UMPQ Umpqua Holdings Corporation

Net earnings of $56.8 million, or $0.26 per common shareStrong quarterly loan and lease growth of $491.5 million, or 11% annualizedNet interest margin of 3.91%, up 6 basis points from the prior quarter

Umpqua Holdings Corporation (NASDAQ: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 SheetTotal 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 IncomeNet 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 QualityThe 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 IncomeNon-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. 

CapitalAs 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 share1 increased 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.

1 "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 MeasuresIn 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 (NASDAQ: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 StatementsThis 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 30,2017				Mar 31,2017				Dec 31,2016				Sep 30,2016				Jun 30,2016				Seq.Quarter			YearoverYear
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 CorporationConsolidated 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.Quarter			YearoverYear
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.Quarter			YearoverYear
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.Quarter			YearoverYear
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 30,2017				Mar 31,2017				Dec 31,2016				Sep 30,2016				Jun 30,2016				Seq.Quarter			YearoverYear
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 30,2017				Mar 31,2017				Dec 31,2016				Sep 30,2016				Jun 30,2016				Seq.Quarter			Year overYear
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 30,2017			Mar 31,2017			Dec 31,2016			Sep 30,2016			Jun 30,2016			Seq.Quarter			Yearover 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 overYear
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 CorporationAverage Balances
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Jun 30,2017				Mar 31,2017				Dec 31,2016				Sep 30,2016				Jun 30,2016				Seq.Quarter			YearoverYear
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 CorporationAverage 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 CorporationResidential 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.Quarter			Year overYear
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 overYear
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