Fourth quarter 2016 net earnings of $0.31 per share and full-year 2016 of $1.05 per share Operating earnings¹ of $0.27 per share for fourth quarter 2016 and $1.19 per share for full-year 2016

PORTLAND, Ore., Jan. 25, 2017 (GLOBE NEWSWIRE) -- Umpqua Holdings Corporation (NASDAQ:UMPQ) (the “Company”) reported net earnings available to common shareholders of $69.2 million for the fourth quarter of 2016, up from $61.8 million for the third quarter of 2016 and $62.9 million for the fourth quarter of 2015.  Earnings per diluted common share were $0.31 for the fourth quarter of 2016, up from $0.28 for the third quarter of 2016 and $0.28 for the fourth quarter of 2015.

For the twelve months ended December 31, 2016, the Company reported net earnings available to common shareholders of $232.8 million, or $1.05 per diluted common share, up from $222.2 million, or $1.01 per diluted common share, for the twelve months ended December 31, 2015.

“We continued to build positive momentum during 2016; restructuring the balance sheet, entering new markets, expanding our product offerings, and enhancing the digital customer experience, while streamlining operations and demonstrating expense discipline,” said Cort O'Haver, president and CEO of Umpqua Holdings Corporation.  “With all of the heavy lifting we completed over the past two years, I believe there is now a tremendous opportunity in front of us.  Given Umpqua's unique franchise and strong brand recognition, combined with the size of the balance sheet and attractive footprint, I feel we are well-positioned to capitalize on that opportunity.  I look forward to sharing more details over the coming year.”

Reconciliation of Net Earnings (GAAP) to Operating Earnings (non-GAAP):
The Company’s financial results include several significant items which have been excluded in the presentation of operating earnings, which is a non-GAAP financial measure.  A summary of these items, and a reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), is presented below.  More information is provided in the non-GAAP financial measures section of this release, which we urge you to read.

		Quarter Ended
(In thousands, except per share data)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015
Net earnings available to common shareholders		$	69,242			$	61,778			$	54,255			$	47,540			$	62,923
Adjustments:
(Gain) loss from change in fair value of MSR asset		(16,465		)		7,826				13,940				20,625				469
Gain on investment securities, net		—				—				(162		)		(696		)		(2,567		)
Net loss on junior subordinated debentures carried at fair value		1,589				1,590				1,572				1,572				1,589
(Gain) loss from change in fair value of swap derivatives		(4,601		)		(182		)		1,493				1,793				(715		)
Merger related expenses		3,218				2,011				6,634				3,450				3,712
Goodwill impairment		—				—				—				142				—
Exit or disposal costs		1,207				1,728				1,434				347				—
Total pre-tax adjustments		(15,052		)		12,973				24,911				27,233				2,488
Income tax effect (1)		6,020				(5,188		)		(9,965		)		(10,836		)		(995		)
Net adjustments		(9,032		)		7,785				14,946				16,397				1,493
Operating earnings		$	60,210			$	69,563			$	69,201			$	63,937			$	64,416
Earnings per diluted share:
Earnings available to common shareholders		$	0.31			$	0.28			$	0.25			$	0.22			$	0.28
Operating earnings		$	0.27			$	0.32			$	0.31			$	0.29			$	0.29
(1)  Income tax effect of operating earnings adjustments at 40% for tax-deductible items.

Full-Year 2016 Highlights (comparisons are to prior year):

• Total revenue of $1.1 billion, unchanged from prior year as increased mortgage banking revenues were offset by lower average yields on interest-earning assets, along with a lower level of interest income arising from the accretion of the credit discount recorded on acquired loans;
  
• Total non-interest expense decreased by 3%, reflecting lower merger-related expenses and lower salaries and benefits expense, partially offset by higher mortgage banking expenses due to the increase in mortgage originations;
  
• Gross loan and lease growth of $642 million, or 4% (excluding the impact of loan sales, loan growth of $1.3 billion, or 8%); 
  
• Deposit growth of $1.3 billion, or 7%; and
  
• Paid dividends of $0.64 per common share, repurchased 635,000 shares of stock, and grew tangible book value¹ by 4%, or $0.34 per share.
  

Fourth Quarter 2016 Highlights (comparisons are to prior quarter):

• Total revenue increased by $15.8 million:
  - Net interest income decreased by $2.1 million, reflecting lower accretion of the credit discount recorded on acquired loans, lower prepayment fee income and higher premium amortization on investment securities, partially offset by growth in in interest-earning assets;
  - Non-interest income increased by $17.9 million, driven primarily by gains related to fair value changes of the mortgage servicing rights ("MSR") asset and debt capital market swap derivatives, partially offset by lower revenues from the origination and sale of mortgages due to a decrease in the home lending gain on sale margin;
• Non-interest expense increased by $2.3 million due primarily to higher merger-related and other expense;
  
• Gross loans and leases grew to $17.5 billion;
  
• Deposits grew to $19.0 billion;
  
• Stable asset quality, with non-performing assets to total assets of 0.25%;
  
• Estimated total risk-based capital ratio of 14.6% and estimated Tier 1 common to risk weighted assets ratio of 11.4%; 
  
• Declared quarterly cash dividend of $0.16 per common share; and
  
• Repurchased 75,000 shares of common stock for $1.3 million.
  

Balance Sheet
Total consolidated assets increased to $24.8 billion as of December 31, 2016, compared to $24.7 billion as of September 30, 2016 and $23.4 billion as of December 31, 2015.  Including secured off-balance sheet lines of credit, the Company had total available liquidity of $9.2 billion as of December 31, 2016, representing 37% of total assets and 49% of total deposits.

Gross loans and leases were up 1% from the prior quarter to $17.5 billion as of December 31, 2016, driven by growth in the commercial and commercial real estate portfolios, partially offset by a decline in multi-family loans.  During the fourth quarter of 2016, the Company sold $26.9 million of leasing and equipment finance loans.

Total deposits increased 1% from the prior quarter to $19.0 billion as of December 31, 2016.  This increase was primarily attributable to growth in interest bearing demand and money market accounts, partially offset by lower non-interest bearing demand deposits.

Net Interest Income
Net interest income was $207.8 million for the fourth quarter of 2016, down $2.1 million from the prior quarter.  This decrease was primarily attributable to a $1.4 million linked quarter decrease in interest income arising from the accretion of the credit discount recorded on acquired loans, as well as lower prepayment fee income and lower average yields on loans and leases and taxable investments.  These items were partially offset by growth in average interest-earning assets.

The Company’s net interest margin was 3.83% for the fourth quarter of 2016, down from 3.95% for the third quarter of 2016.  The linked quarter decrease reflects the lower level of accretion of the credit discount recorded on acquired loans, as well as lower average yields on taxable investments and loans and leases.  The lower average yield on taxable investments was primarily attributable to $1.1 million increase in premium amortization from faster prepayment speeds on the Company's agency mortgage-backed securities portfolio.  This trend occurred prior to the increase in long-term mortgage interest rates late in the quarter.

Credit Quality
Under acquisition accounting, loans (including those considered non-performing) acquired from Sterling were recorded at their estimated fair value, and the related allowance for loan losses was eliminated.  As a result, the Company wrote down the value of the loan and lease portfolio acquired from Sterling as of the acquisition date.  The credit portion of the fair value mark is not reflected in the reported allowance for loan and lease losses, or its related allowance coverage ratios, but we believe should be considered when comparing the current quarter ratios to similar ratios in periods prior to the acquisition of Sterling.

Loans acquired with significantly deteriorated credit quality are accounted for as purchased credit impaired pools.  Accordingly, loans included in the purchased credit impaired pools are not reported as non-performing loans based upon their individual performance status.

During the fourth quarter of 2016, the Company reported $7.7 million of accretion related to the Sterling credit discount in interest income, as compared to $9.1 million in the prior quarter.  As of December 31, 2016, the purchased non-credit impaired loans had approximately $43.9 million of remaining credit discount that will accrete into interest income over the life of the loans, and the purchased credit impaired loan pools had approximately $32.2 million of remaining total discount.

The allowance for loan and lease losses was $134.0 million, or 0.77% of loans and leases, as of December 31, 2016.  To provide better comparability to prior periods, this pro-forma ratio would have been approximately 1.2% after grossing up the allowance for loan and lease losses and the loans and leases by the amount of the credit discount remaining as of quarter-end.  This compares to a pro-forma ratio of approximately 1.3% as of September 30, 2016.

The provision for loan and lease losses increased slightly from the prior quarter to $13.2 million, driven primarily by higher net charge-offs, which increased to $12.9 million for the fourth quarter of 2016, compared to $10.4 million for the third quarter of 2016.  As of December 31, 2016, non-performing assets represented 0.25% of total assets, unchanged from September 30, 2016 and down from 0.28% as of December 31, 2015. 

Non-interest Income
Non-interest income was $98.6 million for the fourth quarter of 2016, up $17.9 million from the prior quarter.  This increase reflects income of $16.5 million and $4.6 million related to the fair value change of the MSR asset and the debt capital market swap derivatives, respectively, both attributable to the increase in long-term interest rates late in the quarter.  This compares to a loss of $7.8 million on the MSR asset, and a gain of $0.2 million on the debt capital markets swap derivative, for the third quarter of 2016.

Excluding the impacts of the changes in fair value on the MSR asset and debt capital markets swap derivative, non-interest income decreased by $10.8 million from the prior quarter, driven primarily by lower revenue from the origination and sale of residential mortgages.  This decrease was driven by a lower home lending gain on sale margin, which decreased to 3.05%, compared to 4.08% in the prior quarter, along with a 5% linked quarter decrease in for sale mortgage originations.  The decrease in home lending gain on sale margin was attributable to the dramatic increase in mortgage rates and a decline in the overall locked loan pipeline.  Of the current quarter’s mortgage production, 63% related to purchase activity, as compared to 68% for the prior quarter and 63% for the same period in the prior year.

Revenue related to the servicing of residential mortgage loans increased by 2% from the prior quarter, reflecting growth in the residential mortgage loans serviced for others portfolio.

Non-interest Expense
Non-interest expense was $183.5 million for the fourth quarter of 2016, which included $3.2 million of merger-related expenses and $1.2 million of exit or disposal costs.  This compares to $181.2 million, including $2.0 million of merger-related expenses and $1.7 million of exit or disposal costs for the third quarter of 2016.

Excluding the impact of merger-related and exit or disposal costs, non-interest expense increased by $1.6 million from the prior quarter.  The linked quarter increase was driven primarily by higher expenses across several categories, including employee group insurance and benefits, severance, technology and marketing expense, as well as lower cost deferrals.  This was partially offset by a $2.9 million linked quarter decline in mortgage banking expenses, consistent with the lower level of mortgage origination volume in the quarter.

Capital
As of December 31, 2016, the Company’s tangible book value per common share¹ decreased slightly to $9.50.  During the fourth quarter of 2016, the Company repurchased 75,000 shares of common stock for $1.3 million.  For the twelve months ended 2016, the Company repurchased 635,000 shares for $9.8 million.

The Company’s estimated total risk-based capital ratio was 14.6% and its estimated Tier 1 common to risk weighted assets ratio was 11.4% as of December 31, 2016.  The Company remains above current “well-capitalized” regulatory minimums.  The regulatory capital ratios as of December 31, 2016 are estimates, pending completion and filing of the Company’s regulatory reports.

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 certain 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.

The Company incurs significant expenses related to the completion and integration of mergers and acquisitions.  It also recognizes gains or losses on its junior subordinated debentures carried at fair value resulting from changes in interest rates and the estimated market credit risk adjusted spread that do not directly correlate with the Company’s operating performance.  Additionally, it may recognize goodwill impairment losses that have no direct effect on the Company’s or the Bank’s cash balances, liquidity, or regulatory capital ratios.  The Company recognizes gains and losses related to the change in the fair value of its MSR, which are primarily tied to movements in interest rates, and are not indicative of the fundamental operating activities for the period. It also recognizes gains or losses related to the change in the fair value of its swap derivatives, which are driven by movements in interest rates and are beyond our control. On occasion, the Company may sell certain securities in its investment portfolio, and recognize an associated gain or loss, which can be highly discretionary based on the timing of the sales, market opportunities, and interest rates, and therefore are not reflective of the Company's operating performance. The Company also may incur expenses related to the exit or disposal of certain business activities, such as the consolidation of bank branches, which do not reflect the on-going operating performance of the Company. Lastly, the Company may recognize one-time bargain purchase gains on certain acquisitions that are not reflective of the Company’s on-going earnings power.

Accordingly, management believes that our operating results are best measured on a comparative basis excluding the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures measured at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of swap derivatives, net gains or losses on investment securities, exit or disposal costs and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains. The Company defines operating earnings as earnings available to common shareholders before these items, and calculates operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.

The following table provides the reconciliation of earnings available to common shareholders (GAAP) to operating earnings (non-GAAP), and earnings per diluted common share (GAAP) to operating earnings per diluted share (non-GAAP) for the periods presented:

		Quarter Ended																				% Change
(Dollars in thousands, except per share data)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Net earnings available to common shareholders		$	69,242			$	61,778			$	54,255			$	47,540			$	62,923			12	%		10	%
Adjustments:
(Gain) loss from change in fair value of MSR asset		(16,465		)		7,826				13,940				20,625				469				(310	)%		nm
Gain on investment securities, net		—				—				(162		)		(696		)		(2,567		)		0	%		(100	)%
Net loss on junior subordinated debentures carried at fair value		1,589				1,590				1,572				1,572				1,589				0	%		0	%
(Gain) loss from change in fair value of swap derivatives		(4,601		)		(182		)		1,493				1,793				(715		)		nm			543	%
Merger related expenses		3,218				2,011				6,634				3,450				3,712				60	%		(13	)%
Goodwill impairment		—				—				—				142				—				nm			nm
Exit or disposal costs		1,207				1,728				1,434				347				—				(30	)%		nm
Total pre-tax adjustments		(15,052		)		12,973				24,911				27,233				2,488				(216	)%		(705	)%
Income tax effect(1)		6,020				(5,188		)		(9,965		)		(10,836		)		(995		)		(216	)%		(705	)%
Net adjustments		(9,032		)		7,785				14,946				16,397				1,493				(216	)%		(705	)%
Operating earnings		$	60,210			$	69,563			$	69,201			$	63,937			$	64,416			(13	)%		(7	)%
Earnings per diluted share:
Earnings available to common shareholders		$	0.31			$	0.28			$	0.25			$	0.22			$	0.28			11	%		11	%
Operating earnings		$	0.27			$	0.32			$	0.31			$	0.29			$	0.29			(16	)%		(7	)%
		Year Ended								% Change
		Dec 31, 2016				Dec 31, 2015				Year over  Year
Net earnings available to common shareholders		$	232,815			$	222,182			5		%
Adjustments:
Loss from change in fair value of MSR asset		25,926				20,723				25		%
Gain on investment securities, net		(858		)		(2,922		)		(71		)%
Net loss on junior subordinated debentures carried at fair value		6,323				6,306				0		%
Gain from change in fair value of swap derivatives		(1,497		)		(162		)		824		%
Merger related expenses		15,313				45,582				(66		)%
Goodwill impairment		142				—				nm
Exit or disposal costs		4,716				—				nm
Total pre-tax adjustment		50,065				69,527				(28		)%
Income tax effect		(19,969		)		(27,811		)		(28		)%
Net adjustments		30,096				41,716				(28		)%
Operating earnings		$	262,911			$	263,898			0		%
Earnings per diluted share:
Earnings available to common shareholders		$	1.05			$	1.01			4		%
Operating earnings		$	1.19			$	1.19			0		%
(1)  Income tax effect of operating earnings adjustments at 40% for tax-deductible items.
nm = not meaningful.

The following tables provide the reconciliation of non-interest income (GAAP) to non-interest income, on an operating basis, (non-GAAP), and non-interest expense (GAAP) to non-interest expense, on an operating basis, (non-GAAP) for the periods presented:

		Quarter ended
(Dollars in thousands)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015
Non-interest income (GAAP)		$	98,620			$	80,710			$	74,659			$	45,951			$	69,345
Adjustments:
(Gain) loss from change in fair value of MSR asset		(16,465		)		7,826				13,940				20,625				469
(Gain) loss from change in fair value of swap derivatives		(4,601		)		(182		)		1,493				1,793				(715		)
Net loss on junior subordinated debentures carried at fair value		1,589				1,590				1,572				1,572				1,589
Gain on investment securities, net		—				—				(162		)		(696		)		(2,567		)
Non-interest income (operating basis)		$	79,143			$	89,944			$	91,502			$	69,245			$	68,121
		Quarter ended
		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015
Non-interest expense (GAAP)		$	183,468			$	181,187			188,511				$	183,989			$	185,911
Adjustments:
Merger related expenses		(3,218		)		(2,011		)		(6,634		)		(3,450		)		(3,712		)
Goodwill impairment		—				—				—				(142		)		—
Exit or disposal costs		(1,207		)		(1,728		)		(1,434		)		(347		)		—
Non-interest expense (operating basis)		$	179,043			$	177,448			$	180,443			$	180,050			$	182,199
		Year Ended
(Dollars in thousands)		Dec 31, 2016				Dec 31, 2015
Non-interest income (GAAP)		$	299,940			$	275,724
Adjustments:
Loss from change in fair value of MSR asset		25,926				20,723
Gain from change in fair value of swap derivatives		(1,497		)		(162		)
Net loss on junior subordinated debentures carried at fair value		6,323				6,306
Gain on investment securities, net		(858		)		(2,922		)
Non-interest income (operating basis)		$	329,834			$	299,669
		Year Ended
		Dec 31, 2016				Dec 31, 2015
Non-interest expense (GAAP)		$	737,155			$	763,642
Adjustments:
Merger related expenses		(15,313		)		(45,582		)
Goodwill impairment		(142		)		—
Exit or disposal costs		(4,716		)		—
Non-interest expense (operating basis)		$	716,984			$	718,060

Management believes tangible common equity and the tangible common equity ratio are meaningful 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).

(Dollars in thousands, except per share data)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015
Total shareholders' equity		$	3,916,795			$	3,920,208			$	3,902,158			$	3,878,630			$	3,849,334
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,793
Other intangible assets, net		36,886				38,753				40,620				42,948				45,508
Tangible common shareholders' equity		$	2,092,258			$	2,093,804			$	2,073,887			$	2,048,031			$	2,016,033
Total assets		$	24,813,119			$	24,744,214			$	24,132,507			$	23,935,686			$	23,406,381
Subtract:
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,793
Other intangible assets, net		36,886				38,753				40,620				42,948				45,508
Tangible assets		$	22,988,582			$	22,917,810			$	22,304,236			$	22,105,087			$	21,573,080
Common shares outstanding at period end		220,177				220,207				220,482				220,171				220,171
Common equity ratio		15.79		%		15.84		%		16.17		%		16.20		%		16.45		%
Tangible common equity ratio		9.10		%		9.14		%		9.30		%		9.26		%		9.35		%
Book value per common share		$	17.79			$	17.80			$	17.70			$	17.62			$	17.48
Tangible book value per common share		$	9.50			$	9.51			$	9.41			$	9.30			$	9.16

About Umpqua Holdings Corporation
Umpqua Holdings Corporation (NASDAQ:UMPQ) is the parent company of Umpqua Bank, an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology, and distinctive banking solutions.  Umpqua Bank has 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 https://www.umpquabank.com/ask-us/investor-relations/.

Earnings Conference Call Information
The Company will host its fourth quarter 2016 earnings conference call on Thursday, January 26, 2017, at 10:00 a.m. PT (1:00 p.m. ET).  During the call, the Company will provide an update on recent activities and discuss its fourth quarter and full-year 2016 financial results.  There will be a live question-and-answer session following the presentation.  To join the call, please dial (877) 718-5106 ten minutes prior to the start time and enter conference ID: 4736138.  A re-broadcast will be available approximately two hours after the call by dialing (888) 203-1112 and entering conference ID 4736138.  The earnings conference call will also be available as an audiocast, which can be accessed on the Company’s investor relations page at https://www.umpquabank.com/ask-us/investor-relations/.  A slide presentation to accompany the call will also be posted on the website before the call.

Forward-Looking Statements
This press release and our earnings call and related slide presentation include 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. We make forward-looking statements about credit discount accretion on acquired loans and 2017 initiatives and growth opportunities.  Specific risks that could cause results to differ from these forward-looking statements include our ability to successfully develop and market new products and technology.  Additional 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; significant volatility in interest rates; unanticipated weakness in loan demand or loan pricing; lack of strategic growth opportunities or our failure to execute on those opportunities; our inability to effectively manage problem credits; unanticipated increases in the cost of deposits; changes in laws or regulations; changes in regulatory or compliance costs; and changes in general economic conditions.

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
		Quarter Ended																				% Change
(In thousands, except per share data)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Interest income:
Loans and leases		$	209,812			$	212,037			$	210,290			$	217,928			$	219,440			(1	)%		(4	)%
Interest and dividends on investments:
Taxable		10,630				10,779				11,963				13,055				12,654				(1	)%		(16	)%
Exempt from federal income tax		2,229				2,181				2,183				2,235				2,363				2	%		(6	)%
Dividends		336				332				365				366				326				1	%		3	%
Temporary investments & interest bearing deposits		1,696				1,090				652				480				422				56	%		302	%
Total interest income		224,703				226,419				225,453				234,064				235,205				(1	)%		(4	)%
Interest expense:
Deposits		9,288				8,999				8,540				8,413				7,905				3	%		17	%
Repurchase agreements		32				32				32				36				39				0	%		(18	)%
Term debt		3,413				3,558				3,848				4,186				3,885				(4	)%		(12	)%
Junior subordinated debentures		4,174				3,938				3,835				3,727				3,542				6	%		18	%
Total interest expense		16,907				16,527				16,255				16,362				15,371				2	%		10	%
Net interest income		207,796				209,892				209,198				217,702				219,834				(1	)%		(5	)%
Provision for loan and lease losses		13,171				13,091				10,589				4,823				4,545				1	%		190	%
Non-interest income:
Service charges on deposits		15,323				15,762				15,667				14,516				15,039				(3	)%		2	%
Brokerage revenue		4,230				4,129				4,580				4,094				4,061				2	%		4	%
Residential mortgage banking revenue, net		58,448				47,206				36,783				15,426				32,440				24	%		80	%
Gain on investment securities, net		—				—				162				696				2,567				0	%		(100	)%
Gain on loan sales		4,060				1,285				5,640				2,371				1,729				216	%		135	%
Loss on junior subordinated debentures carried at fair value		(1,589		)		(1,590		)		(1,572		)		(1,572		)		(1,589		)		0	%		0	%
BOLI income		2,107				2,116				2,152				2,139				1,841				0	%		14	%
Other income		16,041				11,802				11,247				8,281				13,257				36	%		21	%
Total non-interest income		98,620				80,710				74,659				45,951				69,345				22	%		42	%
Non-interest expense:
Salaries and employee benefits		105,406				105,341				107,545				106,538				106,203				0	%		(1	)%
Occupancy and equipment, net		37,618				38,181				37,850				38,295				38,722				(1	)%		(3	)%
Intangible amortization		1,867				1,867				2,328				2,560				2,806				0	%		(33	)%
FDIC assessments		3,985				4,109				3,693				3,721				3,742				(3	)%		6	%
(Gain) loss on other real estate owned, net		(197		)		(14		)		(1,457		)		1,389				(242		)		1,307	%		(19	)%
Merger related expenses		3,218				2,011				6,634				3,450				3,712				60	%		(13	)%
Goodwill impairment		—				—				—				142				—				nm			nm
Other expense		31,571				29,692				31,918				27,894				30,968				6	%		2	%
Total non-interest expense		183,468				181,187				188,511				183,989				185,911				1	%		(1	)%
Income before provision for income taxes		109,777				96,324				84,757				74,841				98,723				14	%		11	%
Provision for income taxes		40,502				34,515				30,470				27,272				35,704				17	%		13	%
Net income		69,275				61,809				54,287				47,569				63,019				12	%		10	%
Dividends and undistributed earnings allocated to participating securities		33				31				32				29				96				6	%		(66	)%
Net earnings available to common shareholders		$	69,242			$	61,778			$	54,255			$	47,540			$	62,923			12	%		10	%
Weighted average basic shares outstanding		220,190				220,291				220,421				220,227				220,202				0	%		0	%
Weighted average diluted shares outstanding		220,756				220,751				220,907				221,052				220,930				0	%		0	%
Earnings per common share – basic		$	0.31			$	0.28			$	0.25			$	0.22			$	0.29			11	%		7	%
Earnings per common share – diluted		$	0.31			$	0.28			$	0.25			$	0.22			$	0.28			11	%		11	%
nm = not meaningful

Umpqua Holdings Corporation
Consolidated Statements of Income
(Unaudited)
		Year Ended								% Change
(In thousands, except per share data)		Dec 31, 2016				Dec 31, 2015				Year over Year
Interest income:
Loans and leases		$	850,067			$	869,433			(2	)%
Interest and dividends on investments:
Taxable		46,427				47,842				(3	)%
Exempt from federal income tax		8,828				9,647				(8	)%
Dividends		1,399				708				98	%
Temporary investments & interest bearing deposits		3,918				2,236				75	%
Total interest income		910,639				929,866				(2	)%
Interest expense:
Deposits		35,240				29,839				18	%
Repurchase agreements		132				173				(24	)%
Term debt		15,005				14,470				4	%
Junior subordinated debentures		15,674				13,750				14	%
Total interest expense		66,051				58,232				13	%
Net interest income		844,588				871,634				(3	)%
Provision for loan and lease losses		41,674				36,589				14	%
Non-interest income:
Service charges on deposits		61,268				59,740				3	%
Brokerage revenue		17,033				18,481				(8	)%
Residential mortgage banking revenue, net		157,863				124,722				27	%
Gain on investment securities, net		858				2,922				(71	)%
Gain on loan sales		13,356				22,380				(40	)%
Loss on junior subordinated debentures carried at fair value		(6,323		)		(6,306		)		0	%
BOLI income		8,514				8,351				2	%
Other income		47,371				45,434				4	%
Total non-interest income		299,940				275,724				9	%
Non-interest expense:
Salaries and employee benefits		424,830				430,936				(1	)%
Occupancy and equipment, net		151,944				142,975				6	%
Intangible amortization		8,622				11,225				(23	)%
FDIC assessments		15,508				13,480				15	%
(Gain) loss on other real estate owned, net		(279		)		1,894				(115	)%
Merger related expenses		15,313				45,582				(66	)%
Goodwill Impairment		142				—				nm
Other expense		121,075				117,550				3	%
Total non-interest expense		737,155				763,642				(3	)%
Income before provision for income taxes		365,699				347,127				5	%
Provision for income taxes		132,759				124,588				7	%
Net income		232,940				222,539				5	%
Dividends and undistributed earnings allocated to participating securities		125				357				(65	)%
Net earnings available to common shareholders		$	232,815			$	222,182			5	%
Weighted average basic shares outstanding		220,282				220,327				0	%
Weighted average diluted shares outstanding		220,908				221,045				0	%
Earnings per common share – basic		$	1.06			$	1.01			5	%
Earnings per common share – diluted		$	1.05			$	1.01			4	%
nm = not meaningful

Umpqua Holdings Corporation Consolidated Balance Sheets
(Unaudited)
																						% Change
(In thousands, except per share data)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Assets:
Noninterest bearing cash		$	331,994			$	364,013			$	369,535			$	299,871			$	277,645			(9	)%		20	%
Interest bearing deposits and temporary investments		1,117,438				1,102,428				535,828				613,049				496,080				1	%		125	%
Investment securities:
Trading, at fair value		10,964				10,866				10,188				9,791				9,586				1	%		14	%
Available for sale, at fair value		2,701,220				2,520,037				2,482,072				2,542,535				2,522,539				7	%		7	%
Held to maturity, at amortized cost		4,216				4,302				4,382				4,525				4,609				(2	)%		(9	)%
Loans held for sale		387,318				565,624				552,681				659,264				363,275				(32	)%		7	%
Loans and leases		17,508,663				17,392,051				17,355,240				16,955,583				16,866,536				1	%		4	%
Allowance for loan and lease losses		(133,984		)		(133,692		)		(131,042		)		(130,243		)		(130,322		)		0	%		3	%
Loans and leases, net		17,374,679				17,258,359				17,224,198				16,825,340				16,736,214				1	%		4	%
Restricted equity securities		45,528				47,537				47,542				47,545				46,949				(4	)%		(3	)%
Premises and equipment, net		303,882				306,287				312,647				322,822				328,734				(1	)%		(8	)%
Goodwill		1,787,651				1,787,651				1,787,651				1,787,651				1,787,793				0	%		0	%
Other intangible assets, net		36,886				38,753				40,620				42,948				45,508				(5	)%		(19	)%
Residential mortgage servicing rights, at fair value		142,973				114,446				112,095				117,172				131,817				25	%		8	%
Other real estate owned		6,738				8,309				16,437				20,411				22,307				(19	)%		(70	)%
Bank owned life insurance		299,673				297,561				295,444				293,703				291,892				1	%		3	%
Deferred tax assets, net		34,322				27,587				63,038				108,865				138,082				24	%		(75	)%
Other assets		227,637				290,454				278,149				240,194				203,351				(22	)%		12	%
Total assets		$	24,813,119			$	24,744,214			$	24,132,507			$	23,935,686			$	23,406,381			0	%		6	%
Liabilities:
Deposits		$	19,020,985			$	18,918,780			$	18,258,474			$	18,162,974			$	17,707,189			1	%		7	%
Securities sold under agreements to repurchase		352,948				309,463				360,234				325,203				304,560				14	%		16	%
Term debt		852,397				902,678				902,999				903,382				888,769				(6	)%		(4	)%
Junior subordinated debentures, at fair value		262,209				260,114				258,660				256,917				255,457				1	%		3	%
Junior subordinated debentures, at amortized cost		100,931				101,012				101,093				101,173				101,254				0	%		0	%
Other liabilities		306,854				331,959				348,889				307,407				299,818				(8	)%		2	%
Total liabilities		20,896,324				20,824,006				20,230,349				20,057,056				19,557,047				0	%		7	%
Shareholders' equity:
Common stock		3,515,299				3,514,858				3,517,240				3,518,792				3,520,591				0	%		0	%
Retained earnings		422,839				388,678				362,258				343,421				331,301				9	%		28	%
Accumulated other comprehensive (loss) income		(21,343		)		16,672				22,660				16,417				(2,558		)		(228	)%		734	%
Total shareholders' equity		3,916,795				3,920,208				3,902,158				3,878,630				3,849,334				0	%		2	%
Total liabilities and shareholders' equity		$	24,813,119			$	24,744,214			$	24,132,507			$	23,935,686			$	23,406,381			0	%		6	%
Common shares outstanding at period end		220,177				220,207				220,482				220,171				220,171				0	%		0	%
Book value per common share		$	17.79			$	17.80			$	17.70			$	17.62			$	17.48			0	%		2	%
Tangible book value per common share		$	9.50			$	9.51			$	9.41			$	9.30			$	9.16			0	%		4	%
Tangible equity - common		$	2,092,258			$	2,093,804			$	2,073,887			$	2,048,031			$	2,016,033			0	%		4	%
Tangible common equity to tangible assets		9.10		%		9.14		%		9.30		%		9.26		%		9.35		%		(0.04	)		(0.25	)

Umpqua Holdings Corporation
Loan & Lease Portfolio
(Unaudited)
(Dollars in thousands)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Loans & leases:
Commercial real estate:
Non-owner occupied term, net		$	3,330,442			$	3,280,660			$	3,377,464			$	3,202,488			$	3,226,836			2	%		3	%
Owner occupied term, net		2,599,055				2,573,942				2,581,786				2,714,766				2,582,874				1	%		1	%
Multifamily, net		2,858,956				2,968,019				3,004,890				2,959,975				3,151,516				(4	)%		(9	)%
Commercial construction, net		463,625				388,934				367,879				338,801				271,119				19	%		71	%
Residential development, net		142,984				127,447				111,941				121,025				99,459				12	%		44	%
Commercial:
Term, net		1,508,780				1,480,173				1,440,704				1,412,816				1,408,676				2	%		7	%
Lines of credit & other, net		1,116,259				1,142,946				1,116,876				1,036,389				1,036,733				(2	)%		8	%
Leases & equipment finance, net		950,588				927,857				884,506				791,798				729,161				2	%		30	%
Residential real estate:
Mortgage, net		2,887,971				2,868,337				2,882,076				2,879,600				2,909,306				1	%		(1	)%
Home equity lines & loans, net		1,011,844				1,008,219				989,814				943,254				923,667				0	%		10	%
Consumer & other, net		638,159				625,517				597,304				554,671				527,189				2	%		21	%
Total, net of deferred fees and costs		$	17,508,663			$	17,392,051			$	17,355,240			$	16,955,583			$	16,866,536			1	%		4	%
Loan & leases mix:
Commercial real estate:
Non-owner occupied term, net		19		%		19		%		19		%		19		%		19		%
Owner occupied term, net		15		%		15		%		15		%		16		%		15		%
Multifamily, net		16		%		17		%		17		%		17		%		19		%
Commercial construction, net		3		%		2		%		2		%		2		%		2		%
Residential development, net		1		%		1		%		1		%		1		%		1		%
Commercial:
Term, net		9		%		8		%		8		%		8		%		9		%
Lines of credit & other, net		6		%		7		%		6		%		6		%		6		%
Leases & equipment finance, net		5		%		5		%		6		%		5		%		4		%
Residential real estate:
Mortgage, net		16		%		16		%		17		%		17		%		17		%
Home equity lines & loans, net		6		%		6		%		6		%		6		%		5		%
Consumer & other, net		4		%		4		%		3		%		3		%		3		%
Total		100		%		100		%		100		%		100		%		100		%

Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
(Dollars in thousands)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				% Change
		Amount				Amount				Amount				Amount				Amount				Seq. Quarter			Year over Year
Deposits:
Demand, non-interest bearing		$	5,861,469			$	5,993,793			$	5,475,986			$	5,460,310			$	5,318,591			(2	)%		10	%
Demand, interest bearing		2,296,532				2,218,782				2,186,164				2,178,446				2,157,376				4	%		6	%
Money market		6,932,717				6,841,700				6,782,232				6,814,160				6,599,516				1	%		5	%
Savings		1,325,757				1,303,816				1,254,675				1,213,049				1,136,809				2	%		17	%
Time		2,604,510				2,560,689				2,559,417				2,497,009				2,494,897				2	%		4	%
Total		$	19,020,985			$	18,918,780			$	18,258,474			$	18,162,974			$	17,707,189			1	%		7	%
Total core deposits (1)		$	17,318,003			$	17,257,663			$	16,598,065			$	16,559,943			$	16,102,743			0	%		8	%
Deposit mix:
Demand, non-interest bearing		31		%		31		%		30		%		30		%		30		%
Demand, interest bearing		12		%		12		%		12		%		12		%		12		%
Money market		36		%		36		%		37		%		37		%		37		%
Savings		7		%		7		%		7		%		7		%		6		%
Time		14		%		14		%		14		%		14		%		15		%
Total		100		%		100		%		100		%		100		%		100		%
Number of open accounts:
Demand, non-interest bearing		384,040				382,687				379,996				375,913				371,745
Demand, interest bearing		82,520				83,501				84,434				85,731				86,745
Money market		56,031				56,128				56,492				56,927				57,194
Savings		159,080				158,760				157,849				156,846				154,176
Time		47,705				47,689				47,850				47,794				47,672
Total		729,376				728,765				726,621				723,211				717,532
Average balance per account:
Demand, non-interest bearing		$	15.3			$	15.7			$	14.4			$	14.5			$	14.3
Demand, interest bearing		27.8				26.6				25.9				25.4				24.9
Money market		123.7				121.9				120.1				119.7				115.4
Savings		8.3				8.2				7.9				7.7				7.4
Time		54.6				53.7				53.5				52.2				52.3
Total		$	26.1			$	26.0			$	25.1			$	25.1			$	24.7
(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)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Non-performing assets:
Loans and leases on non-accrual status		$	27,765			$	27,791			$	25,136			$	30,045			$	29,215			0	%		(5	)%
Loans and leases past due 90+ days & accruing (1)		28,369				26,189				23,076				22,144				15,169				8	%		87	%
Total non-performing loans and leases		56,134				53,980				48,212				52,189				44,384				4	%		26	%
Other real estate owned		6,738				8,309				16,437				20,411				22,307				(19	)%		(70	)%
Total non-preforming assets		$	62,872			$	62,289			$	64,649			$	72,600			$	66,691			1	%		(6	)%
Performing restructured loans and leases		$	40,667			$	36,645			$	40,848			$	31,409			$	31,355			11	%		30	%
Loans and leases past due 31-89 days		$	30,425			$	39,708			$	29,640			$	29,054			$	28,423			(23	)%		7	%
Loans and leases past due 31-89 days to total loans and leases		0.17		%		0.23		%		0.17		%		0.17		%		0.17		%
Non-performing loans and leases to total loans and leases (1)		0.32		%		0.31		%		0.28		%		0.31		%		0.26		%
Non-performing assets to total assets (1)		0.25		%		0.25		%		0.27		%		0.30		%		0.28		%
(1) Excludes non-performing mortgage loans guaranteed by Ginnie Mae, which Umpqua has the unilateral right to repurchase but has not done so, totaling $10.9 million, $7.3 million, $11.3 million, $14.2 million, and $19.2 million at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Allowance for loan and lease losses:
Balance beginning of period		$	133,692			$	131,042			$	130,243			$	130,322			$	130,133
Provision for loan and lease losses		13,171				13,091				10,589				4,823				4,545				1	%		190	%
Charge-offs		(16,303		)		(13,088		)		(12,682		)		(7,850		)		(7,108		)		25	%		129	%
Recoveries		3,424				2,647				2,892				2,948				2,752				29	%		24	%
Net charge-offs		(12,879		)		(10,441		)		(9,790		)		(4,902		)		(4,356		)		23	%		196	%
Total allowance for loan and lease losses		133,984				133,692				131,042				130,243				130,322				0	%		3	%
Reserve for unfunded commitments		3,611				3,536				3,531				3,482				3,574				2	%		1	%
Total allowance for credit losses		$	137,595			$	137,228			$	134,573			$	133,725			$	133,896			0	%		3	%
Net charge-offs to average loans and leases (annualized)		0.29		%		0.24		%		0.23		%		0.12		%		0.10		%
Recoveries to gross charge-offs		21.00		%		20.22		%		22.80		%		37.55		%		38.72		%
Allowance for loan and lease losses to loans and leases		0.77		%		0.77		%		0.76		%		0.77		%		0.77		%
Allowance for credit losses to loans and leases		0.79		%		0.79		%		0.78		%		0.79		%		0.79		%

Umpqua Holdings Corporation
Credit Quality – Allowance for Loan and Lease Losses
(Unaudited)
		Year Ended								% Change
(Dollars in thousands)		Dec 31, 2016				Dec 31, 2015				Year over Year
Allowance for credit losses:
Balance beginning of period		$	130,322			$	116,167
Provision for loan and lease losses		41,674				36,589				14	%
Charge-offs		(49,923		)		(35,571		)		40	%
Recoveries		11,911				13,137				(9	)%
Net charge-offs		(38,012		)		(22,434		)		69	%
Total allowance for loan and lease losses		133,984				130,322				3	%
Reserve for unfunded commitments		3,611				3,574				1	%
Total allowance for credit losses		$	137,595			$	133,896			3	%
Net charge-offs to average loans and leases		0.22		%		0.14		%
Recoveries to gross charge-offs		23.86		%		36.93		%

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Quarter Ended															% Change
		Dec 31, 2016			Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Seq. Quarter			Year over  Year
Average Rates:
Yield on loans and leases		4.70	%		4.75	%		4.81	%		5.07	%		5.21	%		(0.05	)		(0.51	)
Yield on loans held for sale		3.79	%		3.79	%		3.80	%		4.06	%		3.83	%		—			(0.04	)
Yield on taxable investments		1.85	%		1.96	%		2.14	%		2.32	%		2.26	%		(0.11	)		(0.41	)
Yield on tax-exempt investments (1)		4.72	%		4.68	%		4.73	%		4.73	%		4.76	%		0.04			(0.04	)
Yield on temporary investments & interest bearing cash		0.56	%		0.50	%		0.51	%		0.54	%		0.28	%		0.06			0.28
Total yield on earning assets (1)		4.14	%		4.26	%		4.39	%		4.66	%		4.69	%		(0.12	)		(0.55	)
Cost of interest bearing deposits		0.28	%		0.28	%		0.27	%		0.27	%		0.26	%		—			0.02
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.04	%		0.04	%		0.04	%		0.05	%		0.05	%		—			(0.01	)
Cost of term debt		1.53	%		1.57	%		1.72	%		1.88	%		1.73	%		(0.04	)		(0.20	)
Cost of junior subordinated debentures		4.59	%		4.36	%		4.30	%		4.20	%		3.96	%		0.23			0.63
Total cost of interest bearing liabilities		0.46	%		0.46	%		0.46	%		0.47	%		0.44	%		—			0.02
Net interest spread (1)		3.68	%		3.80	%		3.93	%		4.19	%		4.25	%		(0.12	)		(0.57	)
Net interest margin (1)		3.83	%		3.95	%		4.07	%		4.34	%		4.39	%		(0.12	)		(0.56	)
As reported (GAAP):
Return on average assets		1.11	%		1.01	%		0.91	%		0.82	%		1.08	%		0.10			0.03
Return on average tangible assets		1.20	%		1.09	%		0.99	%		0.89	%		1.17	%		0.11			0.03
Return on average common equity		7.04	%		6.28	%		5.61	%		4.93	%		6.49	%		0.76			0.55
Return on average tangible common equity		13.19	%		11.79	%		10.59	%		9.34	%		12.41	%		1.40			0.78
Efficiency ratio – Consolidated		59.65	%		62.11	%		66.15	%		69.48	%		64.02	%		(2.46	)		(4.37	)
Efficiency ratio – Bank		57.96	%		60.45	%		64.44	%		67.29	%		62.40	%		(2.49	)		(4.44	)
Operating basis (non-GAAP): (2)
Return on average assets		0.97	%		1.13	%		1.16	%		1.10	%		1.10	%		(0.16	)		(0.13	)
Return on average tangible assets		1.05	%		1.22	%		1.26	%		1.19	%		1.20	%		(0.17	)		(0.15	)
Return on average common equity		6.12	%		7.08	%		7.16	%		6.63	%		6.64	%		(0.96	)		(0.52	)
Return on average tangible common equity		11.47	%		13.28	%		13.51	%		12.57	%		12.70	%		(1.81	)		(1.23	)
Efficiency ratio – Consolidated		62.15	%		58.96	%		59.78	%		62.49	%		63.00	%		3.19			(0.85	)
Efficiency ratio – Bank		60.67	%		57.66	%		58.48	%		60.89	%		61.72	%		3.01			(1.05	)

(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
(2) Operating earnings is calculated as earnings available to common shareholders excluding the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures carried at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs, bargain purchase gain on acquisitions and goodwill impairment.

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
		Year Ended						% Change
		Dec 31, 2016			Dec 31, 2015			Year over Year
Average Rates:
Yield on loans and leases		4.83	%		5.38	%		(0.55	)
Yield on loans held for sale		3.84	%		3.72	%		0.12
Yield on taxable investments		2.07	%		2.13	%		(0.06	)
Yield on tax-exempt investments (1)		4.71	%		4.73	%		(0.02	)
Yield on temporary investments & interest bearing cash		0.53	%		0.26	%		0.27
Total yield on earning assets (1)		4.36	%		4.74	%		(0.38	)
Cost of interest bearing deposits		0.28	%		0.24	%		0.04
Cost of securities sold under agreements
to repurchase and fed funds purchased		0.04	%		0.05	%		(0.01	)
Cost of term debt		1.67	%		1.57	%		0.10
Cost of junior subordinated debentures		4.37	%		3.90	%		0.47
Total cost of interest bearing liabilities		0.46	%		0.42	%		0.04
Net interest spread (1)		3.90	%		4.32	%		(0.42	)
Net interest margin (1)		4.04	%		4.44	%		(0.40	)
As reported (GAAP):
Return on average assets		0.97	%		0.97	%		—
Return on average tangible assets		1.04	%		1.06	%		(0.02	)
Return on average common equity		5.97	%		5.82	%		0.15
Return on average tangible common equity		11.25	%		12.08	%		(0.83	)
Efficiency ratio – Consolidated		64.15	%		66.27	%		(2.12	)
Efficiency ratio – Bank		62.35	%		64.57	%		(2.22	)
Operating basis (non-GAAP): (2)
Return on average assets		1.09	%		1.15	%		(0.06	)
Return on average tangible assets		1.18	%		1.26	%		(0.08	)
Return on average common equity		6.74	%		6.91	%		(0.17	)
Return on average tangible common equity		12.70	%		14.35	%		(1.65	)
Efficiency ratio – Consolidated		60.81	%		61.04	%		(0.23	)
Efficiency ratio – Bank		59.40	%		59.76	%		(0.36	)

                               
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.
(2) Operating earnings is calculated as earnings available to common shareholders excluding the after-tax impact of merger-related expenses, gains or losses on junior subordinated debentures carried at fair value, gains or losses from the change in fair value of the MSR, gains or losses from the change in fair value of the swap derivative, net gains or losses in investment securities, exit or disposal costs, bargain purchase gain on acquisitions and goodwill impairment.

Umpqua Holdings Corporation Average Balances
(Unaudited)
		Quarter Ended																				% Change
(Dollars in thousands)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Temporary investments & interest bearing cash		$	1,194,904			$	874,410			$	514,881			$	356,674			$	608,250			37	%		96	%
Investment securities, taxable		2,373,652				2,265,883				2,304,998				2,311,589				2,293,429				5	%		3	%
Investment securities, tax-exempt		287,359				283,818				280,841				287,085				302,443				1	%		(5	)%
Loans held for sale		482,028				481,740				403,964				297,732				334,404				0	%		44	%
Loans and leases		17,386,385				17,400,657				17,234,220				17,008,084				16,514,770				0	%		5	%
Total interest earning assets		21,724,328				21,306,508				20,738,904				20,261,164				20,053,296				2	%		8	%
Goodwill & other intangible assets, net		1,825,491				1,827,405				1,829,407				1,832,046				1,835,821				0	%		(1	)%
Total assets		24,740,986				24,422,986				23,896,315				23,415,439				23,196,052				1	%		7	%
Non-interest bearing demand deposits		5,939,223				5,766,022				5,466,098				5,289,810				5,285,992				3	%		12	%
Interest bearing deposits		13,026,614				12,836,987				12,644,442				12,411,005				12,249,333				1	%		6	%
Total deposits		18,965,837				18,603,009				18,110,540				17,700,815				17,535,325				2	%		8	%
Interest bearing liabilities		14,606,120				14,446,687				14,249,349				13,976,678				13,812,645				1	%		6	%
Shareholders’ equity - common		3,914,624				3,911,323				3,889,593				3,878,540				3,847,587				0	%		2	%
Tangible common equity (1)		2,089,133				2,083,918				2,060,186				2,046,494				2,011,766				0	%		4	%

Umpqua Holdings Corporation Average Balances
(Unaudited)
		Year Ended								% Change
(Dollars in thousands)		Dec 31, 2016				Dec 31, 2015				Year over Year
Temporary investments & interest bearing cash		$	736,854			$	869,253			(15	)%
Investment securities, taxable		2,314,062				2,275,512				2	%
Investment securities, tax-exempt		284,780				310,684				(8	)%
Loans held for sale		416,724				333,455				25	%
Loans and leases		17,258,081				15,938,127				8	%
Total interest earning assets		21,010,501				19,727,031				7	%
Goodwill & other intangible assets, net		1,828,575				1,980,905				(8	)%
Total assets		24,121,462				22,905,541				5	%
Non-interest bearing demand deposits		5,616,585				5,015,508				12	%
Interest bearing deposits		12,730,866				12,235,302				4	%
Total deposits		18,347,451				17,250,810				6	%
Interest bearing liabilities		14,320,838				13,833,245				4	%
Shareholders’ equity - common		3,898,599				3,820,505				2	%
Tangible common equity (1)		2,070,024				1,839,600				13	%

(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)		Dec 31, 2016				Sep 30, 2016				Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Seq. Quarter			Year over Year
Residential mortgage servicing rights:
Residential mortgage loans serviced for others		$	14,327,368			$	13,880,660			$	13,564,242			$	13,304,468			$	13,047,266			3	%		10	%
MSR asset, at fair value		142,973				114,446				112,095				117,172				131,817				25	%		8	%
MSR as % of serviced portfolio		1.00		%		0.82		%		0.83		%		0.88		%		1.01		%
Residential mortgage banking revenue:
Origination and sale		$	32,386			$	45,631			$	42,083			$	28,409			$	25,363			(29	)%		28	%
Servicing		9,597				9,401				8,640				7,642				7,546				2	%		27	%
Change in fair value of MSR asset		16,465				(7,826		)		(13,940		)		(20,625		)		(469		)		(310	)%		nm
Total		$	58,448			$	47,206			$	36,783			$	15,426			$	32,440			24	%		80	%
Closed loan volume:
Closed loan volume - portfolio		$	250,000			$	305,648			$	365,926			$	332,918			$	352,465			(18	)%		(29	)%
Closed loan volume - for-sale		1,061,327				1,118,526				1,046,349				764,076				794,820				(5	)%		34	%
Closed loan volume - total		$	1,311,327			$	1,424,174			1,412,275				1,096,994				$	1,147,285			(8	)%		14	%
Gain on sale margin:
Based on for-sale volume		3.05		%		4.08		%		4.02		%		3.72		%		3.19		%		(1.03	)		(0.14	)
		Year Ended								% Change
		Dec 31, 2016				Dec 31, 2015				Year over Year
Residential mortgage banking revenue:
Origination and sale		$	148,509			$	117,432			26		%
Servicing		35,280				28,013				26		%
Change in fair value of MSR asset		(25,926		)		(20,723		)		25		%
Total		$	157,863			$	124,722			27		%
Closed loan volume:
Closed loan volume - portfolio		$	1,254,492			$	1,556,414			(19		)%
Closed loan volume - for-sale		3,990,278				3,497,920				14		%
Closed loan volume - total		$	5,244,770			$	5,054,334			4		%
Gain on sale margin:
Based on for-sale volume		3.72		%		3.36		%		0.36

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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