Umpqua Holdings Reports Fourth Quarter & Full Year 2009 Results

Umpqua Holdings Corporation (NASDAQ: UMPQ), parent company of Umpqua Bank and Umpqua Investments, Inc. today announced a fourth quarter 2009 net loss of $26.7 million. Including preferred stock dividends of $3.2 million, the net loss available to common shareholders was $29.9 million, or $0.34 per diluted share. For the full year 2009, the Company reported a net loss of $153.4 million. Including preferred stock dividends of $12.9 million, the net loss available to common shareholders was $166.3 million, or $2.36 per diluted share. Operating loss, defined as earnings available to common shareholders before merger related expenses, net of tax, and goodwill impairment, was $54.1 million for the year ended 2009, or $0.77 per diluted share. Operating income or loss is considered a "non-GAAP” financial measure. More information regarding this measurement and reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures below.

Significant financial statement items for the fourth quarter of 2009 include:

• Provision for loan losses of $68.6 million;
• Total net charge-offs of $64.1 million;
• The allowance for credit losses increased from 1.71% to 1.81% of total loans during the fourth quarter;
• Non-performing assets ended the quarter at $223.6 million, or 2.38% of total assets, resulting in part from reclassification of portion of restructured loans to non-accrual status;
• Loans past due 30-89 days declined 10% on a sequential quarter basis;
• Total deposits increased $225 million, or 3%, on a sequential quarter basis;
• Net interest income of $85 million, an increase of 3% on a sequential quarter basis;
• Net interest margin, on a tax equivalent basis, increased during the quarter to 4.06%;
• The cost of interest bearing deposits for the fourth quarter was 1.35%, a decrease of 15 basis points from the third quarter of 2009;
• Mortgage banking revenue was $4.1 million on closed mortgage loan volume of $172 million;
• Loss on fair value of junior subordinated debentures of $3.7 million during the fourth quarter of 2009;
• Net loss on other real estate owned was $9.1 million during the fourth quarter of 2009;
• Tangible common equity ratio of 8.27% and tangible book value per common share of $8.33; and
• Total risk based capital of 17.07%.

"During this past quarter the Company experienced the continuation of core deposit growth, strong results from our residential mortgage lending division, and a steady net interest margin,” said Ray Davis, president and CEO of Umpqua Holdings Corporation. "Unfortunately these successes have been overshadowed by continued earnings pressure from our credit quality numbers resulting in a loss for the period due to economic issues that have plagued our industry for the last several years. Our management team continues to actively deal with troubled credits and is focused on returning the company to normalized earnings, as the country emerges from the national recession.”

Asset quality

Non-performing assets were $223.6 million, or 2.38% of total assets, as of December 31, 2009, compared to $156.0 million, or 1.70% of total assets as of September 30, 2009, and $161.3 million, or 1.88% of total assets as of December 31, 2008. Of this amount, $5.9 million represented loans past due greater than 90 days and still accruing interest, $193.1 million represented non-accrual loans, and $24.6 million was other real estate owned (OREO).

The Company has aggressively charged-down impaired assets to their disposition values, and they are expected to be resolved at those levels, absent further declines in market prices. As of December 31, 2009, the non-performing assets of $223.6 million have been written down by 41%, or $154.8 million, from their original balance of $378.4 million.

The provision for loan losses for the fourth quarter of 2009 was $68.6 million. Total net charge-offs for the fourth quarter of 2009 were $64.1 million, which represented 4.19% of average loans on an annualized basis. The allowance for credit losses increased to 1.81% of total loans as of December 31, 2009, compared to 1.71% of total loans as of September 30, 2009 and 1.58% of total loans as of December 31, 2008.

Loans past due 30-89 days were $41.5 million, or 0.69% of total loans as of December 31, 2009, down 10% from $46.1 million as of September 30, 2009, and down 30% from $59.1 million as of December 31, 2008.

Since 2007, the Company has been aggressively resolving problems arising from the current economic downturn. The following is a recap of the Company’s credit quality trends since the start of 2007:

Credit quality trends
(Dollars in thousands)
				Provision			Net			Allowance						Non-performing
				for			charge-offs			for credit losses			30-89 days			assets to
				loan loss			(recoveries)			to loans %			past due %			total assets %
Q1 2007				$83			$(90)			1.14%			0.17%			0.18%
Q2 2007				3,413			31			1.17%			0.56%			0.59%
Q3 2007				20,420			865			1.47%			0.99%			0.96%
Q4 2007				17,814			21,188			1.42%			0.64%			1.18%
Q1 2008				15,132			13,476			1.45%			1.13%			1.06%
Q2 2008				25,137			37,976			1.22%			0.31%			1.25%
Q3 2008				35,454			15,193			1.54%			1.16%			1.66%
Q4 2008				31,955			30,072			1.58%			0.96%			1.88%
Q1 2009				59,092			59,871			1.58%			1.47%			1.82%
Q2 2009				29,331			26,047			1.63%			0.80%			1.73%
Q3 2009				52,108			47,342			1.71%			0.76%			1.70%
Q4 2009				68,593			64,072			1.81%			0.69%			2.38%
Total				$358,532			$316,043

Loan portfolio

Construction loan portfolio

Total construction loans as of December 31, 2009 decreased 17% from September 30, 2009, and decreased 32% from December 31, 2008. Within the construction loan portfolio, the residential development loan segment was $225.8 million, or 4% of the total loan portfolio. Of this amount, $45.5 million represented non-performing loans, and $180.3 million represented performing loans, which were 3% of the total loan portfolio. The residential development loan segment has decreased $158 million, or 41%, from December 31, 2008.

The remaining $393 million in construction loans as of December 31, 2009 was primarily commercial construction projects. Total non-performing assets related to commercial construction loans were $41.4 million at December 31, 2009, with $1.2 million, or 0.3% of total commercial construction projects, past due 30-89 days as of December 31, 2009.

Commercial real estate loan portfolio

The total term commercial real estate loan portfolio was $3.5 billion as of December 31, 2009. Of this total, $2.4 billion are non-owner occupied and $1.1 billion are owner occupied. Of the total portfolio, $18.6 million, or 0.53%, are past due 30-89 days as of December 31, 2009. As shown in table 8 on page 24 of this release, 6% of the total commercial real estate portfolio matures in 2010, 4% in 2011, 13% in years 2012-2013, and 21% in years 2014-2015. The remaining 56% of the portfolio matures in or after the year 2016.

The portfolio was conservatively underwritten at origination to a minimum debt service coverage ratio of 1.20, and as a result in many cases the loan-to-value was substantially less than our in-house maximum of 75%. This underwriting serves to protect against the low capitalization rate environment of the past several years.

During the past 12 months, the Company has completed several rounds of stress testing on the commercial real estate portfolio, focusing on items such as capitalization rate, interest rate and vacancy factors. The results of the stress testing showed no significant unidentified risks, unlike our experience in the residential development construction portfolio. However, given the economic climate, we expect any potential issues that may arise in this portfolio will result from individual loans within distinct geographic areas and not represent a systemic weakness. We are well positioned to manage the exposure and work with our customers until the economic climate improves.

Restructured loans

Restructured loans were $134 million as of December 31, 2009, down 26% from $182 million as of September 30, 2009. The decrease during the fourth quarter resulted from reclassifications to non-accrual status of loans previously restructured based on projected performance. The Company will consider a loan for restructuring only if it is current on payments. The Company does not enter into restructurings on loans in non-performing status, and requires the customer to pledge additional collateral, maintain a minimum debt service coverage ratio of 1.0, and show substantial external sources of repayment prior to the Company agreeing to restructure.

Additional detail on credit quality, trends, the loan portfolio by segment and non-performing assets

Additional tables are included at the end of this earnings release covering the following aspects of the Company's loan portfolio: residential development loan trends by region, residential development loan stratification by size and by region, non-performing asset detail by type and by region, loans past due 30-89 days by type and by region, loans past due 30-89 days trends, restructured loans by type and by region, commercial real estate loan portfolio by type and by region, commercial real estate loan portfolio by type and by year of maturity, commercial real estate loan portfolio by type and by year of origination, commercial construction loan portfolio by type and by region, and commercial loan portfolio by type and by region.

Net interest margin

The Company reported a tax equivalent net interest margin of 4.06% for the fourth quarter of 2009, compared to 4.05% for the third quarter of 2009, and 4.02% for the fourth quarter of 2008. The increase in net interest margin, net of interest reversals, resulted primarily from declining costs of interest bearing deposits, partially offset by the impact of holding higher levels of interest bearing cash. Interest reversals on new non-accrual loans during the fourth quarter of 2009 were $1.4 million, negatively impacting the net interest margin by 7 basis points. Excluding the reversals of interest, the net interest margin would have been 4.13% during the quarter. The cost of interest bearing deposits was 15 basis points lower than the third quarter of 2009.

Mortgage banking revenue

The Company generated $4.1 million in total mortgage banking revenue during the fourth quarter of 2009, on closed loan volume of $172 million. For the full year 2009, total closed loan volume was a record $757 million, an increase of 131% from $328 million for the full year 2008. As of December 31, 2009, the Company serviced $1.3 billion of mortgage loans for others, and the related mortgage servicing right asset was valued at $12.6 million, or 0.99% of the total serviced portfolio.

Fair value of junior subordinated debentures

The Company recognized a loss from the change in fair value of junior subordinated debentures of $3.7 million during the fourth quarter of 2009. The Company utilizes a pricing service along with internal models to determine the valuation of this liability. The majority of the fair value difference over par value relates to the $61.8 million of junior subordinated debentures issued in the third quarter of 2007, which carry interest rate spreads of 135 and 275 basis points over the 3 month LIBOR. As of December 31, 2009, the credit adjusted interest spread for potential new issuances was forecasted to be significantly higher. The difference between spreads creates the gain in fair value of the Company’s junior subordinated debentures which results from their carrying amount compared to the estimated amount that would be paid to transfer the liability in an orderly transaction among market participants. This fair value adjustment will reverse and be recognized as a reduction in non-interest income over the remaining period to maturity of the related instrument. As of December 31, 2009, the total par value of junior subordinated debentures carried at fair value was $134.0 million, and the fair value was $86.0 million.

Non-interest expense

Total non-interest expense for the fourth quarter of 2009 was $72.5 million, compared to $68.3 million for the third quarter of 2009. Included in non-interest expense are several categories which are outside of the control of the Company, including FDIC deposit insurance assessments, gain or loss on other real estate owned valuations, VISA litigation and infrequently occurring expenses such as merger costs and goodwill impairments. Excluding the non-controllable or infrequently occurring items, the remaining non-interest expense items totaled $60.2 million for the fourth quarter of 2009, compared to $56.4 million for the third quarter of 2009. This increase related mainly to increases in variable expense related to our mortgage operation (on increased volume), $0.8 million of accelerated intangible amortization, and growth initiatives underway.

Total FDIC deposit insurance assessments during the fourth quarter of 2009 were $3.2 million, and for the full year were $15.8 million. The increase over the prior year resulted from an overall industry-wide increase in assessments as the FDIC is replenishing the deposit insurance fund.

Balance sheet

Total consolidated assets as of December 31, 2009 were $9.4 billion, compared to $9.2 billion on September 30, 2009 and $8.6 billion a year ago. Total gross loans and leases, and deposits, were $6.0 billion and $7.4 billion, respectively, as of December 31, 2009, compared to $6.1 and $6.6 billion, respectively, as of December 31, 2008.

Total net loan fundings during the fourth quarter of 2009 were $447 million. Of this amount, $162 million represents originations of mortgage loans held for sale and $285 million represents net loan advances on loans held for investment. Net loan advances is calculated as gross advances on non-revolving notes plus net advances (gross advances less gross payments) on revolving notes. Total loans held for investment decreased $72 million during the fourth quarter of 2009. This decrease is principally attributable to charge-offs of $66 million and transfers to other real estate owned of $17 million.

Total deposits increased $225 million, or 3%, over the third quarter of 2009. For the full year 2009, total deposits increased $851 million, or 13%. Average non-interest bearing demand deposits increased 5% over the third quarter of 2009, and increased 5% for the full year 2009 over 2008.

Due to poor/unattractive bond market conditions during the second half of 2009, the Company has been holding larger levels of interest bearing cash rather than investing into the bond portfolio. At December 31, 2009, the Company had $491 million of interest bearing cash earning 0.25%, the target Federal Funds Rate. This excess balance sheet liquidity has been increased as investment security alternatives in the current market are unattractive given the historically low interest rate environment. The Company plans to hold this extra interest bearing cash position until the investment alternatives in the market improve from a return/duration standpoint. Including secured off-balance sheet lines of credit, total available liquidity to the Company was $3 billion as of December 31, 2009, representing 32% of total assets and 39% of total deposits.

Capital

As of December 31, 2009, total shareholders’ equity was $1.6 billion, comprised of $204 million in preferred stock (par value of $214.2 million issued to the U.S. Treasury on November 14, 2008 and described below), and common equity available to common shareholders of $1.4 billion. Book value per common share was $15.70, tangible book value per common share was $8.33 and the ratio of tangible common equity to tangible assets was 8.27%.

In August 2009, the Company completed an underwritten public offering of common stock raising $258.7 million by issuing 26,538,461 shares of the Company’s common stock, including 3,461,538 shares pursuant to the underwriters’ over-allotment option, at a price of $9.75 per share. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $245.7 million. The net proceeds from the offering qualify as tangible common equity and Tier 1 capital and will be used for general corporate purposes, which may include capital to support growth and acquisition opportunities and to position the Company for eventual redemption of preferred stock issued to the U.S. Treasury under the Capital Purchase Program.

The Company’s estimated total risk-based capital ratio as of December 31, 2009 is 17.07%, and has increased from 14.62% as of December 31, 2008. Our total risk-based capital level is well in excess of the regulatory definition of "well capitalized” of 10.00%. This capital ratio as of December 31, 2009 is an estimate pending completion and filing of the Company’s regulatory reports.

On November 14, 2008, in exchange for an aggregate purchase price of $214.2 million, Umpqua Holdings Corporation issued and sold to the United States Department of the Treasury (U.S. Treasury) pursuant to the TARP Capital Purchase Program the following: (i) 214,181 shares of the Company's newly designated Fixed Rate Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $1,000 per share ($214,181,000 liquidation preference in the aggregate) and (ii) a warrant to purchase up to 2,221,795 shares of the Company's common stock, no par value per share, at an exercise price of $14.46 per share, subject to certain anti-dilution and other adjustments. The warrant may be exercised for up to ten years after it was issued.

After completion of the underwritten public offering of common stock in August 2009, the number of shares of common stock underlying the warrant issued to the U.S. Treasury were reduced by 50%, and now total 1,110,898 at the same exercise price of $14.46 per share.

There were no repurchases of common stock during 2009. The total remaining available common shares authorized for repurchase is approximately 1.5 million as of December 31, 2009.

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

Umpqua incurs significant expenses related to the completion and integration of mergers. Additionally, we 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. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges. We define operating earnings as earnings available to common shareholders before merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating income by the same diluted share total used in determining diluted earnings per common share.

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

												Sequential			Year over
			Quarter ended:									Quarter			Year
(Dollars in thousands, except per share data)			12/31/09			9/30/09			12/31/08			% Change			% Change
Net (loss) earnings available to common shareholders			$(29,924)			$(10,376)			$2,205			188%			(1457)%
Add back: Merger expense, net of tax, and goodwill impairment			--			--			982			nm			nm
Operating (loss) earnings			$(29,924)			$(10,376)			$3,187			188%			(1039)%
Earnings (loss) per diluted share:
Net (loss) earnings available to common shareholders			$(0.34)			$(0.14)			$0.04			143%			(950)%
Operating (loss) earnings			$(0.34)			$(0.14)			$0.05			143%			(780)%

			Year ended:						Year over Year
			12/31/09			12/31/08			% Change
Net (loss) earnings available to common shareholders			$(166,262)			$49,270			(437)%
Add back: Merger expense, net of tax, and goodwill impairment			112,116			982			nm
Operating (loss) earnings			$(54,146)			$50,252			(208)%
Earnings (loss) per diluted share:
Net (loss) earnings available to common shareholders			$(2.36)			$0.82			(388)%
Operating (loss) earnings			$(0.77)			$0.83			(193)%
nm = not meaningful

Management believes "tangible common equity" and the "tangible common equity ratio" are meaningful measures of capital adequacy. Tangible common equity is calculated as total shareholders' equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs). In addition, 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			12/31/09			9/30/09			12/31/08
Total shareholders' equity			$1,566,517			$1,606,150			$1,487,008
Subtract:
Preferred stock			204,335			203,779			202,178
Goodwill and other intangible assets, net			639,634			641,759			757,833
Tangible common shareholders' equity			$722,548			$760,612			$526,997
Total assets			$9,381,372			$9,204,346			$8,597,550
Subtract:
Goodwill and other intangible assets, net			639,634			641,759			757,833
Tangible assets			$8,741,738			$8,562,587			$7,839,717
Common shares outstanding at period end			86,785,588			86,780,559			60,146,400
Tangible common equity ratio			8.27%			8.88%			6.72%
Tangible book value per common share			$8.33			$8.76			$8.76

Subsequent event – FDIC assisted acquisition of EvergreenBank of Seattle, WA

On January 22, 2010, the Washington Department of Financial Institutions closed EvergreenBank, Seattle, Washington and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. That same date, Umpqua Bank assumed the banking operations of EvergreenBank from the FDIC under a whole bank purchase and assumption agreement with loss sharing. In connection with the assumption, Umpqua Bank acquired assets totaling $420 million, including $370 million of loans, along with liabilities of $347 million, including $306 million of deposits. These amounts represent gross book values from interim balances, and do not include fair value adjustments. With this agreement, Umpqua Bank now operates seven additional store locations the greater Seattle, Washington market. The agreement includes loss sharing between the FDIC and Umpqua Bank, which after fair value adjustments, significantly mitigates the risk of future loss on the loan portfolio acquired. The acquisition is expected to be immediately accretive to operating earnings per share.

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 162 locations between San Francisco, Calif., and Seattle, Wash., along the Oregon and Northern California Coast and in Central Oregon. Umpqua Holdings also owns a retail brokerage subsidiary, Umpqua Investments, Inc., which has locations in Umpqua Bank stores and in dedicated offices in Oregon. Umpqua Bank’s Private Bank Division serves high net worth individuals and non-profits providing customized financial solutions and offerings. Umpqua Holdings Corporation is headquartered in Portland, Ore. For more information, visit www.umpquaholdingscorp.com.

Umpqua Holdings Corporation will conduct a quarterly earnings conference call Thursday, January 28, 2010, at 10:00 a.m. PT (1:00 p.m. ET) during which the Company will discuss fourth quarter and 2009 year end results and provide an update on recent activities. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing 800-784-9386 a few minutes before 10:00 a.m. The conference ID is "49390663.” Information to be discussed in the teleconference will be available on the Company’s Website prior to the call at www.umpquaholdingscorp.com. A rebroadcast can be found approximately two hours after the conference call by dialing 800-642-1687 with the conference ID noted above, or by visiting the Company’s Website.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the SEC. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. In this press release we make forward-looking statements about our ability to return to normalized earnings, limitations on exposure in our commercial real estate loan portfolio, our ability to effectively identify and manage that exposure and our expectation that the acquisition of certain EvergreenBank assets and liabilities will be immediately accretive to operating earnings per share. Specific risks that could cause results to differ from the forward-looking statements are set forth in our filings with the SEC and include, without limitation, unanticipated deterioration in the commercial real estate loan portfolio, and loss of, or inability to recruit, personnel to manage problem credits, unanticipated deterioration of the economy in our markets and unanticipated operating expenses, deposit runoff and/or loan losses relating to the EvergreenBank acquisition, that were not covered by fair value adjustments at the date of acquisition.

Umpqua Holdings Corporation
Consolidated Statements of Operations
(Unaudited)
			Quarter Ended:
												Sequential			Year over
												Quarter			Year
Dollars in thousands, except per share data			Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			% Change			% Change
Interest income
Loans and leases			$88,608			$89,474			$93,632			(1)%			(5)%
Interest and dividends on investments:
Taxable			16,570			15,365			11,253			8%			47%
Exempt from federal income tax			2,039			2,020			1,653			1%			23%
Dividends			--			22			36			(100)%			(100)%
Temporary investments & interest bearing cash			268			207			84			29%			219%
Total interest income			107,485			107,088			106,658			0%			1%
Interest expense
Deposits			20,190			22,132			28,252			(9)%			(29)%
Repurchase agreements and fed funds purchased			153			163			262			(6)%			(42)%
Junior subordinated debentures			1,957			2,114			3,306			(7)%			(41)%
Term debt			641			917			1,794			(30)%			(64)%
Total interest expense			22,941			25,326			33,614			(9)%			(32)%
Net interest income			84,544			81,762			73,044			3%			16%
Provision for loan and lease losses			68,593			52,108			31,955			32%			115%
Non-interest income
Service charges			8,392			8,542			8,668			(2)%			(3)%
Brokerage fees			2,480			1,993			2,384			24%			4%
Mortgage banking revenue, net			4,071			4,288			(408)			(5)%			nm
Net (loss) gain on investment securities			(600)			158			(73)			(480)%			nm
Gain (loss) on junior subordinated debentures carried at fair value			(3,691)			982			8,751			(476)%			(142)%
Other income			2,372			1,962			1,559			21%			52%
Total non-interest income			13,024			17,925			20,881			(27)%			(38)%
Non-interest expense
Salaries and benefits			32,153			31,583			29,557			2%			9%
Occupancy and equipment			10,407			9,937			9,442			5%			10%
Intangible amortization			2,122			1,319			1,438			61%			48%
FDIC assessments			3,180			3,321			1,368			(4)%			132%
Net loss on other real estate owned			9,094			8,641			2,658			5%			242%
VISA litigation			--			--			(2,085)			nm			(100)%
Goodwill impairment			--			--			982			nm			(100)%
Merger related expenses			--			--			--			--			--
Other			15,544			13,548			12,944			15%			20%
Total non-interest expense			72,500			68,349			56,304			6%			29%
(Loss) income before (benefit from) provision for income taxes			(43,525)			(20,770)			5,666			110%			(868)%
(Benefit from) provision for income taxes			(16,843)			(13,626)			1,836			24%			(1017)%
Net (loss) income			(26,682)			(7,144)			3,830			273%			(797)%
Dividends and undistributed earnings allocated to participating securities			8			7			5			14%			60%
Preferred stock dividend - undeclared			3,234			3,225			1,620			0%			100%
Net (loss) earnings available to common shareholders			$(29,924)			$(10,376)			$2,205			188%			(1457)%
Weighted average shares outstanding			86,782,397			74,084,640			60,134,062			17%			44%
Weighted average diluted shares outstanding			86,782,397			74,084,640			60,491,507			17%			43%
(Loss) earnings per common share – Basic			$(0.34)			$(0.14)			$0.04			143%			(950)%
(Loss) earnings per common share – Diluted			$(0.34)			$(0.14)			$0.04			143%			(950)%
nm = not meaningful

Umpqua Holdings Corporation
Consolidated Statements of Operations
(Unaudited)
			Year Ended:
Dollars in thousands, except per share data			Dec 31, 2009			Dec 31, 2008			% Change
Interest income
Loans and leases			$355,195			$393,927			(10)%
Interest and dividends on investments:
Taxable			60,195			41,189			46%
Exempt from federal income tax			7,794			6,653			17%
Dividends			22			334			(93)%
Temporary investments & interest bearing cash			526			443			19%
Total interest income			423,732			442,546			(4)%
Interest expense
Deposits			88,742			129,370			(31)%
Repurchase agreements and fed funds purchased			680			2,220			(69)%
Junior subordinated debentures			9,026			13,655			(34)%
Other borrowings			4,576			6,994			(35)%
Total interest expense			103,024			152,239			(32)%
Net interest income			320,708			290,307			10%
Provision for loan and lease losses			209,124			107,678			94%
Non-interest income
Service charges			32,957			34,775			(5)%
Brokerage fees			7,597			8,948			(15)%
Mortgage banking revenue, net			18,688			2,436			667%
Net gain (loss) on investment securities			(1,677)			1,349			(224)%
Gain on junior subordinated debentures carried at fair value			6,482			38,903			(83)%
Proceeds from Visa mandatory partial redemption			--			12,633			(100)%
Other income			9,469			8,074			17%
Total non-interest income			73,516			107,118			(31)%
Non-interest expense
Salaries and benefits			126,850			114,600			11%
Occupancy and equipment			39,673			37,047			7%
Intangible amortization			6,165			5,857			5%
FDIC assessments			15,825			5,182			205%
Net loss on other real estate owned			23,204			8,313			179%
Visa litigation			--			(5,183)			(100)%
Goodwill impairment			111,952			982			nm
Merger related expenses			273			--			nm
Other			55,461			49,772			11%
Total non-interest expense			379,403			216,570			75%
(Loss) income before (benefit from) provision for income taxes			(194,303)			73,177			(366)%
(Benefit from) provision for income taxes			(40,937)			22,133			(285)%
Net (loss) income			(153,366)			51,044			(400)%
Dividends and undistributed earnings allocated to participating securities			30			154			(81)%
Preferred stock dividend - undeclared			12,866			1,620			694%
Net (loss) earnings available to common shareholders			$(166,262)			$49,270			(437)%
Weighted average shares outstanding			70,399,201			60,083,788			17%
Weighted average diluted shares outstanding			70,399,201			60,423,867			17%
(Loss) earnings per share – Basic			$(2.36)			$0.82			(388)%
(Loss) earnings per share – Diluted			$(2.36)			$0.82			(388)%
nm = not meaningful

Umpqua Holdings Corporation
Consolidated Balance Sheets
(Unaudited)
												Sequential			Year over
												Quarter			Year
Dollars in thousands, except per share data			Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			% Change			% Change
Assets:
Cash and due from banks, non-interest bearing			$113,353			$108,768			$139,909			4%			(19)%
Cash and due from banks, interest bearing			491,462			261,642			8,155			88%			nm
Temporary investments			598			575			56,612			4%			(99)%
Investment securities:
Trading			2,273			1,912			1,987			19%			14%
Available for sale			1,795,616			1,848,482			1,238,712			(3)%			45%
Held to maturity			6,061			6,211			15,812			(2)%			(62)%
Loans held for sale			33,715			23,614			22,355			43%			51%
Loans and leases			5,999,267			6,071,042			6,131,374			(1)%			(2)%
Less: Allowance for loan and lease losses			(107,657)			(103,136)			(95,865)			4%			12%
Loans and leases, net			5,891,610			5,967,906			6,035,509			(1)%			(2)%
Restricted equity securities			15,211			15,211			16,491			0%			(8)%
Premises and equipment, net			103,266			101,883			104,694			1%			(1)%
Mortgage servicing rights, at fair value			12,625			11,552			8,205			9%			54%
Goodwill and other intangibles, net			639,634			641,759			757,833			0%			(16)%
Other real estate owned			24,566			26,705			27,898			(8)%			(12)%
Other assets			251,382			188,126			163,378			34%			54%
Total assets			$9,381,372			$9,204,346			$8,597,550			2%			9%
Liabilities:
Deposits			$7,440,434			$7,215,821			$6,588,935			3%			13%
Securities sold under agreements to repurchase			45,180			50,031			47,588			(10)%			(5)%
Term debt			76,274			76,329			206,531			0%			(63)%
Junior subordinated debentures, at fair value			85,666			81,992			92,520			4%			(7)%
Junior subordinated debentures, at amortized cost			103,188			103,269			103,655			0%			0%
Other liabilities			64,113			70,754			71,313			(9)%			(10)%
Total liabilities			7,814,855			7,598,196			7,110,542			3%			10%
Shareholders' equity:
Preferred stock			204,335			203,779			202,178			0%			1%
Common stock			1,253,288			1,252,786			1,005,820			0%			25%
Retained earnings			83,939			118,204			264,938			(29)%			(68)%
Accumulated other comprehensive income			24,955			31,381			14,072			(20)%			77%
Total shareholders' equity			1,566,517			1,606,150			1,487,008			(2)%			5%
Total liabilities and shareholders' equity			$9,381,372			$9,204,346			$8,597,550			2%			9%
Common shares outstanding at period end			86,785,588			86,780,559			60,146,400			0%			44%
Book value per common share			$15.70			$16.16			$21.36			(3)%			(27)%
Tangible book value per common share			$8.33			$8.76			$8.76			(5)%			(5)%
Tangible equity - common			$722,548			$760,612			$526,997			(5)%			37%
Tangible common equity to tangible assets			8.27%			8.88%			6.72%
nm = not meaningful

Umpqua Holdings Corporation
Loan Portfolio
(Unaudited)
																		Sequential			Year over
Dollars in thousands			Dec 31, 2009					Sep 30, 2009					Dec 31, 2008					Quarter			Year
Loans and leases by class:			Amount		Mix			Amount		Mix			Amount		Mix			% Change			% Change
Commercial real estate			$3,523,104		59%			$3,438,923		57%			$3,257,796		53%			2%			8%
Residential real estate			443,731		7%			441,613		7%			435,287		7%			0%			2%
Construction			618,974		10%			748,337		12%			909,532		15%			(17)%			(32)%
Total real estate			4,585,809		76%			4,628,873		76%			4,602,615		75%			(1)%			0%
Commercial			1,354,469		23%			1,381,549		22%			1,460,909		24%			(2)%			(7)%
Leases			34,528		1%			36,720		1%			40,155		1%			(6)%			(14)%
Installment and other			35,863		1%			34,833		1%			39,145		1%			3%			(8)%
Deferred loan fees, net			(11,402)		0%			(10,933)		0%			(11,450)		0%			4%			0%
Total loans and leases			$5,999,267		100%			$6,071,042		100%			$6,131,374		100%			(1)%			(2)%

Umpqua Holdings Corporation
Deposits by Type/Core Deposits
(Unaudited)
																					Sequential		Year over
Dollars in thousands				Dec 31, 2009							Sep 30, 2009					Dec 31, 2008					Quarter		Year
				Amount			Mix				Amount		Mix			Amount		Mix			% Change		% Change
Demand, non interest-bearing				$1,398,332			19%				$1,337,280		19%			$1,254,079		19%			5%		12%
Demand, interest-bearing				3,388,696			46%				3,185,128		44%			2,810,935		43%			6%		21%
Savings				297,293			4%				294,482		4%			277,154		4%			1%		7%
Time				2,356,113			32%				2,398,931		33%			2,246,767		34%			(2)%		5%
Total Deposits				$7,440,434			100%				$7,215,821		100%			$6,588,935		100%			3%		13%
Total Core deposits-ending (1)				$5,837,024			78%				$5,608,058		78%			$5,277,728		80%			4%		11%
Number of open accounts:
Demand, non interest-bearing				157,199							156,659					147,395					0%		7%
Demand, interest-bearing				62,883							63,483					59,938					(1)%		5%
Savings				74,884							74,421					69,661					1%		7%
Time				34,249							35,495					33,023					(4)%		4%
Total				329,215							330,058					310,017					0%		6%
Average balance per account:
Demand, non interest-bearing				$8.9							$8.5					$8.5
Demand, interest-bearing				53.9							50.2					46.9
Savings				4.0							4.0					4.0
Time				68.8							67.6					68.0
Total				22.6							21.9					21.3
(1) Core deposits are defined as total deposits less time deposits greater than $100,000.

Umpqua Holdings Corporation
Credit Quality
(Unaudited)
												Sequential			Year over
			Quarter Ended									Quarter			Year
Dollars in thousands			Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			% Change			% Change
Allowance for credit losses:
Balance beginning of period			$103,136			$98,370			$93,982
Provision for loan and lease losses			68,593			52,108			31,955			32%			115%
Charge-offs			(65,502)			(48,443)			(31,222)			35%			110%
Less: Recoveries			1,430			1,101			1,150			30%			24%
Net charge-offs			(64,072)			(47,342)			(30,072)			35%			113%
Total Allowance for loan and lease losses			107,657			103,136			95,865			4%			12%
Reserve for unfunded commitments			731			841			983
Total Allowance for credit losses			$108,388			$103,977			$96,848			4%			12%
Net charge-offs to average loans and leases (annualized)			4.19%			3.07%			1.94%
Recoveries to gross charge-offs			2.18%			2.27%			3.68%
Allowance for credit losses to loans and leases			1.81%			1.71%			1.58%
Nonperforming assets:
Loans on non-accrual status			$193,118			$123,714			$127,914			56%			51%
Loans past due 90+ days & accruing interest			5,909			5,614			5,452			5%			8%
Total nonperforming loans			199,027			129,328			133,366			54%			49%
Other real estate owned			24,566			26,705			27,898			(8)%			(12)%
Total nonperforming assets			$223,593			$156,033			$161,264			43%			39%
Nonperforming loans to total loans and leases			3.32%			2.13%			2.18%
Nonperforming assets to total assets			2.38%			1.70%			1.88%
Past due 30-89 days			$41,458			$46,069			$59,138			(10)%			(30)%
Past due 30-89 days to total loans and leases			0.69%			0.76%			0.96%

Umpqua Holdings Corporation
Credit Quality (continued)
(Unaudited)
			Year Ended:
Dollars in thousands			Dec 31, 2009			Dec 31, 2008			% Change
Allowance for credit losses
Balance beginning of period			$95,865			$84,904
Provision for loan and lease losses			209,124			107,678			94%
Charge-offs			(200,867)			(101,052)			99%
Less: Recoveries			3,535			4,335			(18)%
Net charge-offs			(197,332)			(96,717)			104%
Total Allowance for loan and lease losses			107,657			95,865			12%
Reserve for unfunded commitments			731			983
Total Allowance for credit losses			$108,388			$96,848			12%
Net charge-offs to average loans and leases (annualized)			3.23%			1.58%
Recoveries to gross charge-offs			1.76%			4.29%

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
													Sequential			Year over
				Quarter Ended:									Quarter			Year
				Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			Change			Change
Net Interest Spread:
Yield on loans and leases				5.75%			5.77%			6.03%			(0.02)			(0.28)
Yield on taxable investments				4.03%			4.22%			4.88%			(0.19)			(0.85)
Yield on tax-exempt investments (1)				5.81%			5.86%			5.81%			(0.05)			0.00
Yield on temporary investments & interest bearing cash				0.28%			0.28%			0.82%			0.00			(0.54)
Total yield on earning assets (1)				5.15%			5.29%			5.85%			(0.14)			(0.70)
Cost of interest bearing deposits				1.35%			1.50%			2.15%			(0.15)			(0.80)
Cost of securities sold under agreements to repurchase and fed funds purchased				1.09%			1.08%			1.36%			0.01			(0.27)
Cost of term debt				3.33%			3.68%			3.45%			(0.35)			(0.12)
Cost of junior subordinated debentures				4.19%			4.50%			6.42%			(0.31)			(2.23)
Total cost of interest bearing liabilities				1.45%			1.62%			2.34%			(0.17)			(0.89)
Net interest spread (1)				3.70%			3.67%			3.51%			0.03			0.19
Net interest margin – Consolidated (1)				4.06%			4.05%			4.02%			0.01			0.04
Net interest margin – Bank (1)				4.15%			4.15%			4.20%			0.00			(0.05)
As reported (GAAP):
Return on average assets				(1.27)%			(0.45)%			0.10%			(0.82)			(1.37)
Return on average tangible assets				(1.37)%			(0.49)%			0.11%			(0.88)			(1.48)
Return on average common equity				(8.41)%			(3.19)%			0.70%			(5.22)			(9.11)
Return on average tangible common equity				(15.39)%			(6.35)%			1.75%			(9.04)			(17.14)
Efficiency ratio – Consolidated				73.57%			67.91%			59.46%			5.66			14.11
Efficiency ratio – Bank				67.99%			65.21%			60.84%			2.78			7.15
Excluding merger expense & goodwill impairment:
Return on average assets				(1.27)%			(0.45)%			0.15%			(0.82)			(1.42)
Return on average tangible assets				(1.37)%			(0.49)%			0.17%			(0.88)			(1.54)
Return on average common equity				(8.41)%			(3.19)%			1.00%			(5.22)			(9.41)
Return on average tangible common equity				(15.39)%			(6.35)%			2.52%			(9.04)			(17.91)
Efficiency ratio – Consolidated				73.57%			67.91%			58.42%			5.66			15.15
Efficiency ratio – Bank				67.99%			65.21%			60.84%			2.78			7.15
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.

Umpqua Holdings Corporation
Selected Ratios
(Unaudited)
				Year Ended:
				Dec 31, 2009			Dec 31, 2008			Change
Net Interest Spread:
Yield on loans and leases				5.78%			6.42%			(0.64)
Yield on taxable investments				4.34%			4.70%			(0.36)
Yield on tax-exempt investments (1)				5.80%			5.68%			0.12
Yield on temporary investments & interest bearing cash				0.27%			1.82%			(1.55)
Total yield on earning assets (1)				5.39%			6.18%			(0.79)
Cost of interest bearing deposits				1.56%			2.49%			(0.93)
Cost of securities sold under agreements to repurchase and fed funds purchased				1.12%			2.23%			(1.11)
Cost of term debt				3.53%			3.60%			(0.07)
Cost of junior subordinated debentures				4.74%			6.03%			(1.29)
Total cost of interest bearing liabilities				1.70%			2.66%			(0.96)
Net interest spread (1)				3.69%			3.52%			0.17
Net interest margin – Consolidated (1)				4.09%			4.07%			0.02
Net interest margin – Bank (1)				4.20%			4.25%			(0.05)
As reported (GAAP):
Return on average assets				(1.85)%			0.59%			(2.44)
Return on average tangible assets				(2.01)%			0.65%			(2.66)
Return on average equity				(12.63)%			3.93%			(16.56)
Return on average tangible equity				(26.91)%			9.99%			(36.90)
Efficiency ratio – Consolidated				95.34%			54.08%			41.26
Efficiency ratio – Bank				93.77%			56.34%			37.43
Excluding merger expense & goodwill impairment:
Return on average assets				(0.60)%			0.60%			(1.20)
Return on average tangible assets				(0.65)%			0.66%			(1.31)
Return on average equity				(4.11)%			4.01%			(8.12)
Return on average tangible equity				(8.77)%			10.19%			(18.96)
Efficiency ratio – Consolidated				67.14%			53.84%			13.30
Efficiency ratio – Bank				65.08%			56.34%			8.74
(1) Tax exempt interest has been adjusted to a taxable equivalent basis using a 35% tax rate.

Umpqua Holdings Corporation
Average Balances
(Unaudited)
												Sequential			Year over
			Quarter Ended:									Quarter			Year
Dollars in thousands			Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			% Change			% Change
Temporary investments & interest bearing cash			$384,492			$291,214			$40,961			32%			839%
Investment securities, taxable			1,645,629			1,458,333			924,722			13%			78%
Investment securities, tax-exempt			207,984			203,676			167,127			2%			24%
Loans held for sale			43,662			39,915			14,900			9%			193%
Loans and leases			6,072,606			6,111,146			6,158,620			(1)%			(1)%
Total earning assets			8,354,373			8,104,284			7,306,330			3%			14%
Goodwill & other intangible assets, net			640,995			642,315			759,424			0%			(16)%
Total assets			9,332,737			9,100,407			8,425,353			3%			11%
Non interest bearing demand deposits			1,392,988			1,325,328			1,254,846			5%			11%
Interest bearing deposits			5,943,110			5,866,098			5,235,651			1%			14%
Total deposits			7,336,098			7,191,426			6,490,497			2%			13%
Interest bearing liabilities			6,260,408			6,211,237			5,723,779			1%			9%
Shareholders’ equity - common			1,412,324			1,291,218			1,262,566			9%			12%
Tangible common equity (1)			771,329			648,903			503,142			19%			53%

Umpqua Holdings Corporation
Average Balances
(Unaudited)
			Year Ended:
Dollars in thousands			Dec 31, 2009			Dec 31, 2008			% Change
Temporary investments & interest bearing cash			$193,486			$24,357			694%
Investment securities, taxable			1,386,960			883,987			57%
Investment securities, tax-exempt			198,641			170,277			17%
Loans held for sale			42,261			17,840			137%
Loans and leases			6,103,666			6,118,540			0%
Total earning assets			7,925,014			7,215,001			10%
Goodwill & other intangible assets, net			698,223			761,672			(8)%
Total assets			8,975,178			8,342,005			8%
Non interest bearing demand deposits			1,318,954			1,255,263			5%
Interest bearing deposits			5,691,785			5,204,313			9%
Total deposits			7,010,739			6,459,576			9%
Interest bearing liabilities			6,072,812			5,724,340			6%
Shareholders’ equity - common			1,315,953			1,254,730			5%
Tangible common equity (1)			617,730			493,058			25%

(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
Mortgage Banking Activity
(unaudited)
												Sequential			Year over
			Quarter Ended:									Quarter			Year
Dollars in thousands			Dec 31, 2009			Sep 30, 2009			Dec 31, 2008			% Change			% Change
Mortgage Servicing Rights (MSR):
Mortgage loans serviced for others			$1,277,832			$1,205,528			$955,494			6%			34%
MSR Asset, at fair value			$12,625			$11,552			$8,205			9%			54%
MSR as % of serviced portfolio			0.99%			0.96%			0.86%
Mortgage Banking Revenue:
Origination and sale			$3,804			$4,294			$1,987			(11)%			91%
Servicing			805			796			633			1%			27%
Change in fair value of MSR asset			(538)			(802)			(3,028)			(33)%			(82)%
Total Mortgage Banking Revenue			$4,071			$4,288			$(408)			(5)%			nm
Closed loan volume			$172,303			$158,957			$70,430			8%			145%
			Year Ended:
Dollars in thousands			Dec 31, 2009			Dec 31, 2008			% Change
Mortgage Banking Revenue:
Origination and sale			$18,844			$6,940			172%
Servicing			2,993			2,472			21%
Change in fair value of MSR asset			(3,149)			(4,578)			(31)%
Change in fair value of MSR hedge			--			(2,398)			(100)%
Total Mortgage Banking Revenue			$18,688			$2,436			667%
Closed loan volume			$756,997			$328,327			131%

nm = not meaningful

Additional detail on credit quality, trends, the loan portfolio by segment and non-performing assets

The following tables present additional detail covering the following aspects of the Company's loan portfolio:

• Table 1 - Residential development loan trends by region
• Table 2 - Residential development loan stratification by size and by region
• Table 3 - Non-performing asset detail by type and by region
• Table 4 - Loans past due 30-89 days by type and by region
• Table 5 - Loans past due 30-89 days trends
• Table 6 - Restructured loans by type and by region
• Table 7 - Commercial real estate loan portfolio by type and by region
• Table 8 - Commercial real estate loan portfolio by type and by year of maturity
• Table 9 - Commercial real estate loan portfolio by type and by year of origination
• Table 10 - Commercial construction loan portfolio by type and by region
• Table 11 - Commercial loan portfolio by type and by region

The following is a geographic distribution of the residential development portfolio as of December 31, 2009, September 30, 2009 and December 31, 2008:

Table 1- Residential development loan trends by region
(Dollars in thousands)															Non-
												% change			performing			Performing
			Balance			Balance			Balance			from			loans			loans
			12/31/08			9/30/09			12/31/09			12/31/08			12/31/09			12/31/09
Northwest Oregon			$134,506			$93,745			$88,762			(34)%			$4,090			$84,672
Central Oregon			31,186			13,753			9,059			(71)%			2,729			6,330
Southern Oregon			33,850			21,852			19,006			(44)%			4,950			14,056
Washington			27,531			17,690			8,616			(69)%			0			8,616
Greater Sacramento			109,181			80,107			74,993			(31)%			23,391			51,602
Northern California			47,905			31,336			25,373			(47)%			10,324			15,049
Total			$384,159			$258,483			$225,809			(41)%			$45,484			$180,325
% of total loan portfolio			6%			4%			4%									3%
Quarter change $			$(71,158)			$(42,807)			$(32,674)
Quarter change %			(16)%			(14)%			(13)%

The following is a stratification by size and region of the remaining residential development loans still on accrual status (excludes non-performing loans) as of December 31, 2009:

Table 2 - Residential development loan stratification by size and by region
(Dollars in thousands)
						$250k			$1 million		$3 million		$5 million
			$250k			to			to		to		to		$10 million
			and less			$1 million			$3 million		$5 million		$10 million		and greater		Total
Northwest Oregon			$4,674			$8,770			$22,307		$17,480		$16,635		$14,806		$84,672
Central Oregon			514			2,115			3,701		--		--		--		6,330
Southern Oregon			1,209			7,330			5,517		--		--		--		14,056
Washington			--			632			4,792		3,192		--		--		8,616
Greater Sacramento			3,605			6,487			4,628		4,867		11,455		20,560		51,602
Northern California			1,640			3,792			9,617		--		--		--		15,049
Total			$11,642			$29,126			$50,562		$25,539		$28,090		$35,366		$180,325
% of Total			6%			16%			28%		14%		16%		20%		100%

The following is a distribution of non-performing assets by type and by region as of December 31, 2009:

Table 3 - Non-performing asset detail by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total
Loans 90 days past due:
Residential development			$--			$--			$--			$--			$--			$--			$--
Commercial construction			--			--			--			--			--			--			--
Commercial real estate			--			--			--			247			--			--			247
Commercial			--			--			--			1,000			266			--			1,266
Other			4,222			--			--			--			174			--			4,396
Total 90 days past due			$4,222			$--			$--			$1,247			$440			$--			$5,909
Non-accrual loans:
Residential development			$4,090			$2,729			$4,950			$--			$23,391			$10,324			$45,484
Commercial construction			10,061			987			--			2,700			18,602			4,308			36,658
Commercial real estate			16,101			4,043			5,029			1,566			20,821			14,819			62,379
Commercial			31,329			3,591			481			9,963			328			2,905			48,597
Other			--			--			--			--			--			--			--
Total non-accrual loans			$61,581			$11,350			$10,460			$14,229			$63,142			$32,356			$193,118
Total non-performing loans			$65,803			$11,350			$10,460			$15,476			$63,582			$32,356			$199,027
Other real estate owned:
Residential development			$2,772			$4,643			$1,064			$4,885			$1,987			$144			$15,495
Commercial construction			359			392			--			426			3,595			--			4,772
Commercial real estate			430			--			514			--			--			--			944
Commercial			303			982			--			--			--			151			1,436
Other			1,919			--			--			--			--			--			1,919
Total OREO			$5,783			$6,017			$1,578			$5,311			$5,582			$295			$24,566
Total non-performing assets			$71,586			$17,367			$12,038			$20,787			$69,164			$32,651			$223,593
% of total			32%			8%			5%			9%			31%			15%			100%

The Company has aggressively charged-down impaired assets to their disposition values. As of December 31, 2009, the non-performing assets of $223.6 million have been written down by 41%, or $154.8 million, from their original balance of $378.4 million.

The following is a distribution of loans past due 30-89 days by loan type by region as of December 31, 2009:

Table 4 - Loans past due 30-89 days by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total
Loans 30-89 days past due:
Residential development			$7,500			$1,041			$--			$--			$283			$126			$8,950
Commercial construction			442			--			--			683			--			110			1,235
Commercial real estate			4,160			695			287			3,819			2,629			7,055			18,645
Commercial			1,553			529			--			--			772			5,531			8,385
Other			3,171			--			--			--			1,072			--			4,243
Total 30-89 days past due			$16,826			$2,265			$287			$4,502			$4,756			$12,822			$41,458

Table 5 - Loans past due 30-89 days trends
(Dollars in thousands)
												Sequential			Year
												Quarter			Over Year
			12/31/09			9/30/09			12/31/08			% Change			% Change
Loans 30-89 days past due:
Residential development			$8,950			$8,766			$29,472			2%			(70)%
Commercial construction			1,235			9,361			629			(87)%			96%
Commercial real estate			18,645			14,405			16,882			29%			10%
Commercial			8,385			10,294			8,296			(19)%			1%
Other			4,243			3,243			3,859			31%			10%
Total 30-89 days past due			$41,458			$46,069			$59,138			(10)%			30%

The following is a distribution of restructured loans by loan type by region as of December 31, 2009:

Table 6 - Restructured loans by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total
Restructured loans, accrual basis:
Residential development			$26,994			$--			$306			$7,985			$33,103			$--			$68,388
Commercial construction			--			--			--			--			--			--			--
Commercial real estate			18,349			--			5,790			--			9,742			7,866			41,747
Commercial			715			--			--			--			279			18,628			19,622
Other			4,634			--			--			--			48			--			4,682
Total restructured loans			$50,692			$--			$6,096			$7,985			$43,172			$26,494			$134,439

The following is a distribution of the term commercial real estate portfolio by type and by region as of December 31, 2009:

Table 7 - Commercial real estate loan portfolio by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern						% of total
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total			Portfolio
Non-owner occupied:
Commercial building			$110,805			$4,367			$37,924			$15,820			$106,502			$101,516			$376,934			11%
Medical office			80,514			1,104			15,711			4,210			16,473			13,562			131,574			4%
Professional office			176,920			8,649			54,413			26,213			106,395			65,559			438,149			12%
Storage			20,747			352			18,698			--			17,477			39,876			97,150			3%
Multifamily 5+			60,579			249			10,251			1,428			5,630			20,173			98,310			3%
Resort			2,064			--			5,081			--			--			--			7,145			0%
Retail			223,272			3,528			33,101			11,178			165,667			73,723			510,469			15%
Residential			32,030			352			13,002			6,056			10,219			18,677			80,336			2%
Farmland & agriculture			5,976			223			638			--			204			29,000			36,041			1%
Apartments			61,395			--			9,925			--			11,330			22,601			105,251			3%
Assisted living			106,607			--			67,486			--			2,933			8,725			185,751			5%
Hotel/motel			50,782			--			1,023			11,112			18,066			18,653			99,636			3%
Industrial			29,656			3,584			7,751			--			36,983			23,565			101,539			3%
RV park			31,158			675			15,490			--			821			5,963			54,107			2%
Warehouse			11,416			--			237			--			1,198			1,717			14,568			0%
Other			31,851			1,055			3,668			3,522			3,746			5,599			49,441			1%
Total non-owner occupied			$1,035,772			$24,138			$294,399			$79,539			$503,644			$448,909			$2,386,401			68%
Owner occupied:
Commercial building			$163,314			$2,639			$31,417			$12,388			$61,729			$108,766			$380,253			11%
Medical office			64,699			3,319			17,553			2,218			1,646			25,977			115,412			3%
Professional office			49,118			2,830			12,479			3,324			21,489			17,174			106,414			3%
Storage			15,061			149			--			663			148			5,087			21,108			1%
Multifamily 5+			869			--			60			--			158			--			1,087			0%
Resort			5,736			--			--			--			3,131			1,067			9,934			0%
Retail			59,651			2,939			12,402			4,055			31,954			57,872			168,873			5%
Residential			6,974			--			2,632			--			1,401			2,814			13,821			0%
Farmland & agriculture			10,906			--			822			--			--			44,904			56,632			2%
Apartments			202			--			741			--			51			--			994			0%
Assisted living			27,656			--			146			--			6,964			15,619			50,385			1%
Hotel/motel			12,226			--			192			716			--			24,330			37,464			1%
Industrial			53,607			1,409			13,958			1,562			9,480			39,030			119,046			3%
RV park			144			--			2,544			--			161			1,239			4,088			0%
Warehouse			10,885			--			410			--			1,145			6,921			19,361			1%
Other			28,417			1,513			--			--			276			1,625			31,831			1%
Total owner occupied			$509,465			$14,798			$95,356			$24,926			$139,733			$352,425			$1,136,703			32%
Total commercial real estate			$1,545,237			$38,936			$389,755			$104,465			$643,377			$801,334			$3,523,104			100%
% of total			44%			1%			11%			3%			18%			23%			100%

The following is a distribution of the term commercial real estate portfolio by type and by year of maturity as of December 31, 2009:

Table 8 - Commercial real estate loan portfolio by type and by year of maturity
(Dollars in thousands)
									2012-			2014-			2016-			2021 &
			2010			2011			2013			2015			2020			Later			Total
Non-owner occupied:
Commercial building			$17,630			$19,250			$61,651			$59,837			$202,742			$15,824			$376,934
Medical office			1,280			955			5,181			34,265			79,066			10,827			131,574
Professional office			32,221			7,338			89,564			101,780			194,867			12,379			438,149
Storage			1,317			2,125			14,182			21,593			54,559			3,374			97,150
Multifamily 5+			4,100			2,144			11,275			22,792			53,327			4,672			98,310
Resort			--			--			692			871			1,193			4,389			7,145
Retail			28,368			21,276			65,163			158,049			232,364			5,249			510,469
Residential			23,840			10,661			8,952			10,548			21,662			4,673			80,336
Farmland & agriculture			10,171			349			2,948			4,843			15,159			2,571			36,041
Apartments			6,033			1,683			5,789			15,872			73,174			2,700			105,251
Assisted living			22,847			24,084			20,919			33,489			82,137			2,275			185,751
Hotel/motel			4,830			6,034			18,065			35,732			30,271			4,704			99,636
Industrial			2,780			3,856			16,434			24,948			47,290			6,231			101,539
RV park			1,308			846			6,712			14,685			28,894			1,662			54,107
Warehouse			420			125			6,862			2,795			4,366			--			14,568
Other			16,114			4,463			9,158			6,942			9,098			3,666			49,441
Total non-owner occupied			$173,259			$105,189			$343,547			$549,041			$1,130,169			$85,196			$2,386,401
Owner occupied:
Commercial building			$12,932			$4,284			$35,356			$56,324			$224,348			$47,009			$380,253
Medical office			--			78			6,873			10,821			74,471			23,169			115,412
Professional office			2,908			1,000			18,857			24,581			52,664			6,404			106,414
Storage			1,480			149			2,621			1,370			14,794			694			21,108
Multifamily 5+			25			--			638			244			180			--			1,087
Resort			--			--			108			3,955			5,871			--			9,934
Retail			1,545			5,078			19,517			32,809			99,310			10,614			168,873
Residential			2,407			230			2,681			3,169			3,655			1,679			13,821
Farmland & agriculture			1,128			3,677			2,585			11,961			34,678			2,603			56,632
Apartments			--			--			--			51			943			--			994
Assisted living			175			--			4,932			18,576			24,500			2,202			50,385
Hotel/motel			1,744			9			8,657			6,846			11,038			9,170			37,464
Industrial			3,520			3,788			16,441			23,826			52,617			18,854			119,046
RV park			165			--			777			571			2,414			161			4,088
Warehouse			1,149			338			1,618			9,128			7,024			104			19,361
Other			1,768			715			169			762			3,238			25,179			31,831
Total owner occupied			$30,946			$19,346			$121,830			$204,994			$611,745			$147,842			$1,136,703
Total commercial real estate			$204,205			$124,535			$465,377			$754,035			$1,741,914			$233,038			$3,523,104
% of total			6%			4%			13%			21%			49%			7%			100%

The following is a distribution of the term commercial real estate portfolio by type and by year of origination as of December 31, 2009:

Table 9 - Commercial real estate loan portfolio by type and by year of origination
(Dollars in thousands)
			Prior to			2000-			2005-			2007-
			2000			2004			2006			2008			2009			Total
Non-owner occupied:
Commercial building			$14,211			$90,648			$63,746			$144,016			$64,313			$376,934
Medical office			627			48,475			17,947			47,143			17,382			131,574
Professional office			13,804			168,057			140,227			83,757			32,304			438,149
Storage			1,940			49,505			26,866			18,487			352			97,150
Multifamily 5+			3,709			27,098			19,122			42,829			5,552			98,310
Resort			737			5,715			--			693			--			7,145
Retail			10,439			178,260			158,973			148,617			14,180			510,469
Residential			1,328			10,029			27,581			27,379			14,019			80,336
Farmland & agriculture			856			8,217			12,328			6,899			7,741			36,041
Apartments			838			25,494			23,169			23,176			32,574			105,251
Assisted living			7,356			55,791			92,412			16,164			14,028			185,751
Hotel/motel			12,537			43,180			20,097			22,990			832			99,636
Industrial			3,298			42,813			40,341			14,450			637			101,539
RV park			3,127			17,656			16,553			11,071			5,700			54,107
Warehouse			1,131			8,989			3,828			620			--			14,568
Other			659			10,332			14,962			20,764			2,724			49,441
Total non-owner occupied			$76,597			$790,259			$678,152			$629,055			$212,338			$2,386,401
Owner occupied:
Commercial building			$10,711			$82,631			$91,642			$124,725			$70,544			$380,253
Medical office			2,284			22,428			13,099			27,246			50,355			115,412
Professional office			4,184			34,752			28,700			33,004			5,774			106,414
Storage			547			5,312			5,437			9,164			648			21,108
Multifamily 5+			179			908			--			--			--			1,087
Resort			415			6,412			139			--			2,968			9,934
Retail			6,024			39,775			61,738			56,705			4,631			168,873
Residential			128			5,226			4,331			2,336			1,800			13,821
Farmland & agriculture			1,499			10,066			15,010			19,343			10,714			56,632
Apartments			51			--			--			943			--			994
Assisted living			4,975			7,831			21,212			14,200			2,167			50,385
Hotel/motel			3,927			15,956			5,765			1,592			10,224			37,464
Industrial			2,929			46,104			36,049			13,852			20,112			119,046
RV park			877			1,074			--			1,993			144			4,088
Warehouse			114			9,410			2,666			2,409			4,762			19,361
Other			--			1,877			21,260			7,911			783			31,831
Total owner occupied			$38,844			$289,762			$307,048			$315,423			$185,626			$1,136,703
Total commercial real estate			$115,441			$1,080,021			$985,200			$944,478			$397,964			$3,523,104
% of total			3%			31%			28%			27%			11%			100%

The following is a distribution of the commercial construction portfolio by type and by region as of December 31, 2009:

Table 10 - Commercial construction loan portfolio by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern						% of total
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total			Portfolio
Non-owner occupied:
Commercial building			$19,726			$--			$3,023			$9,434			$31,565			$2,250			$65,998			18%
Medical office			15,429			--			264			--			--			400			16,093			4%
Professional office			16,472			--			--			--			15,180			3,500			35,152			10%
Storage			6,100			--			--			--			1,711			3,094			10,905			3%
Multifamily 5+			1,339			--			--			--			6,184			--			7,523			2%
Retail			15,801			--			--			--			6,456			1,212			23,469			6%
Residential			29,314			1,778			5,128			4,630			39,188			11,167			91,205			25%
Apartments			13,621			--			--			--			--			--			13,621			4%
Assisted living			16,196			--			--			--			209			--			16,405			5%
Hotel/motel			--			--			--			--			--			4,070			4,070			1%
Industrial			--			--			--			--			1,515			18			1,533			0%
Other			249			--			--			--			--			3,000			3,249			1%
Total non-owner occupied			$134,247			$1,778			$8,415			$14,064			$102,008			$28,711			$289,223			79%
Owner occupied:
Commercial building			$14,342			$--			$171			$--			$10,421			$10,498			$35,432			10%
Medical office			14,472			--			403			--			3,511			463			18,849			5%
Professional office			--			--			--			--			--			--			--			0%
Storage			995			--			--			--			--			--			995			0%
Multifamily 5+			--			--			--			--			--			--			--			0%
Retail			--			--			--			--			--			4,041			4,041			1%
Residential			4,981			--			--			--			3,675			619			9,275			3%
Apartments			860			--			--			--			--			--			860			0%
Assisted living			7,472			--			--			--			--			--			7,472			2%
Hotel/motel			--			--			--			--			--			--			--			0%
Industrial			415			--			118			--			--			--			533			0%
Other			--			--			--			--			--			--			--			0%
Total owner occupied			$43,537			$--			$692			$--			$17,607			$15,621			$77,457			21%
Total commercial construction			$177,784			$1,778			$9,107			$14,064			$119,615			$44,332			$366,680			100%
% of total			48%			1%			2%			4%			33%			12%			100%

The following is a distribution of the commercial loan portfolio by type and by region as of December 31, 2009:

Table 11 - Commercial loan portfolio by type and by region
(Dollars in thousands)
			Northwest			Central			Southern						Greater			Northern						% of total
			Oregon			Oregon			Oregon			Washington			Sacramento			California			Total			Portfolio
Commercial line of credit			$171,342			$3,050			$30,394			$28,005			$151,609			$80,017			$464,417			34%
Asset based line of credit			82,518			160			580			6,501			3,918			53,697			147,374			11%
Term loan			168,579			4,138			28,647			8,970			42,804			126,295			379,433			28%
Agriculture			29,696			--			786			--			287			53,461			84,230			6%
Municipal			15,680			--			20,778			--			73,640			9,798			119,896			9%
Government guaranteed			--			--			--			--			--			60,936			60,936			5%
Small business			45,560			--			--			4,097			48,526			--			98,183			7%
Total commercial loans			$513,375			$7,348			$81,185			$47,573			$320,784			$384,204			$1,354,469			100%
% of total			38%			1%			6%			3%			24%			28%			100%