in thousands)                                    Jun 30, 2017       Jun 30, 2016       Year over Year
Allowance for loan and lease losses:
Balance beginning of period                               $       133,984    $    130,322
Provision for loan and lease losses                       22,329             15,412             45      %
Charge-offs                                               (26,946         )  (20,532      )     31      %
Recoveries                                                7,500              5,840              28      %
Net charge-offs                                           (19,446         )  (14,692      )     32      %
Total allowance for loan and lease losses                 136,867            131,042            4       %
Reserve for unfunded commitments                          3,816              3,531              8       %
Total allowance for credit losses                         $       140,683    $    134,573       5       %
Net charge-offs to average loans and leases (annualized)  0.22            %  0.17         %
Recoveries to gross charge-offs                           27.83           %  28.44        %
Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
                                                          Quarter Ended                                          % Change
                                                          Jun 30,    Mar 31,    Dec 31,    Sep 30,    Jun 30,    Seq.       Year
                                                          2017       2017       2016       2016       2016       Quarter    over
                                                                                                                            Year
Average Rates:
Yield on loans and leases                                 4.67  %    4.65  %    4.70  %    4.75  %    4.81  %    0.02       (0.14 )
Yield on loans held for sale                              3.26  %    3.86  %    3.79  %    3.79  %    3.80  %    (0.60 )    (0.54 )
Yield on taxable investments                              2.07  %    2.10  %    1.85  %    1.96  %    2.14  %    (0.03 )    (0.07 )
Yield on tax-exempt investments (1)                       4.64  %    4.76  %    4.72  %    4.68  %    4.73  %    (0.12 )    (0.09 )
Yield on interest bearing cash and temporary investments  1.03  %    0.79  %    0.56  %    0.50  %    0.51  %    0.24       0.52
Total yield on earning assets (1)                         4.26  %    4.18  %    4.14  %    4.26  %    4.39  %    0.08       (0.13 )
Cost of interest bearing deposits                         0.33  %    0.30  %    0.28  %    0.28  %    0.27  %    0.03       0.06
Cost of securities sold under agreements
to repurchase and fed funds purchased                     0.32  %    0.04  %    0.04  %    0.04  %    0.04  %    0.28       0.28
Cost of term debt                                         1.72  %    1.67  %    1.53  %    1.57  %    1.72  %    0.05       --
Cost of junior subordinated debentures                    4.88  %    4.70  %    4.59  %    4.36  %    4.30  %    0.18       0.58
Total cost of interest bearing liabilities                0.52  %    0.48  %    0.46  %    0.46  %    0.46  %    0.04       0.06
Net interest spread (1)                                   3.74  %    3.70  %    3.68  %    3.80  %    3.93  %    0.04       (0.19 )
Net interest margin (1)                                   3.91  %    3.85  %    3.83  %    3.95  %    4.07  %    0.06       (0.16 )
Performance Ratios:
Return on average assets                                  0.92  %    0.75  %    1.11  %    1.01  %    0.91  %    0.17       0.01
Return on average tangible assets                         0.99  %    0.81  %    1.20  %    1.09  %    0.99  %    0.18       --
Return on average common equity                           5.76  %    4.74  %    7.04  %    6.28  %    5.61  %    1.02       0.15
Return on average tangible common equity                  10.67 %    8.83  %    13.19 %    11.79 %    10.59 %    1.84       0.08
Efficiency ratio - Consolidated                           64.71 %    68.15 %    59.65 %    62.11 %    66.15 %    (3.44 )    (1.44 )
Efficiency ratio - Bank                                   62.45 %    65.75 %    57.96 %    60.45 %    64.44 %    (3.30 )    (1.99 )

(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
                                                          Six Months Ended            % Change
                                                          Jun 30, 2017  Jun 30, 2016  Year over
                                                                                      Year
Average Rates:
Yield on loans and leases                                 4.66   %      4.94   %      (0.28 )
Yield on loans held for sale                              3.54   %      3.91   %      (0.37 )
Yield on taxable investments                              2.09   %      2.23   %      (0.14 )
Yield on tax-exempt investments (1)                       4.70   %      4.73   %      (0.03 )
Yield on interest bearing cash and temporary investments  0.82   %      0.52   %      0.30
Total yield on earning assets (1)                         4.23   %      4.53   %      (0.30 )
Cost of interest bearing deposits                         0.31   %      0.27   %      0.04
Cost of securities sold under agreements
to repurchase and fed funds purchased                     0.19   %      0.04   %      0.15
Cost of term debt                                         1.70   %      1.80   %      (0.10 )
Cost of junior subordinated debentures                    4.79   %      4.25   %      0.54
Total cost of interest bearing liabilities                0.50   %      0.46   %      0.04
Net interest spread (1)                                   3.73   %      4.07   %      (0.34 )
Net interest margin (1)                                   3.89   %      4.21   %      (0.32 )
Performance Ratios:
Return on average assets                                  0.84   %      0.87   %      (0.03 )
Return on average tangible assets                         0.90   %      0.94   %      (0.04 )
Return on average common equity                           5.25   %      5.27   %      (0.02 )
Return on average tangible common equity                  9.76   %      9.97   %      (0.21 )
Efficiency ratio - Consolidated                           66.38  %      67.75  %      (1.37 )
Efficiency ratio - Bank                                   64.05  %      65.81  %      (1.76 )

(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.

Umpqua Holdings Corporation
Average Balances
(Unaudited)
                                                 Quarter Ended                                                                     % Change
(Dollars in thousands)                           Jun 30,         Mar 31,         Dec 31,           Sep 30,         Jun 30,         Seq.     Year
                                                 2017            2017            2016              2016            2016            Quarter  over
                                                                                                                                            Year
Temporary investments and interest bearing cash  $     125,886   $     804,354   $     1,194,904   $     874,410   $     514,881   (84 )%   (76 )%
Investment securities, taxable                   3,008,079       2,723,576       2,373,652         2,265,883       2,304,998       10  %    31  %
Investment securities, tax-exempt                292,553         286,444         287,359           283,818         280,841         2   %    4   %
Loans held for sale                              392,183         351,570         482,028           481,740         403,964         12  %    (3  )%
Loans and leases                                 18,024,651      17,598,314      17,386,385        17,400,657      17,234,220      2   %    5   %
Total interest earning assets                    21,843,352      21,764,258      21,724,328        21,306,508      20,738,904      0   %    5   %
Goodwill and other intangible assets, net        1,822,032       1,823,799       1,825,491         1,827,405       1,829,407       0   %    0   %
Total assets                                     24,792,869      24,730,285      24,740,986        24,422,986      23,896,315      0   %    4   %
Non-interest bearing demand deposits             5,951,670       5,883,924       5,939,223         5,766,022       5,466,098       1   %    9   %
Interest bearing deposits                        13,037,064      13,119,736      13,026,614        12,836,987      12,644,442      (1  )%   3   %
Total deposits                                   18,988,734      19,003,660      18,965,837        18,603,009      18,110,540      0   %    5   %
Interest bearing liabilities                     14,659,650      14,661,558      14,606,120        14,446,687      14,249,349      0   %    3   %
Shareholders’ equity - common                    3,956,777       3,936,340       3,914,624         3,911,323       3,889,593       1   %    2   %
Tangible common equity (1)                       2,134,745       2,112,541       2,089,133         2,083,918       2,060,186       1   %    4   %
Umpqua Holdings Corporation
Average Balances
(Unaudited)
                                                 Six Months Ended                % Change
(Dollars in thousands)                           Jun 30, 2017    Jun 30, 2016    Year over Year
Temporary investments and interest bearing cash  $     463,245   $     435,777   6       %
Investment securities, taxable                   2,866,614       2,308,294       24      %
Investment securities, tax-exempt                289,515         283,963         2       %
Loans held for sale                              371,989         350,848         6       %
Loans and leases                                 17,812,660      17,121,152      4       %
Total interest earning assets                    21,804,023      20,500,034      6       %
Goodwill and other intangible assets, net        1,822,910       1,830,726       0       %
Total assets                                     24,761,749      23,655,877      5       %
Non-interest bearing demand deposits             5,917,984       5,377,954       10      %
Interest bearing deposits                        13,078,171      12,527,723      4       %
Total deposits                                   18,996,155      17,905,677      6       %
Interest bearing liabilities                     14,660,598      14,113,013      4       %
Shareholders’ equity - common                    3,946,615       3,884,067       2       %
Tangible common equity (1)                       2,123,705       2,053,341       3       %

(1) Average tangible common equity is a non-GAAP financial measure. Average tangible common equity is calculated as average common shareholders’ equity less average goodwill and other intangible assets, net (excluding MSRs).

Umpqua Holdings Corporation
Residential Mortgage Banking Activity
(unaudited)
                                                Quarter Ended                                                                                                 % Change
(Dollars in thousands)                          Jun 30, 2017          Mar 31, 2017          Dec 31, 2016          Sep 30, 2016          Jun 30, 2016          Seq.      Year over
                                                                                                                                                              Quarter   Year
Residential mortgage servicing rights:
Residential mortgage loans serviced for others  $    14,797,242       $    14,541,171       $    14,327,368       $    13,880,660       $    13,564,242       2    %    9     %
MSR asset, at fair value                        141,832               142,344               142,973               114,446               112,095               0    %    27    %
MSR as % of serviced portfolio                  0.96            %     0.98            %     1.00            %     0.82            %     0.83            %
Residential mortgage banking revenue:
Origination and sale                            $    32,385           $    24,647           $    32,386           $    45,631           $    42,083           31   %    (23   )%
Servicing                                       9,839                 9,858                 9,597                 9,401                 8,640                 0    %    14    %
Change in fair value of MSR asset               (8,330          )     (7,671          )     16,465                (7,826          )     (13,940         )     9    %    (40   )%
Total                                           $    33,894           $    26,834           $    58,448           $    47,206           $    36,783           26   %    (8    )%
Closed loan volume:
Closed loan volume - portfolio                  $    312,022          $    245,334          $    250,000          $    305,648          $    365,926          27   %    (15   )%
Closed loan volume - for-sale                   918,200               754,715               1,061,327             1,118,526             1,046,349             22   %    (12   )%
Closed loan volume - total                      $    1,230,222        $    1,000,049        $    1,311,327        $    1,424,174        $    1,412,275        23   %    (13   )%
Gain on sale margin:
Based on for-sale volume                        3.53            %     3.27            %     3.05            %     4.08            %     4.02            %     0.26      (0.49 )
                                                Six Months Ended                            % Change
(Dollars in thousands)                          Jun 30, 2017          Jun 30, 2016          Year over
                                                                                            Year
Residential mortgage banking revenue:
Origination and sale                            $    57,032           $    70,492           (19             )%
Servicing                                       19,697                16,282                21              %
Change in fair value of MSR asset               (16,001         )     (34,565         )     (54             )%
Total                                           $    60,728           $    52,209           16              %
Closed loan volume:
Closed loan volume - portfolio                  $    557,356          $    698,844          (20             )%
Closed loan volume - for-sale                   1,672,915             1,810,425             (8              )%
Closed loan volume - total                      $    2,230,271        $    2,509,269        (11             )%
Gain on sale margin:
Based on for-sale volume                        3.41            %     3.89            %     (0.48           )
nm = not meaningful
Contacts:

Ron Farnsworth
EVP/Chief Financial Officer
Umpqua Holdings Corporation
503-727-4108
ronfarnsworth@umpquabank.com

Bradley Howes
SVP/Director of Investor Relations
Umpqua Holdings Corporation
503-727-4226
bradhowes@umpquabank.com

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