UMPQ Umpqua Holdings Corporation

Net earnings of $61.3 million, or $0.28 per common share Quarterly loan and lease growth of $356.6 million, or 8% annualized Quarterly deposit growth of $392.0 million, or 8% annualized

Umpqua Holdings Corporation (NASDAQ:UMPQ) (the “Company”) reported net earnings available to common shareholders of $61.3 million for the third quarter of 2017, compared to $56.8 million for the second quarter of 2017 and $61.8 million for the third quarter of 2016.  Earnings per diluted common share were $0.28 for the third quarter of 2017, compared to $0.26 for the second quarter of 2017 and $0.28 for the third quarter of 2016.

“The improvement in our third quarter financial performance reflects strong growth in both loans and deposits, continuing on the early success of our balanced growth initiatives,” said Cort O'Haver, president and CEO of Umpqua Holdings Corporation.  “Mortgage banking remained seasonally strong in the quarter, and we managed operating expenses effectively.  Our core growth markets remain vibrant, and we are in good position to generate positive operating leverage from the revenue and efficiency strategies organized under the Umpqua Next Gen initiative.”

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

• $9.2 million negative adjustment related to the fair value change of the MSR asset, compared to negative adjustments of $8.3 million in the prior quarter and $7.8 million in the same period of the prior year.
• $153,000 negative adjustment related to the fair value change of the debt capital market swap derivatives, compared to a negative adjustment of $756,000 in the prior quarter and a gain of $182,000 in the same period of the prior year.
• $6.7 million in merger-related expenses associated with final work on a non-customer facing system conversion, compared to $1.6 million in the prior quarter and $2.0 million in the same period of the prior year.
• $1.6 million of exit or disposal costs, compared to $742,000 in the prior quarter and $1.7 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.

Third Quarter 2017 Highlights (compared to prior quarter):

• Net interest income increased by $8.4 million, or 4%, driven by growth in loans and leases, combined with a 3 basis point increase in net interest margin resulting primarily from higher accretion of the credit discount;
• Provision for loan and lease losses increased by $1.3 million primarily from continued loan growth, and net charge-offs declined by two basis points to 0.20% of average loans and leases (annualized);
• Non-interest income increased by $4.3 million, driven primarily by higher gains from portfolio loan sales;
• Non-interest expense increased by $4.3 million, driven primarily by $5.0 million of higher merger-related expenses associated with final work on a non-customer facing system conversion;
• Gross loan and lease growth of $356.6 million, or 8% annualized;
• Deposit growth of $392.0 million, or 8% annualized;
• Non-performing assets to total assets increased to 0.30%, primarily driven by two larger non-performing loans;
• Estimated total risk-based capital ratio of 14.1% and estimated Tier 1 common to risk weighted assets ratio of 11.1%; and
• Increased the quarterly cash dividend by 12.5% to $0.18 per common share.

Balance SheetTotal consolidated assets were $25.7 billion as of September 30, 2017, compared to $25.3 billion as of June 30, 2017 and $24.7 billion as of September 30, 2016.  Including secured off-balance sheet lines of credit, total available liquidity was $9.5 billion as of September 30, 2017, representing 37% of total assets and 48% of total deposits.

Gross loans and leases were $18.7 billion as of September 30, 2017, an increase of $356.6 million, or 8% annualized, from $18.3 billion as of June 30, 2017.  This increase reflects balanced growth across the Company's commercial, leasing, commercial real-estate and consumer loan portfolios.  During the third quarter of 2017, the Company sold $19.2 million of leases and equipment finance loans and $72.5 million of portfolio residential mortgage loans. 

Total deposits were $19.9 billion as of September 30, 2017, an increase of $392.0 million, or 8% annualized, from $19.5 billion as of June 30, 2017.  This increase was primarily attributable to growth in non-interest bearing demand accounts.

Net Interest IncomeNet interest income was $220.5 million for the third quarter of 2017, an increase of $8.4 million, or 4%, from the prior quarter.   This increase was primarily attributable to the strong growth in loans and leases, along with a 3 basis point increase in net interest margin.  Accretion of the credit discount recorded on acquired loans from Sterling Financial Corporation (“Sterling”) increased by $2.1 million from the prior quarter level, driven by higher accretion on credit impaired loans.

The Company’s net interest margin was 3.94% for the third quarter of 2017, up 3 basis points from 3.91% for the second quarter of 2017.  The linked quarter increase reflects the higher level of accretion on credit impaired loans, along with slightly higher average yields on loans and leases.  This was partially offset by a 3 basis point increase in the cost of funds, and a higher mix of interest-bearing cash, relative to the prior quarter.

Credit QualityThe allowance for loan and lease losses was $139.5 million, or 0.75% of loans and leases, as of September 30, 2017.  During the third quarter of 2017, the Company recorded $8.0 million of accretion related to the credit discount on acquired loans from Sterling, compared to $5.9 million in the prior quarter.  This increase was driven primarily by a higher level of accretion on credit impaired loans associated with higher pay-offs.  As of September 30, 2017, the Sterling purchased non-credit impaired loans had approximately $29.8 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 $27.3 million of remaining total discount.

The provision for loan and lease losses was $12.0 million for the third quarter of 2017, a $1.3 million increase from the prior quarter level, driven primarily by strong loan and lease growth.  Net charge-offs decreased by two basis points to 0.20% of average loans and leases (annualized) for the third quarter of 2017.  As of September 30, 2017, non-performing assets increased to 0.30% of total assets, from 0.23% as of June 30, 2017 and from 0.25% as of September 30, 2016.  This increase reflects two larger loans which moved to non-accrual status during the quarter.

Non-interest IncomeNon-interest income was $75.4 million for the third quarter of 2017, up $4.3 million from the prior quarter.  The current quarter's non-interest income included negative adjustments of $9.2 million and $153,000 related to fair value changes of the MSR asset and the debt capital market swap derivatives, respectively.  This compares to fair value losses of $8.3 million and $756,000 for the MSR asset and debt capital market swap derivatives, respectively, during the second quarter of 2017. 

Net revenue from the origination and sale of residential mortgages was $32.8 million for the third quarter of 2017, up slightly from the prior quarter.  For-sale mortgage origination volume decreased by 3% from the prior quarter, while the home lending gain on sale margin increased by 15 basis points to 3.68% for the third quarter of 2017.  Of the current quarter’s mortgage production, 74% related to purchase activity, compared to 77% for the prior quarter and 68% for the same period in the prior year.

Gain on loan sales increased by $4.7 million from the prior quarter, reflecting a higher level of portfolio loans sales compared to the prior quarter.

Non-interest Expense

Non-interest expense was $188.4 million for the third quarter of 2017, up $4.3 million from the prior quarter level.  This increase was driven primarily by higher merger-related expenses related to final work on a non-customer facing system conversion, consistent with Company's prior guidance.  These were partially offset by a decrease in services, marketing and communications expense. 

CapitalAs of September 30, 2017, the Company’s book value per share increased to $18.10, from $17.98 in the prior quarter, and its tangible book value per common share1 increased to $9.83, from $9.71 in the prior quarter.  During the third quarter of 2017, the Company increased its quarterly cash dividend by 12.5% to $0.18 per common share.

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 September 30, 2017.  The Company remains above current “well-capitalized” regulatory minimums.  The regulatory capital ratios as of September 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 providedunder 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)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016
Total shareholders' equity		$	3,985,260			$	3,958,845			$	3,931,150			$	3,916,795			$	3,920,208
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,651
Other intangible assets, net		31,819				33,508				35,197				36,886				38,753
Tangible common shareholders' equity		$	2,165,790			$	2,137,686			$	2,108,302			$	2,092,258			$	2,093,804
Total assets		$	25,695,663			$	25,257,784			$	24,861,458			$	24,813,119			$	24,744,214
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,651
Other intangible assets, net		31,819				33,508				35,197				36,886				38,753
Tangible assets		$	23,876,193			$	23,436,625			$	23,038,610			$	22,988,582			$	22,917,810
Common shares outstanding at period end		220,225				220,205				220,349				220,177				220,207
Common equity ratio		15.51		%		15.67		%		15.81		%		15.79		%		15.84		%
Tangible common equity ratio		9.07		%		9.12		%		9.15		%		9.10		%		9.14		%
Book value per common share		$	18.10			$	17.98			$	17.84			$	17.79			$	17.80
Tangible book value per common share		$	9.83			$	9.71			$	9.57			$	9.50			$	9.51

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 third quarter 2017 earnings conference call on Thursday, October 19, 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 third quarter 2017 financial results.  There will be a live question-and-answer session following the presentation.  To join the call, please dial (800) 210-9006 ten minutes prior to the start time and enter conference ID: 7723316.  A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 7723316.  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 ability to effectively manage problem credits; our ability 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)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Interest income:
Loans and leases		$	223,321			$	212,998			$	205,996			$	209,812			$	212,037			5	%		5	%
Interest and dividends on investments:
Taxable		13,979				15,220				13,931				10,630				10,779				(8	)%		30	%
Exempt from federal income tax		2,125				2,237				2,242				2,229				2,181				(5	)%		(3	)%
Dividends		357				360				388				336				332				(1	)%		8	%
Temporary investments and interest bearing deposits		934				324				1,557				1,696				1,090				188	%		(14	)%
Total interest income		240,716				231,139				224,114				224,703				226,419				4	%		6	%
Interest expense:
Deposits		12,052				10,641				9,648				9,288				8,999				13	%		34	%
Repurchase agreements and federal funds purchased		81				321				30				32				32				(75	)%		153	%
Term debt		3,491				3,662				3,510				3,413				3,558				(5	)%		(2	)%
Junior subordinated debentures		4,628				4,437				4,201				4,174				3,938				4	%		18	%
Total interest expense		20,252				19,061				17,389				16,907				16,527				6	%		23	%
Net interest income		220,464				212,078				206,725				207,796				209,892				4	%		5	%
Provision for loan and lease losses		11,997				10,657				11,672				13,171				13,091				13	%		(8	)%
Non-interest income:
Service charges on deposits		15,849				15,478				14,729				15,323				15,762				2	%		1	%
Brokerage revenue		3,832				3,903				4,122				4,230				4,129				(2	)%		(7	)%
Residential mortgage banking revenue, net		33,430				33,894				26,834				58,448				47,206				(1	)%		(29	)%
(Loss) gain on investment securities, net		(6		)		35				(2		)		—				—				(117	)%		nm
Gain on loan sales		7,969				3,310				1,754				4,060				1,285				141	%		520	%
Loss on junior subordinated debentures carried at fair value		(1,590		)		(1,572		)		(1,555		)		(1,589		)		(1,590		)		1	%		0	%
BOLI income		2,041				2,089				2,069				2,107				2,116				(2	)%		(4	)%
Other income		13,877				13,982				12,274				16,041				11,802				(1	)%		18	%
Total non-interest income		75,402				71,119				60,225				98,620				80,710				6	%		(7	)%
Non-interest expense:
Salaries and employee benefits		108,732				108,561				106,473				105,406				105,341				0	%		3	%
Occupancy and equipment, net		37,648				36,955				38,673				37,618				38,181				2	%		(1	)%
Intangible amortization		1,689				1,689				1,689				1,867				1,867				0	%		(10	)%
FDIC assessments		4,405				4,447				4,087				3,985				4,109				(1	)%		7	%
(Gain) loss on other real estate owned, net		(99		)		(457		)		82				(197		)		(14		)		(78	)%		607	%
Merger related expenses		6,664				1,640				1,020				3,218				2,011				306	%		231	%
Other expense		29,315				31,186				30,690				31,571				29,692				(6	)%		(1	)%
Total non-interest expense		188,354				184,021				182,714				183,468				181,187				2	%		4	%
Income before provision for income taxes		95,515				88,519				72,564				109,777				96,324				8	%		(1	)%
Provision for income taxes		34,182				31,707				26,561				40,502				34,515				8	%		(1	)%
Net income		61,333				56,812				46,003				69,275				61,809				8	%		(1	)%
Dividends and undistributed earnings allocated to participating securities		14				14				12				33				31				0	%		(55	)%
Net earnings available to common shareholders		$	61,319			$	56,798			$	45,991			$	69,242			$	61,778			8	%		(1	)%
Weighted average basic shares outstanding		220,215				220,310				220,287				220,190				220,291				0	%		0	%
Weighted average diluted shares outstanding		220,755				220,753				220,779				220,756				220,751				0	%		0	%
Earnings per common share – basic		$	0.28			$	0.26			$	0.21			$	0.31			$	0.28			8	%		0	%
Earnings per common share – diluted		$	0.28			$	0.26			$	0.21			$	0.31			$	0.28			8	%		0	%
nm = not meaningful

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
		Nine Months Ended								% Change
(In thousands, except per share data)		Sep 30, 2017				Sep 30, 2016				Year over Year
Interest income
Loans and leases		$	642,315			$	640,255			0	%
Interest and dividends on investments:
Taxable		43,130				35,797				20	%
Exempt from federal income tax		6,604				6,599				0	%
Dividends		1,105				1,063				4	%
Temporary investments and interest bearing deposits		2,815				2,222				27	%
Total interest income		695,969				685,936				1	%
Interest expense
Deposits		32,341				25,952				25	%
Repurchase agreements and federal funds purchased		432				100				332	%
Term debt		10,663				11,592				(8	)%
Junior subordinated debentures		13,266				11,500				15	%
Total interest expense		56,702				49,144				15	%
Net interest income		639,267				636,792				0	%
Provision for loan and lease losses		34,326				28,503				20	%
Non-interest income
Service charges on deposits		46,056				45,945				0	%
Brokerage revenue		11,857				12,803				(7	)%
Residential mortgage banking revenue, net		94,158				99,415				(5	)%
Gain on investment securities, net		27				858				(97	)%
Gain on loan sales		13,033				9,296				40	%
Loss on junior subordinated debentures carried at fair value		(4,717		)		(4,734		)		0	%
BOLI income		6,199				6,407				(3	)%
Other income		40,133				31,330				28	%
Total non-interest income		206,746				201,320				3	%
Non-interest expense
Salaries and employee benefits		323,766				319,424				1	%
Occupancy and equipment, net		113,276				114,326				(1	)%
Intangible amortization		5,067				6,755				(25	)%
FDIC assessments		12,939				11,523				12	%
Gain on other real estate owned, net		(474		)		(82		)		478	%
Merger related expenses		9,324				12,095				(23	)%
Goodwill impairment		—				142				nm
Other expense		91,191				89,504				2	%
Total non-interest expense		555,089				553,687				0	%
Income before provision for income taxes		256,598				255,922				0	%
Provision for income taxes		92,450				92,257				0	%
Net income		164,148				163,665				0	%
Dividends and undistributed earnings
allocated to participating securities		40				92				(57	)%
Net earnings available to common shareholders		$	164,108			$	163,573			0	%
Weighted average basic shares outstanding		220,270				220,313				0	%
Weighted average diluted shares outstanding		220,793				220,936				0	%
Earnings per common share – basic		$	0.75			$	0.74			1	%
Earnings per common share – diluted		$	0.74			$	0.74			0	%
nm = not meaningful

Umpqua Holdings CorporationConsolidated Balance Sheets
(Unaudited)
																						% Change
(In thousands, except per share data)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Assets:
Cash and due from banks		$	304,760			$	320,027			$	262,655			$	331,994			$	364,013			(5	)%		(16	)%
Interest bearing cash and temporary investments		540,806				295,937				421,991				1,117,438				1,102,428				83	%		(51	)%
Investment securities:
Trading, at fair value		11,919				11,467				11,241				10,964				10,866				4	%		10	%
Available for sale, at fair value		3,047,358				3,132,566				3,243,408				2,701,220				2,520,037				(3	)%		21	%
Held to maturity, at amortized cost		3,905				4,017				4,121				4,216				4,302				(3	)%		(9	)%
Loans held for sale		417,470				451,350				372,073				387,318				565,624				(8	)%		(26	)%
Loans and leases		18,677,762				18,321,142				17,829,638				17,508,663				17,392,051				2	%		7	%
Allowance for loan and lease losses		(139,503		)		(136,867		)		(136,292		)		(133,984		)		(133,692		)		2	%		4	%
Loans and leases, net		18,538,259				18,184,275				17,693,346				17,374,679				17,258,359				2	%		7	%
Restricted equity securities		45,509				45,511				45,522				45,528				47,537				0	%		(4	)%
Premises and equipment, net		276,316				288,853				293,133				303,882				306,287				(4	)%		(10	)%
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,651				0	%		0	%
Other intangible assets, net		31,819				33,508				35,197				36,886				38,753				(5	)%		(18	)%
Residential mortgage servicing rights, at fair value		141,225				141,832				142,344				142,973				114,446				0	%		23	%
Other real estate owned		4,160				4,804				6,518				6,738				8,309				(13	)%		(50	)%
Bank owned life insurance		305,572				303,894				301,777				299,673				297,561				1	%		3	%
Deferred tax assets, net		—				—				8,464				34,322				27,587				nm			(100	)%
Other assets		238,934				252,092				232,017				227,637				290,454				(5	)%		(18	)%
Total assets		$	25,695,663			$	25,257,784			$	24,861,458			$	24,813,119			$	24,744,214			2	%		4	%
Liabilities:
Deposits		$	19,851,910			$	19,459,950			$	19,167,293			$	19,020,985			$	18,918,780			2	%		5	%
Securities sold under agreements to repurchase		321,542				330,189				304,280				352,948				309,463				(3	)%		4	%
Term debt		852,306				852,219				852,308				852,397				902,678				0	%		(6	)%
Junior subordinated debentures, at fair value		266,875				265,423				263,605				262,209				260,114				1	%		3	%
Junior subordinated debentures, at amortized cost		100,690				100,770				100,851				100,931				101,012				0	%		0	%
Deferred tax liability, net		51,423				34,296				—				—				—				50	%		100	%
Other liabilities		265,657				256,092				241,971				306,854				331,959				4	%		(20	)%
Total liabilities		21,710,403				21,298,939				20,930,308				20,896,324				20,824,006				2	%		4	%
Shareholders' equity:
Common stock		3,516,558				3,514,094				3,516,537				3,515,299				3,514,858				0	%		0	%
Retained earnings		476,226				454,802				433,417				422,839				388,678				5	%		23	%
Accumulated other comprehensive (loss) income		(7,524		)		(10,051		)		(18,804		)		(21,343		)		16,672				(25	)%		(145	)%
Total shareholders' equity		3,985,260				3,958,845				3,931,150				3,916,795				3,920,208				1	%		2	%
Total liabilities and shareholders' equity		$	25,695,663			$	25,257,784			$	24,861,458			$	24,813,119			$	24,744,214			2	%		4	%
Common shares outstanding at period end		220,225				220,205				220,349				220,177				220,207				0	%		0	%
Book value per common share		$	18.10			$	17.98			$	17.84			$	17.79			$	17.80			1	%		2	%
Tangible book value per common share		$	9.83			$	9.71			$	9.57			$	9.50			$	9.51			1	%		3	%
Tangible equity - common		$	2,165,790			$	2,137,686			$	2,108,302			$	2,092,258			$	2,093,804			1	%		3	%
Tangible common equity to tangible assets		9.07		%		9.12		%		9.15		%		9.10		%		9.14		%		(0.05	)		(0.07	)

Umpqua Holdings Corporation
Loan and Lease Portfolio
(Unaudited)
(Dollars in thousands)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Loans and leases:
Commercial real estate:
Non-owner occupied term, net		$	3,475,243			$	3,401,679			$	3,410,914			$	3,330,442			$	3,280,660			2	%		6	%
Owner occupied term, net		2,467,995				2,593,395				2,584,183				2,599,055				2,573,942				(5	)%		(4	)%
Multifamily, net		2,993,203				2,964,851				2,885,164				2,858,956				2,968,019				1	%		1	%
Commercial construction, net		521,666				464,690				471,007				463,625				388,934				12	%		34	%
Residential development, net		186,400				165,956				145,479				142,984				127,447				12	%		46	%
Commercial:
Term, net		1,819,664				1,686,597				1,620,311				1,508,780				1,480,173				8	%		23	%
Lines of credit and other, net		1,134,045				1,153,409				1,114,160				1,116,259				1,142,946				(2	)%		(1	)%
Leases and equipment finance, net		1,137,732				1,082,651				1,000,376				950,588				927,857				5	%		23	%
Residential real estate:
Mortgage, net		3,094,361				3,021,331				2,916,924				2,887,971				2,868,337				2	%		8	%
Home equity lines and loans, net		1,079,931				1,056,848				1,015,138				1,011,844				1,008,219				2	%		7	%
Consumer and other, net		767,522				729,735				665,982				638,159				625,517				5	%		23	%
Total, net of deferred fees and costs		$	18,677,762			$	18,321,142			$	17,829,638			$	17,508,663			$	17,392,051			2	%		7	%
Loan and leases mix:
Commercial real estate:
Non-owner occupied term, net		19		%		19		%		19		%		19		%		19		%
Owner occupied term, net		13		%		14		%		14		%		15		%		15		%
Multifamily, net		16		%		16		%		16		%		16		%		17		%
Commercial construction, net		3		%		3		%		3		%		3		%		2		%
Residential development, net		1		%		1		%		1		%		1		%		1		%
Commercial:
Term, net		10		%		9		%		9		%		9		%		8		%
Lines of credit and other, net		6		%		6		%		6		%		6		%		7		%
Leases and equipment finance, net		6		%		6		%		6		%		5		%		5		%
Residential real estate:
Mortgage, net		16		%		16		%		16		%		16		%		16		%
Home equity lines and loans, net		6		%		6		%		6		%		6		%		6		%
Consumer and other, net		4		%		4		%		4		%		4		%		4		%
Total		100		%		100		%		100		%		100		%		100		%

Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
(Dollars in thousands)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Deposits:
Demand, non-interest bearing		$	6,571,471			$	6,112,480			$	6,021,585			$	5,861,469			$	5,993,793			8	%		10	%
Demand, interest bearing		2,394,240				2,371,386				2,327,226				2,296,532				2,218,782				1	%		8	%
Money market		6,700,261				6,755,707				6,784,442				6,932,717				6,841,700				(1	)%		(2	)%
Savings		1,444,801				1,427,677				1,400,330				1,325,757				1,303,816				1	%		11	%
Time		2,741,137				2,792,700				2,633,710				2,604,510				2,560,689				(2	)%		7	%
Total		$	19,851,910			$	19,459,950			$	19,167,293			$	19,020,985			$	18,918,780			2	%		5	%
Total core deposits (1)		$	18,005,730			$	17,561,956			$	17,427,832			$	17,318,003			$	17,257,663			3	%		4	%
Deposit mix:
Demand, non-interest bearing		33		%		32		%		31		%		31		%		31		%
Demand, interest bearing		12		%		12		%		12		%		12		%		12		%
Money market		34		%		35		%		36		%		36		%		36		%
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		394,755				389,767				385,859				384,040				382,687
Demand, interest bearing		79,899				80,594				81,570				82,520				83,501
Money market		55,659				55,795				55,903				56,031				56,128
Savings		162,556				161,369				160,323				159,080				158,760
Time		47,129				47,339				47,365				47,705				47,689
Total		739,998				734,864				731,020				729,376				728,765
Average balance per account:
Demand, non-interest bearing		$	16.6			$	15.7			$	15.6			$	15.3			$	15.7
Demand, interest bearing		30.0				29.4				28.5				27.8				26.6
Money market		120.4				121.1				121.4				123.7				121.9
Savings		8.9				8.8				8.7				8.3				8.2
Time		58.2				59.0				55.6				54.6				53.7
Total		$	26.8			$	26.5			$	26.2			$	26.1			$	26.0

(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)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Non-performing assets:
Loans and leases on non-accrual status		$	44,573			$	26,566			$	28,915			$	27,765			$	27,791			68	%		60	%
Loans and leases past due 90+ days and accruing (1)		29,073				27,252				23,421				28,369				26,189				7	%		11	%
Total non-performing loans and leases		73,646				53,818				52,336				56,134				53,980				37	%		36	%
Other real estate owned		4,160				4,804				6,518				6,738				8,309				(13	)%		(50	)%
Total non-performing assets		$	77,806			$	58,622			$	58,854			$	62,872			$	62,289			33	%		25	%
Performing restructured loans and leases		$	45,813			$	52,861			$	43,029			$	40,667			$	36,645			(13	)%		25	%
Loans and leases past due 31-89 days		$	32,251			$	31,153			$	49,530			$	30,425			$	39,708			4	%		(19	)%
Loans and leases past due 31-89 days to total loans and leases		0.17		%		0.17		%		0.28		%		0.17		%		0.23		%
Non-performing loans and leases to total loans and leases (1)		0.39		%		0.29		%		0.29		%		0.32		%		0.31		%
Non-performing assets to total assets (1)		0.30		%		0.23		%		0.24		%		0.25		%		0.25		%

(1) Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $12.3 million, $16.3 million, $5.3 million, $10.9 million, and $7.3 million at September 30, 2017, June 30, 2017, March 31, 2016, December 31, 2016, and September 30, 2016, respectively.

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Allowance for loan and lease losses:
Balance beginning of period		$	136,867			$	136,292			$	133,984			$	133,692			$	131,042
Provision for loan and lease losses		11,997				10,657				11,672				13,171				13,091				13	%		(8	)%
Charge-offs		(13,222		)		(13,944		)		(13,002		)		(16,303		)		(13,088		)		(5	)%		1	%
Recoveries		3,861				3,862				3,638				3,424				2,647				0	%		46	%
Net charge-offs		(9,361		)		(10,082		)		(9,364		)		(12,879		)		(10,441		)		(7	)%		(10	)%
Total allowance for loan and lease losses		139,503				136,867				136,292				133,984				133,692				2	%		4	%
Reserve for unfunded commitments		3,932				3,816				3,495				3,611				3,536				3	%		11	%
Total allowance for credit losses		$	143,435			$	140,683			$	139,787			$	137,595			$	137,228			2	%		5	%
Net charge-offs to average loans and leases (annualized)		0.20		%		0.22		%		0.22		%		0.29		%		0.24		%
Recoveries to gross charge-offs		29.20		%		27.70		%		27.98		%		21.00		%		20.22		%
Allowance for loan and lease losses to loans and leases		0.75		%		0.75		%		0.76		%		0.77		%		0.77		%
Allowance for credit losses to loans and leases		0.77		%		0.77		%		0.78		%		0.79		%		0.79		%

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Nine Months Ended								% Change
(Dollars in thousands)		Sep 30, 2017				Sep 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		34,326				28,503				20	%
Charge-offs		(40,168		)		(33,620		)		19	%
Recoveries		11,361				8,487				34	%
Net charge-offs		(28,807		)		(25,133		)		15	%
Total allowance for loan and lease losses		139,503				133,692				4	%
Reserve for unfunded commitments		3,932				3,536				11	%
Total allowance for credit losses		$	143,435			$	137,228			5	%
Net charge-offs to average loans and leases (annualized)		0.21		%		0.20		%
Recoveries to gross charge-offs		28.28		%		25.24		%

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Quarter Ended															% Change
		Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Seq. Quarter			Year over Year
Average Rates:
Yield on loans and leases		4.70	%		4.67	%		4.65	%		4.70	%		4.75	%		0.03			(0.05	)
Yield on loans held for sale		3.89	%		3.26	%		3.86	%		3.79	%		3.79	%		0.63			0.10
Yield on taxable investments		2.00	%		2.07	%		2.10	%		1.85	%		1.96	%		(0.07	)		0.04
Yield on tax-exempt investments (1)		4.59	%		4.64	%		4.76	%		4.72	%		4.68	%		(0.05	)		(0.09	)
Yield on interest bearing cash and temporary investments		1.47	%		1.03	%		0.79	%		0.56	%		0.50	%		0.44			0.97
Total yield on earning assets (1)		4.30	%		4.26	%		4.18	%		4.14	%		4.26	%		0.04			0.04
Cost of interest bearing deposits		0.36	%		0.33	%		0.30	%		0.28	%		0.28	%		0.03			0.08
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.10	%		0.32	%		0.04	%		0.04	%		0.04	%		(0.22	)		0.06
Cost of term debt		1.63	%		1.72	%		1.67	%		1.53	%		1.57	%		(0.09	)		0.06
Cost of junior subordinated debentures		5.02	%		4.88	%		4.70	%		4.59	%		4.36	%		0.14			0.66
Total cost of interest bearing liabilities		0.55	%		0.52	%		0.48	%		0.46	%		0.46	%		0.03			0.09
Net interest spread (1)		3.75	%		3.74	%		3.70	%		3.68	%		3.80	%		0.01			(0.05	)
Net interest margin (1)		3.94	%		3.91	%		3.85	%		3.83	%		3.95	%		0.03			(0.01	)
Performance Ratios:
Return on average assets		0.96	%		0.92	%		0.75	%		1.11	%		1.01	%		0.04			(0.05	)
Return on average tangible assets		1.04	%		0.99	%		0.81	%		1.20	%		1.09	%		0.05			(0.05	)
Return on average common equity		6.10	%		5.76	%		4.74	%		7.04	%		6.28	%		0.34			(0.18	)
Return on average tangible common equity		11.23	%		10.67	%		8.83	%		13.19	%		11.79	%		0.56			(0.56	)
Efficiency ratio – Consolidated		63.43	%		64.71	%		68.15	%		59.65	%		62.11	%		(1.28	)		1.32
Efficiency ratio – Bank		61.42	%		62.45	%		65.75	%		57.96	%		60.45	%		(1.03	)		0.97

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

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Nine Months Ended						% Change
		Sep 30, 2017			Sep 30, 2016			Year over Year
Average Rates:
Yield on loans and leases		4.67	%		4.88	%		(0.21	)
Yield on loans held for sale		3.67	%		3.86	%		(0.19	)
Yield on taxable investments		2.06	%		2.14	%		(0.08	)
Yield on tax-exempt investments (1)		4.66	%		4.71	%		(0.05	)
Yield on interest bearing cash and temporary investments		0.96	%		0.51	%		0.45
Total yield on earning assets (1)		4.25	%		4.43	%		(0.18	)
Cost of interest bearing deposits		0.33	%		0.27	%		0.06
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.16	%		0.04	%		0.12
Cost of term debt		1.67	%		1.72	%		(0.05	)
Cost of junior subordinated debentures		4.87	%		4.29	%		0.58
Total cost of interest bearing liabilities		0.52	%		0.46	%		0.06
Net interest spread (1)		3.73	%		3.97	%		(0.24	)
Net interest margin (1)		3.91	%		4.12	%		(0.21	)
Performance Ratios:
Return on average assets		0.88	%		0.91	%		(0.03	)
Return on average tangible assets		0.95	%		0.99	%		(0.04	)
Return on average common equity		5.54	%		5.61	%		(0.07	)
Return on average tangible common equity		10.26	%		10.59	%		(0.33	)
Efficiency ratio – Consolidated		65.35	%		65.79	%		(0.44	)
Efficiency ratio – Bank		63.13	%		63.96	%		(0.83	)

(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)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Temporary investments and interest bearing cash		$	253,015			$	125,886			$	804,354			$	1,194,904			$	874,410			101	%		(71	)%
Investment securities, taxable		2,867,292				3,008,079				2,723,576				2,373,652				2,265,883				(5	)%		27	%
Investment securities, tax-exempt		281,139				292,553				286,444				287,359				283,818				(4	)%		(1	)%
Loans held for sale		420,282				392,183				351,570				482,028				481,740				7	%		(13	)%
Loans and leases		18,537,827				18,024,651				17,598,314				17,386,385				17,400,657				3	%		7	%
Total interest earning assets		22,359,555				21,843,352				21,764,258				21,724,328				21,306,508				2	%		5	%
Goodwill and other intangible assets, net		1,820,394				1,822,032				1,823,799				1,825,491				1,827,405				0	%		0	%
Total assets		25,311,994				24,792,869				24,730,285				24,740,986				24,422,986				2	%		4	%
Non-interest bearing demand deposits		6,354,591				5,951,670				5,883,924				5,939,223				5,766,022				7	%		10	%
Interest bearing deposits		13,155,462				13,037,064				13,119,736				13,026,614				12,836,987				1	%		2	%
Total deposits		19,510,053				18,988,734				19,003,660				18,965,837				18,603,009				3	%		5	%
Interest bearing liabilities		14,705,842				14,659,650				14,661,558				14,606,120				14,446,687				0	%		2	%
Shareholders’ equity - common		3,986,868				3,956,777				3,936,340				3,914,624				3,911,323				1	%		2	%
Tangible common equity (1)		2,166,474				2,134,745				2,112,541				2,089,133				2,083,918				1	%		4	%

Umpqua Holdings CorporationAverage Balances
(Unaudited)
		Nine Months Ended								% Change
(Dollars in thousands)		Sep 30, 2017				Sep 30, 2016				Year over Year
Temporary investments and interest bearing cash		$	392,399			$	583,056			(33	)%
Investment securities, taxable		2,866,842				2,294,054				25	%
Investment securities, tax-exempt		286,693				283,914				1	%
Loans held for sale		388,263				394,797				(2	)%
Loans and leases		18,057,039				17,215,000				5	%
Total interest earning assets		21,991,236				20,770,821				6	%
Goodwill and other intangible assets, net		1,822,063				1,829,611				0	%
Total assets		24,947,180				23,913,446				4	%
Non-interest bearing demand deposits		6,065,119				5,508,255				10	%
Interest bearing deposits		13,104,218				12,631,564				4	%
Total deposits		19,169,337				18,139,819				6	%
Interest bearing liabilities		14,675,845				14,225,049				3	%
Shareholders’ equity - common		3,960,180				3,893,218				2	%
Tangible common equity (1)		2,138,117				2,063,607				4	%

(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)		Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Sep 30, 2016				Seq. Quarter			Year over Year
Residential mortgage servicing rights:
Residential mortgage loans serviced for others		$	15,007,942			$	14,797,242			$	14,541,171			$	14,327,368			$	13,880,660			1	%		8	%
MSR asset, at fair value		141,225				141,832				142,344				142,973				114,446				0	%		23	%
MSR as % of serviced portfolio		0.94		%		0.96		%		0.98		%		1.00		%		0.82		%		(2	)%		15	%
Residential mortgage banking revenue:
Origination and sale		$	32,784			$	32,385			$	24,647			$	32,386			$	45,631			1	%		(28	)%
Servicing		9,879				9,839				9,858				9,597				9,401				0	%		5	%
Change in fair value of MSR asset		(9,233		)		(8,330		)		(7,671		)		16,465				(7,826		)		11	%		18	%
Total		$	33,430			$	33,894			$	26,834			$	58,448			$	47,206			(1	)%		(29	)%
Closed loan volume:
Closed loan volume - portfolio		$	336,362			$	312,022			$	245,334			$	250,000			$	305,648			8	%		10	%
Closed loan volume - for-sale		891,063				918,200				754,715				1,061,327				1,118,526				(3	)%		(20	)%
Closed loan volume - total		$	1,227,425			$	1,230,222			$	1,000,049			$	1,311,327			$	1,424,174			0	%		(14	)%
Gain on sale margin:
Based on for-sale volume		3.68		%		3.53		%		3.27		%		3.05		%		4.08		%		0.15			(0.40	)
		Nine Months Ended								% Change
(Dollars in thousands)		Sep 30, 2017				Sep 30, 2016				Year over Year
Residential mortgage banking revenue:
Origination and sale		$	89,816			$	116,123			(23		)%
Servicing		29,576				25,683				15		%
Change in fair value of MSR asset		(25,234		)		(42,391		)		(40		)%
Total		$	94,158			$	99,415			(5		)%
Closed loan volume:
Closed loan volume - portfolio		$	893,718			$	1,004,492			(11		)%
Closed loan volume - for-sale		2,563,978				2,928,951				(12		)%
Closed loan volume - total		$	3,457,696			$	3,933,443			(12		)%
Gain on sale margin:
Based on for-sale volume		3.50		%		3.96		%		(0.46		)

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