UMPQUA HOLDINGS CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

FORWARD LOOKING STATEMENTS AND RISK FACTORS

See the discussion of forward-looking statements and risk factors in Part I Item
1 and Item 1A of this report.


The following discussion and analysis of our financial condition and results of
operations constitutes management's review of the factors that affected our
financial and operating performance for the years ended December 31, 2021 and
2020. This discussion should be read in conjunction with the consolidated
financial statements and notes thereto contained elsewhere in this report. For a
discussion of the year ended December 31, 2019, including a comparison to the
year ended December 31, 2020, see Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations, on Registrant's Annual Report
on Form 10-K for the year ended December 31, 2020, filed with the Securities and
Exchange Commission on February 25, 2021.

EXECUTIVE OVERVIEW

COVID-19 Update


We continue to manage our response to the pandemic by adapting to the
recommendations of healthcare officials in order to provide a safe environment
for our customers and associates. To limit the impact of COVID-19 on our
business operations, we have incorporated remote work programs for associates,
where possible, as well as social distancing, enhanced cleaning practices, and
face coverings. We also continue to encourage customers to utilize our mobile
banking app and online access to address their needs.

While we do not know and cannot quantify all of the specific impacts, the extent
to which the COVID-19 pandemic continues to impact our business, results of
operations, and financial condition, as well as our regulatory capital and
liquidity ratios, continues to depend on future developments, which are highly
uncertain and cannot be predicted, including the continued scope and duration of
the pandemic; actions taken by governmental authorities and other third parties
in response to the pandemic, including vaccinations; the effect on our
customers, counterparties, employees and third party service providers; and the
effect on the economy and markets. The risks to our business are more fully
described in Part I, item 1A "Risk Factors" of this Annual Report on Form 10-K.
We are closely monitoring the impact of COVID-19 on all aspects of our business.

Financial Performance


•Earnings per diluted common share were $1.91 for the year ended December 31,
2021, compared to net loss per diluted common share of $6.92 for the year ended
December 31, 2020. The increase in net income for the year ended December 31,
2021, as compared to the prior year, is due mainly to the goodwill impairment of
$1.8 billion taken in 2020. There is no goodwill impairment recorded in the
current period. In addition, we recorded a recapture of the provision for credit
losses of $42.7 million for the year ended December 31, 2021, as compared to a
provision for credit losses of $204.9 million for the year ended December 31,
2020.

•Net interest income was $919.6 million for the year ended December 31, 2021,
compared to $882.5 million for the year ended December 31, 2020. The increase in
net interest income compared to the prior year was primarily due to a decrease
in interest expense as the Bank allowed higher cost deposits to run off and
decreased borrowings during the year, with the impact partially offset by loans
and leases repricing to lower interest rates.

•Net interest margin, on a tax equivalent basis, was 3.18% for the year ended
December 31, 2021, compared to 3.23% for the year ended December 31, 2020. The
decrease in net interest margin compared to the prior year was driven by lower
yields on interest-earning assets, as rates continue to remain low based on the
interest rate cuts that the Federal Reserve instituted as a response to the
COVID-19 pandemic. The decrease was partially offset by a reduction in the cost
of interest-bearing liabilities from the Company's management of the cost of our
funding sources.


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•Non-interest income was $356.3 million for the year ended December 31, 2021,
compared to $412.0 million for the year ended December 31, 2020. The decline was
due primarily to the decrease in residential mortgage banking revenue, as
discussed below, and a decrease in brokerage revenue of $10.5 million, due to
the April 2021 sale of Umpqua Investments. The decrease was partially offset by
a $17.8 million increase in swap derivative gain (loss) recorded in other
income.

•Residential mortgage banking revenue was $186.8 million for the year ended
December 31, 2021, compared to $270.8 million for year ended December 31, 2020.
The decrease in residential mortgage banking revenue was primarily driven by a
decline in for-sale originations and in the gain on sale margin due to
normalizing margins, caused by rising rates that resulted in a slow-down in
refinancing demand. In addition, in mid-2021, the Company strategically shifted
a portion of residential mortgage production to portfolio loans. The decrease
was partially offset by a lower loss on fair value of the MSR asset for the year
ended December 31, 2021, as compared to the prior year.

•For-sale mortgage closed loan volume decreased by 29% in 2021, as compared to
2020. In addition, the gain on sale margin decreased to 3.32%, for the year
ended December 31, 2021, as compared to 4.62% for the year ended December 31,
2020.

•Non-interest expense was $760.5 million for the year ended December 31, 2021,
compared to $2.5 billion for the year ended December 31, 2020. The decrease in
non-interest expense compared to the prior year was driven by the $1.8 billion
goodwill impairment that was recorded in the first quarter of 2020. In addition,
the Bank had a decrease in occupancy and equipment expense, offset by an
increase in merger related expenses due to the pending merger with Columbia. The
efficiency ratio for the year ended December 31, 2021 is 60%, as compared to
196% for the year ended December 31, 2020, with the decrease due to goodwill
impairment taken in 2020.

•Total gross loans and leases were $22.6 billion as of December 31, 2021, an
increase of $773.8 million, or 4%, compared to December 31, 2020.  The increase
in total loans is primarily due to an increase in commercial real estate
balances of $1.1 billion, mostly within multifamily lending, and an increase in
residential real estate balances of $706.5 million. The increase was offset by a
decrease of $957.0 million in commercial balances, due to the decrease in PPP
loans of $1.4 billion during the period, as the majority of these loans were
forgiven by the SBA, as expected.

•Total deposits were $26.6 billion as of December 31, 2021, an increase of $2.0
billion, or 8%, from December 31, 2020. This increase was due to growth in
demand, money market, and savings deposits of $2.1 billion, $437.8 million, and
$463.0 million, respectively. The increases are mainly attributable to customer
saving habits in the current economic environment, resulting in higher average
balances per deposit account. The increase in total deposits also includes a
decline in higher cost time deposits of $1.0 billion.

•Total consolidated assets were $30.6 billion as of December 31, 2021, compared
to $29.2 billion at December 31, 2020. The increase was mainly due to an
increase in available for sale securities and loans during the period.

Credit Quality


•Non-performing assets decreased to $53.1 million, or 0.17% of total assets, as
of December 31, 2021, compared to $69.2 million, or 0.24% of total assets, as of
December 31, 2020. Non-performing loans were $51.2 million, or 0.23% of total
loans and leases, as of December 31, 2021, compared to $67.4 million, or 0.31%
of total loans and leases, as of December 31, 2020.

•The allowance for credit losses on loans and leases was $248.4 million, as of
December 31, 2021, a decrease of $80.0 million, as compared to December 31,
2020. The reserve for unfunded commitments was $12.8 million, as of December 31,
2021, a decrease of $7.5 million, as compared to December 31, 2020. The decrease
in the allowance for credit losses is due to the improvement in economic
forecasts used in the credit models.


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•The Company had a recapture of the provision for credit losses of $42.7 million
for the year ended December 31, 2021. The recapture of the provision for credit
losses in the current period was due to stabilization of credit quality metrics
and improved economic forecasts used in credit models as of December 31, 2021.
As an annualized percentage of average outstanding loans and leases, the
provision for credit losses for the year ended December 31, 2021 was (0.19)%, as
compared to 0.92% for the prior year.

Liquidity


•Total cash and cash equivalents was $2.8 billion as of December 31, 2021, an
increase of $188.4 million from December 31, 2020. The increase in cash and cash
equivalents is consistent with the growth in deposit balances, which will
provide flexibility to fund continued growth in the lending and investment
portfolios.

Capital and Growth Initiatives

•In October 2021, Umpqua and Columbia announced their Merger Agreement under
which the two companies will combine in an all-stock transaction, which is
expected to close in mid-2022.


•Umpqua's Next Gen 2.0 is a continuation of our initiative to modernize the
Bank. Like its predecessor, the Next Gen 2.0 program includes initiatives to
grow revenue, invest in strategic areas for future growth-including technology
and digital enhancements-and advance operational excellence goals to reduce
operating costs and invest the savings in strategic growth opportunities. We
continue to focus on the successful acquisition of customers and talent, as well
as the implementation of new technology to gain efficiencies and advance the
customer experience. The consolidation of stores and back-office facilities, as
well as other related cost-savings initiatives, resulted in expense reduction.
We consolidated 99 stores under Next Gen and Next Gen 2.0, which represents the
rationalization of one-third of our footprint over the past four years. Since we
launched our original Next Gen plans in late 2017, our deposit balances are up
$6.7 billion or 34%; and the number of demand deposit accounts has grown by 4.1%
between September 30, 2017 and December 31, 2021.

•The Company's total risk based capital was 14.3% and its Tier 1 common to risk
weighted assets ratio was 11.6% as of December 31, 2021. As of December 31,
2020, the Company's total risk based ratio was 15.6% and its Tier 1 common to
risk weighted assets ratio was 12.3%.

•The Company repurchased 4.0 million shares for a total of $78.2 million during
the year ended December 31, 2021, under the new share repurchase program, which
authorizes the Company to repurchase up to $400 million of common stock through
July 2022, from time to time in open market transactions, accelerated share
repurchases, or in privately negotiated transactions as permitted under
applicable rules and regulations. The Company does not anticipate any additional
share repurchases under our existing repurchase program given our pending
combination with Columbia.

•The Company declared cash dividends of $0.84 per common share during the year
ended December 31, 2021.

CRITICAL ACCOUNTING ESTIMATES


In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates. The
estimate that is particularly susceptible to significant change is the
determination of the ACL.

The consolidated financial statements are prepared in conformity with GAAP and
follow general practices within the financial services industry, in which the
Company operates. This preparation requires management to make estimates,
assumptions, and judgments that affect the amounts reported in the financial
statements and accompanying notes. These estimates, assumptions, and judgments
are based on information available as of the date of the financial statements;
accordingly, as this information changes, actual results could differ from the
estimates, assumptions, and judgments reflected in the financial statements.
Certain estimates inherently have a greater reliance on the use of assumptions
and judgments and, as such, have a greater possibility of producing results that
could be materially different than originally reported. Management believes the
following estimate is both important to the portrayal of the Company's financial
condition and results of operations and requires difficult, subjective or
complex judgments and, therefore, management considers the following to be a
critical accounting estimate.

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Allowance for Credit Losses


The Bank has established an Allowance for Credit Losses Committee, which is
responsible for, among other things, regularly reviewing the ACL methodology,
including allowance levels, and ensuring that it is designed and applied in
accordance with generally accepted accounting principles. The Company's Audit
and Compliance Committee provides board oversight of the ACL process and reviews
the ACL methodology on a quarterly basis.

CECL is not prescriptive in the methodology used to determine the expected
credit loss estimate. Therefore, management has flexibility in selecting the
methodology. However, the expected credit losses must be estimated over a
financial asset’s contractual term, adjusted for prepayments, utilizing
quantitative and qualitative factors.


The Company utilizes complex models to obtain reasonable and supportable
forecasts of future economic conditions dependent upon specific macroeconomic
variables related to each of the Company's loan and lease portfolios. Loans and
leases deemed to be collateral dependent, or loans deemed to be reasonably
expected to become troubled debt restructured or are troubled debt restructured,
are individually evaluated for loss based on the value of the underlying
collateral or a discounted cash flow analysis.

The adequacy of the ACL is monitored on a regular basis and is based on
management's evaluation of numerous factors, including: the CECL model outputs;
quality of the current loan portfolio; the trend in the loan portfolio's risk
ratings; current economic conditions; loan concentrations; loan growth rates;
past-due and non-performing trends; evaluation of specific loss estimates for
all significant problem loans; historical charge-off and recovery experience;
and other pertinent information. As of December 31, 2021, the Bank used Moody's
Analytics November consensus scenario to estimate the ACL. To assess the
sensitivity in the ACL results and to inform qualitative adjustments, the Bank
used a second scenario, Moody's Analytics November S2 scenario, that differs in
terms of severity within the variables, both favorable and unfavorable. For
additional information related to the Company's ACL, see Note 5 in the Notes to
Consolidated Financial Statements in Item 8 of this report.

Because current economic conditions and forecasts can change and future events
are inherently difficult to predict, the anticipated amount of estimated credit
losses on loans, and therefore the appropriateness of the ACL, could change
significantly. It is difficult to estimate how potential changes in any one
economic factor or input might affect the overall allowance because a wide
variety of factors and inputs are considered in estimating the allowance and
changes in those factors and inputs considered may not occur at the same rate
and may not be consistent across all product types. Additionally, changes in
factors and inputs may be directionally inconsistent, such that improvement in
one factor may offset deterioration in others. Management believes that the ACL
was adequate as of December 31, 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

Information regarding Recent Accounting Pronouncements is included in Note 1 of
the Notes to Consolidated Financial Statements in Item 8 below.

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                             RESULTS OF OPERATIONS

In the first quarter of 2021, the Company realigned its operating segments based
on changes in management's focus and its internal reporting structure. The
Company now reports two segments: Core Banking and Mortgage Banking. This aligns
with how we manage the profitability of the Company and also provides greater
transparency into the financial contribution of mortgage banking activities.

The Core Banking segment includes all lines of business, except Mortgage
Banking, including wholesale, retail, private banking, as well as the
operations, technology, and administrative functions of the Bank and Holding
Company. The Mortgage Banking segment includes the revenue earned from the
production and sale of residential real estate loans, the servicing income from
our serviced loan portfolio, the quarterly changes in the MSR asset, and the
specific expenses that are related to mortgage banking activities including
variable commission expenses. Revenue and related expenses related to
residential real estate loans held for investment are included in the Core
Banking segment as portfolio loans are an anchor product for our consumer
channels and are originated through a variety of channels throughout the
Company. Refer to the segment information footnote for additional detail of the
segments' financial statements.

The Core Banking segment had net income of $372.0 million for the year ended
December 31, 2021, compared to a net loss of $1.6 billion for the year ended
December 31, 2020. Net income for the Core Banking segment increased for the
year ended December 31, 2021, as compared to the same period in the prior year,
due to the impact of goodwill impairment in 2020 of $1.8 billion and a provision
for credit losses of $204.9 million in 2020. In 2021, the Core Banking segment
had a recapture of the provision for credit losses of $42.7 million, as economic
forecasts improved.

The Mortgage Banking segment had net income of $48.3 million for the year ended
December 31, 2021, compared to net income of $94.9 million for the year ended
December 31, 2020. The decrease in net income for the Mortgage Banking segment
was primarily due to a decrease in for-sale origination revenue from $308.2
million in 2020 to $157.8 million in the current period, due to a decline in the
gain on sale margin from 4.62% in the prior year to 3.32% in the current period,
as well as a decrease in the volume of loans sold for 2021. The closed loan
volume declined as a result of rate changes which rose during the year,
resulting in a slowing of loan refinance activity and the decision to place a
higher percentage of production into the loan portfolio in order to support
interest earning asset growth.

The following table presents the returns on average assets, average common
shareholders' equity and average tangible common shareholders' equity for the
years ended December 31, 2021, 2020, and 2019. For each of the periods
presented, the table includes the calculated ratios based on reported net income
(loss). Our return on average common shareholders' equity prior to 2021 was
negatively impacted as the result of capital required to support goodwill. To
the extent this performance metric is used to compare our historical performance
with other financial institutions that did not have merger and
acquisition-related intangible assets, we believe it is beneficial to also
consider the return on average tangible common shareholders' equity. The return
on average tangible common shareholders' equity is calculated by dividing net
income (loss) by average shareholders' common equity less average goodwill and
intangible assets, net (excluding MSRs). The return on average tangible common
shareholders' equity is considered a non-GAAP financial measure and should be
viewed in conjunction with the return on average common shareholders' equity.

Return on Average Assets, Common Shareholders’ Equity and Tangible Common
Shareholders’ Equity
For the Years Ended December 31, 2021, 2020, and 2019



(dollars in thousands)                                      2021                 2020                 2019
Return on average assets                                      1.39  %             (5.22) %              1.27  %
Return on average common shareholders' equity                15.56  %            (51.08) %              8.42  %

Return on average tangible common shareholders’ equity 15.63 %

      (60.34) %             14.77  %

Calculation of average common tangible shareholders’
equity:
Average common shareholders’ equity

                    $ 2,700,711          

$ 2,982,458 $ 4,206,380
Less: average goodwill and other intangible assets,
net

                                                        (12,057)            (457,550)          (1,808,879)
Average tangible common shareholders' equity           $ 2,688,654          $ 2,524,908          $ 2,397,501




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Additionally, management believes tangible common equity and the tangible common
equity ratio are meaningful measures of capital adequacy. Umpqua believes the
exclusion of certain intangible assets in the computation of tangible common
equity and tangible common equity ratio provides a meaningful base for
period-to-period and company-to-company comparisons, which management believes
will assist investors in analyzing the operating results and capital of the
Company. 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 tangible common equity and tangible common equity ratio is considered a
non-GAAP financial measure and should be viewed in conjunction with the total
shareholders' equity and the total shareholders' equity ratio.

The following table provides a reconciliation of ending shareholders' equity
(GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to
ending tangible assets (non-GAAP) as of December 31, 2021, and 2020:
(dollars in thousands)                  December 31, 2021       December 31, 2020
Total shareholders' equity             $       2,749,270       $       2,704,577
Subtract:
Goodwill                                               -                   2,715
 Other intangible assets, net                      8,840                  

13,360

Tangible common shareholders' equity   $       2,740,430       $       2,688,502
Total assets                           $      30,640,936       $      29,235,175
Subtract:
Goodwill                                               -                   2,715
 Other intangible assets, net                      8,840                  

13,360

Tangible assets                        $      30,632,096       $      

29,219,100

Tangible common equity ratio                        8.95  %                 

9.20 %




Non-GAAP financial measures have inherent limitations, are not required to be
uniformly applied, and are not audited. Although we believe these non-GAAP
financial measures are frequently used by stakeholders in the evaluation of a
company, they have limitations as analytical tools, and should not be considered
in isolation or as a substitute for analyses of results as reported under GAAP.

NET INTEREST INCOME


Net interest income for 2021 increased by $37.1 million or 4% compared to the
same period in 2020. The increase in net interest income in 2021 compared to
2020 was mainly due to the lower cost of interest-bearing liabilities due to
lower volume of retail and brokered time deposits as the Bank has allowed these
higher-cost deposits to run off as well as a decrease in borrowings during the
year. The Bank has reduced deposit exception pricing on money market and time
deposits to reduce the cost of these deposits.

The net interest margin (net interest income as a percentage of average
interest-earning assets) on a fully tax equivalent basis was 3.18% for 2021, a
decrease of 5 basis points compared to 2020.  The decrease in the net interest
margin primarily resulted from a decrease in the average yields on
interest-earning assets, partially offset by the decline in the cost of
interest-bearing liabilities.

The yield on loans and leases for 2021 decreased by 23 basis points as compared
to 2020, primarily attributable to loans and leases repricing at lower interest
rates as compared to prior periods. The cost of interest-bearing liabilities
decreased 49 basis points, for 2021, as compared to 2020, due to the decrease in
interest rates and corresponding deposit pricing strategy, as well as a decrease
in average borrowings. Our net interest income is affected by changes in the
amount and mix of interest-earning assets and interest-bearing liabilities, as
well as changes in the yields earned on interest-earning assets and rates paid
on deposits and borrowed funds. The Company continues to be "asset-sensitive."
The decrease in yields on earning assets has continued to impact net interest
margin, even as liabilities reprice downward.


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The following table presents condensed average balance sheet information,
together with interest income and yields on average interest-earning assets, and
interest expense and rates paid on average interest-bearing liabilities for
years ended December 31, 2021, 2020, and 2019:
                                                                   2021                                                               2020                                                               2019
                                                                    Interest             Average                                       Interest             Average                                       Interest             Average
                                                                   Income or            Yields or                                     Income or            Yields or                                     Income or            Yields or
(dollars in thousands)                   Average Balance            Expense               Rates             Average Balance            Expense               Rates             Average Balance            Expense               

Rates

INTEREST-EARNING ASSETS:
Loans held for sale                    $        500,070          $    15,149                3.03  %       $        588,058          $    20,509                3.49  %       $        299,560          $    14,477                4.83  %
Loans and leases (1)                         21,925,108              875,366                3.99  %             22,082,359              930,930                4.22  %             20,889,769            1,036,600                4.96  %
Taxable securities                            3,321,142               61,717                1.86  %              2,796,581               50,354                1.80  %              2,701,821               58,419                2.16  %
Non-taxable securities (2)                      248,256                7,458                3.00  %                240,054                7,500                3.12  %                264,017                8,971                3.40  %
Temporary investments and
interest-bearing deposits                     2,936,273                3,864                0.13  %              1,637,440                4,739                0.29  %                688,258               14,180                2.06  %
Total interest earning assets (1), (2)       28,930,849              963,554                3.33  %             27,344,492            1,014,032                3.71  %             24,843,425            1,132,647                4.56  %
Other assets                                  1,336,523                                                          1,867,241                                                          3,128,419
Total assets                           $     30,267,372                                                   $     29,211,733                                                   $     27,971,844
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits       $      3,462,035          $     1,865                0.05  %       $      2,754,417          $     5,712                0.21  %       $      2,365,845          $    12,040                0.51  %
Money market deposits                         7,624,707                5,964                0.08  %              7,193,470               19,811                0.28  %              6,740,502               56,633                0.84  %
Savings deposits                              2,200,608                  729                0.03  %              1,697,353                  801                0.05  %              1,467,263                1,746                0.12  %
Time deposits                                 2,217,464               18,593                0.84  %              3,882,684               73,876                1.90  %              4,483,818               97,522                2.17  %
Total interest-bearing deposits              15,504,814               27,151                0.18  %             15,527,924              100,200                0.65  %             15,057,428              167,941                1.12  %
Repurchase agreements and federal
funds purchased                                 454,994                  280                0.06  %                370,091                  766                0.21  %                319,723                2,092                0.65  %
Borrowings                                      195,985                2,838                1.45  %              1,014,240               13,921                1.37  %                896,681               17,564                1.96  %
Junior subordinated debentures                  369,259               12,127                3.28  %                325,633               15,221                4.67  %                373,253               22,845                6.12  %
Total interest-bearing liabilities           16,525,052               42,396                0.26  %             17,237,888              130,108                0.75  %             16,647,085              210,442                1.26  %
Non-interest-bearing deposits                10,669,531                                                          8,576,436                                                          6,746,607
Other liabilities                               372,078                                                            414,951                                                            371,772
Total liabilities                            27,566,661                                                         26,229,275                                                         23,765,464
Common equity                                 2,700,711                                                          2,982,458                                                          4,206,380
Total liabilities and shareholders'
equity                                 $     30,267,372                                                   $     29,211,733                                                   $     27,971,844
NET INTEREST INCOME (2)                                          $   921,158                                                        $   883,924                                                        $   922,205
NET INTEREST SPREAD                                                                         3.07  %                                                            2.96  %                                                            3.30  %
NET INTEREST INCOME TO EARNING ASSETS
OR NET INTEREST MARGIN (1), (2)                                                             3.18  %                                                            3.23  %                                                            3.71  %



(1)Non-accrual loans and leases are included in the average balance.
(2)Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax
rate. The amount of such adjustment was an addition to recorded income of
approximately $1.5 million, $1.4 million, and $1.6 million for the years ended
2021, 2020, and 2019, respectively.


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The following table sets forth a summary of the changes in tax equivalent net
interest income due to changes in average asset and liability balances (volume)
and changes in average rates (rate) for 2021 compared to 2020. Changes in tax
equivalent interest income and expense, which are not attributable specifically
to either volume or rate, are allocated proportionately between both variances.
                                                         2021 compared to 2020                                    2020 compared to 2019
                                              Increase (decrease) in interest income and            Increase (decrease) in interest income and expense
                                                       expense due to changes in                                    due to changes in
(in thousands)                                Volume              Rate              Total             Volume               Rate               Total
Interest-earning assets:
Loans held for sale                        $   (2,854)         $ (2,506)         $ (5,360)         $   10,932          $   (4,900)         $   6,032
Loans and leases                               (6,587)          (48,977)          (55,564)             56,730            (162,400)          (105,670)
Taxable securities                              9,683             1,680            11,363               1,988             (10,053)            (8,065)
Non-taxable securities (1)                        251              (293)              (42)               (779)               (692)            (1,471)
Temporary investments and interest bearing
deposits                                        2,544            (3,419)             (875)              9,197             (18,638)            (9,441)
Total interest-earning assets(1)                3,037           (53,515)          (50,478)             78,068            (196,683)          (118,615)
Interest-bearing liabilities:
Interest bearing demand                         1,188            (5,035)           (3,847)              1,723              (8,051)            (6,328)
Money market                                    1,122           (14,969)          (13,847)              3,573             (40,395)           (36,822)
Savings                                           202              (274)              (72)                239              (1,184)              (945)
Time deposits                                 (23,993)          (31,290)          (55,283)            (12,228)            (11,418)           (23,646)
Repurchase agreements and federal funds           146              (632)             (486)                 30              (1,356)            (1,326)
Borrowings                                    (11,810)              727           (11,083)              2,093              (5,736)            (3,643)
Junior subordinated debentures                  1,851            (4,945)           (3,094)             (2,673)             (4,951)            (7,624)
Total interest-bearing liabilities            (31,294)          (56,418)          (87,712)             (7,243)            (73,091)           (80,334)
Net increase (decrease) in net interest
income (1)                                 $   34,331          $  2,903     

$ 37,234 $ 85,311 $ (123,592) $ (38,281)

(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax
rate.


PROVISION FOR CREDIT LOSSES

The Company had a $42.7 million recapture of provision for credit losses for
2021, as compared to a $204.9 million provision for credit losses for 2020. The
change in the provision for credit losses for 2021 as compared to the prior
year, is primarily attributable to the stabilizing of credit quality metrics and
the improvement in economic forecasts used in credit models as well as loan mix
changes, which allowed for a recapture of previous provision for credit losses.
The Company adopted CECL as of January 1, 2020, CECL requires a current expected
credit loss for the life of loans, which may result in volatility in the
provision for credit losses. As an annualized percentage of average outstanding
loans and leases, the recapture of provision for credit losses recorded for 2021
was (0.19)%. As an annualized percentage of average outstanding loans and
leases, the provision for credit losses for 2020 was 0.92%.

Net-charge offs were $44.9 million for 2021, or 0.20% of average loans and
leases, compared to net charge-offs of $71.1 million, or 0.32% of average loans
and leases, for 2020. The majority of net charge-offs relate to leases and
equipment finance loans, included within the commercial loan portfolio.

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Typically, loans in a non-accrual status will not have an allowance for credit
loss as they will be written down to their net realizable value or charged-off.
However, the net realizable value for homogeneous leases and equipment finance
agreements are determined by the loss given default calculated by the CECL
model, and therefore homogeneous leases and equipment finance agreements on
non-accrual will have an allowance for credit loss amount until they become 181
days past due, at which time they are charged-off. The non-accrual leases and
equipment finance agreements of $8.9 million as of December 31, 2021 have a
related allowance for credit losses of $7.0 million, with the remaining loans
written-down to their estimated fair value, less estimated costs to sell, and
are expected to be resolved with no additional material loss, absent further
decline in market prices.

NON-INTEREST INCOME

The following table presents the key components of non-interest income for years
ended December 31, 2021 and 2020:

                                                                       2021 compared to 2020
(dollars in thousands)                        2021               2020             Change Amount          Change Percent
Service charges on deposits               $  42,086          $  40,838          $        1,248                       3  %
Card-based fees                              36,114             28,190                   7,924                      28  %
Brokerage revenue                             5,112             15,599                 (10,487)                    (67) %
Residential mortgage banking revenue, net   186,811            270,822                 (84,011)                    (31) %
Gain (loss) on sale of debt securities,
net                                               8                190                    (182)                    (96) %
(Loss) gain on equity securities, net        (1,511)               769                  (2,280)                   (296) %
Gain on loan and lease sales, net            15,715              6,707                   9,008                     134  %

BOLI income                                   8,302              8,399                     (97)                     (1) %
Other income                                 63,681             40,495                  23,186                      57  %
Total non-interest income                 $ 356,318          $ 412,009          $      (55,691)                    (14) %



During the current year, the Company added the card-based fees line item, which
we previously included in the service charges on deposits and other income line
items. Prior periods have been reclassified to conform to the current
presentation. Card-based fees are comprised of debit and credit card income, ATM
fees, and merchant services income. Debit and credit card income is primarily
comprised of interchange fees earned when our customers' debit and credit cards
are processed through card payment networks. The increase in the year ended
December 31, 2021, as compared to prior year, is attributable to increased
customer spending with debit and credit cards, given strengthening economic
activity combined with an increase in contactless payment options and customer
activity. Included in service charges on deposits are non-sufficient funds and
overdraft fees, which were $15.1 million and $15.7 million for the years ended
December 31, 2021 and 2020, respectively.

Brokerage revenue decreased for the year ended December 31, 2021 as compared to
prior periods, due to the sale of Umpqua Investments, Inc. in April 2021.


Residential mortgage banking revenue, which is the primary source of income for
the Mortgage Banking segment, decreased for the year ended December 31, 2021.
The decrease is due to lower refinance demand as well as a decline in gain on
sale margin, due to normalizing margins, caused by rising rates. Revenue related
to origination and sale of residential mortgages decreased by $150.4 million, as
compared to the prior period. This is offset by lower loss on fair value of the
MSR asset as the loss on fair value of $7.8 million for the year ended
December 31, 2021, compares to a loss on fair value of $73.1 million for the
same period in 2020.

For-sale mortgage closed loan volume decreased 29% as compared to the prior
period. Gain on sale margin decreased to 3.32% in 2021, compared to 4.62% in
2020 due to decreases in refinance demand. Direct expense related to the
origination of for-sale mortgage loans as a percentage of loan production was
2.00% for the year ended December 31, 2021, compared to 1.90% for the year ended
December 31, 2020.


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Origination volume for mortgage loans is generally linked to the level of
interest rates. When rates fall, origination volumes are expected to be elevated
relative to historical levels. If rates rise, origination volumes would be
expected to fall. Margins observed in the current period could be expected to
narrow somewhat in future periods as mortgage industry capacity constraints ease
and refinance demand is met. The MSR asset value is also sensitive to interest
rates, and generally falls with lower rates and rises with higher rates.

The following table presents our residential mortgage banking revenues for the
years ended December 31, 2021 and 2020:
(in thousands)                                                                 2021                 2020
Origination and sale                                                      $   157,789          $   308,219
Servicing                                                                      36,836               35,706
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time        (18,903)             (19,680)
 Changes in valuation inputs or assumptions (1)                                11,089              (53,423)
Balance, end of period                                                    $ 

186,811 $ 270,822


LHFS Production Statistics:
Closed loan volume for-sale                                               $ 4,747,104          $ 6,666,500
Gain on sale margin                                                              3.32  %              4.62  %


(1)The changes in valuation inputs and assumptions principally reflect changes
in discount rates and prepayment speeds, which are primarily affected by changes
in interest rates.

The gain on loan and lease sales in 2021 increased compared to 2020 due to an
increase in SBA loan sales, driven by higher government guarantees and
incentives for borrowers.

Other income in 2021 compared to 2020 increased primarily due to an increase in
swap derivative gain (loss) of $17.8 million.

NON-INTEREST EXPENSE

The following table presents the key elements of non-interest expense for the
years ended December 31, 2021 and 2020:

                                                                        2021 compared to 2020
(dollars in thousands)                         2021                2020             Change Amount          Change Percent
Salaries and employee benefits             $ 480,820          $   479,247          $       1,573                       -  %
Occupancy and equipment, net                 137,546              151,650                (14,104)                     (9) %
Communications                                11,564               11,843                   (279)                     (2) %
Marketing                                      7,381                8,313                   (932)                    (11) %
Services                                      48,800               46,640                  2,160                       5  %
FDIC assessments                               9,238               12,516                 (3,278)                    (26) %
Intangible amortization                        4,520                4,986                   (466)                     (9) %
Merger related expenses                       15,183                    -                 15,183                         nm
Other expenses                                45,404               45,956                   (552)                     (1) %
Non-interest expense before goodwill
impairment                                   760,456              761,151                   (695)                      -  %
Goodwill impairment                                -            1,784,936             (1,784,936)                        nm
Total non-interest expense                 $ 760,456          $ 2,546,087          $  (1,785,631)                    (70) %
nm = not meaningful




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Goodwill impairment of $1.8 billion was recorded as of March 31, 2020, following
an interim impairment analysis triggered by the decline in interest rates and
economic impacts of COVID-19, as well as declines in the Company's stock price.
There is no impairment recorded in the current period.

Occupancy and equipment decreased primarily due to a decrease in rent-related
expenses with the consolidation of store and back office locations as well as
decreased software and software amortization expense, mainly due to one-time
software impairment charges in 2020 associated with technology contract exits
not repeated in the period.

Merger related expenses are directly related to the pending merger with
Columbia, which is expected to close in mid-2022.


Other non-interest expense was consistent with the prior year despite an
increase in exit and disposal costs, as the Company closed store locations and
exited back-office leases as part of the Next Gen 2.0 strategy. Exit and
disposal costs were $12.8 million and $2.6 million for the years 2021 and 2020,
respectively. The increase was offset by a decrease of $3.5 million in
charitable donations, a decrease of $2.2 million in debit card fraud losses, and
a decrease of $1.8 million in losses on disposal of fixed assets, as well as
other miscellaneous fluctuations in other expenses.

INCOME TAXES


Our consolidated effective tax rate as a percentage of pre-tax income for 2021
was 24.7%, compared to an effective rate of pre-tax net loss of (4.6)% for 2020.
The 2020 effective tax rate became negative primarily due to impairment of
non-deductible goodwill. The 2021 effective tax rate differed from the federal
statutory rate of 21% principally because of state taxes, income on tax-exempt
investment securities, reversals of unrecognized tax benefits, nondeductible
merger expenses, non-taxable income arising from bank-owned life insurance, tax
credits arising from low-income housing investments, and state audit refunds.



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                              FINANCIAL CONDITION

CASH AND CASH EQUIVALENTS

Cash and cash equivalents were $2.8 billion at December 31, 2021, compared to
$2.6 billion at December 31, 2020. The increase of interest bearing cash and
temporary investments reflects strong deposit growth of $2.0 billion and the
decrease in loans held for sale of $413.1 million that outpaced investment
growth of $937.8 million and portfolio loan growth of $773.8 million. In
addition, the Company paid down borrowings by $765.0 million during the year. An
elevated on-balance sheet liquidity position enhances the Company's liquidity
flexibility.


INVESTMENT SECURITIES

The composition of our investment securities portfolio reflects management's
investment strategy of maintaining an appropriate level of liquidity while
providing a relatively stable source of interest income. The investment
securities portfolio provides a vehicle for the investment of available funds, a
source of liquidity (by pledging as collateral or through repurchase agreements)
and collateral for certain public funds deposits.

Equity and other securities consist primarily of investments in fixed income
mutual funds to support our CRA initiatives and securities invested in rabbi
trusts for the benefit of certain current or former executives and employees as
required by the underlying agreements. Equity and other securities were $81.2
million at December 31, 2021, compared to $83.1 million at December 31, 2020.
This decrease is primarily due to losses on equity securities of $1.5 million
during the year due to changes in fair value.

Investment debt securities available for sale were $3.9 billion as of
December 31, 2021, compared to $2.9 billion at December 31, 2020. The increase
is due to purchases of $1.8 billion of investment securities, offset by sales
and paydowns of $761.2 million and a decrease in the fair value of investment
securities available for sale of $125.0 million.

The following table presents information regarding the amortized cost, fair
value, average yield and maturity structure of the investment portfolio at
December 31, 2021:

                                                    Amortized Cost           Fair Value           Average Yield (1)
U.S. treasury and agencies
One year or less                                  $             -          $         -                           -  %
One to five years                                         316,029              321,482                        1.55  %
Five to ten years                                         558,259              574,309                        1.96  %
  Over ten years                                           20,681               22,262                        2.60  %
Total U.S. treasury and agencies                          894,969              918,053                        1.83  %
Obligations of states and political subdivisions
One year or less                                           23,166               23,507                        3.26  %
One to five years                                         137,668              145,980                        3.32  %
Five to ten years                                         138,542              140,044                        2.36  %
Over ten years                                             20,962               21,253                        2.60  %
Total obligations of states and political
subdivisions                                              320,338              330,784                        2.86  %
Other Securities
Residential mortgage-backed securities and
collateralized mortgage obligations                     2,651,792            2,625,112                        1.68  %
Total debt securities                             $     3,867,099          $ 3,873,949                        1.82  %


(1) Weighted average yields are stated on a federal tax-equivalent basis of 21%.
Weighted average yields for available for sale investments have been calculated
on an amortized cost basis.


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The mortgage-related securities in the table above include both pooled
mortgage-backed issues and high-quality collateralized mortgage obligation
structures, with an average duration of 4.8 years. These mortgage-related
securities provide yield spread to U.S. Treasury or agency securities; however,
the cash flows arising from them can be volatile due to refinancing of the
underlying mortgage loans.

We review investment securities on an ongoing basis for the presence of
impairment, taking into consideration current market conditions, fair value in
relationship to cost, extent and nature of the change in fair value, issuer
rating changes and trends, whether we intend to sell a security or if it is more
likely than not that we will be required to sell the security before recovery of
our amortized cost basis of the investment, which may be maturity, and other
factors.

Gross unrealized losses in the available for sale investment portfolio was $52.0
million at December 31, 2021. This consisted primarily of unrealized losses on
residential mortgage-backed securities and collateralized mortgage obligations
of $46.5 million. The unrealized losses were primarily attributable to changes
in market interest rates or the widening of market spreads subsequent to the
initial purchase of these securities and are not attributable to changes in
credit quality. In the opinion of management, no allowance for credit losses was
considered necessary on our debt securities as of December 31, 2021.

RESTRICTED EQUITY SECURITIES


Restricted equity securities were $10.9 million and $41.7 million at
December 31, 2021 and 2020, respectively, the majority of which represents the
Bank's investment in the Federal Home Loan Bank of Des Moines. The decrease is
attributable to redemptions of FHLB stock during the period due to decreased
FHLB borrowing activity during the period. FHLB stock is carried at par and does
not have a readily determinable fair value. Ownership of FHLB stock is
restricted to the FHLB and member institutions, and can only be purchased and
redeemed at par. At December 31, 2021, the Bank's minimum required investment in
FHLB stock was $10.7 million.

LOANS AND LEASES

Total loans and leases outstanding at December 31, 2021 increased $773.8 million
compared to December 31, 2020. This increase was principally attributable to net
new loan and lease originations of $735.4 million, with the majority of the
increase in multifamily and residential mortgage loans, as well as a transfer of
$315.9 million from loans held for sale to loans held for investment. The
increase was partially offset by PPP loan forgiveness and payoffs, as well as
loans sold of $231.0 million and charge-offs of $59.3 million. The loan to
deposit ratio as of December 31, 2021 is 85%, as compared to 88% for the year
ended December 31, 2020, which is an indication that deposit growth is outpacing
loan growth.

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The following table presents the concentration distribution of our loan and
lease portfolio by major type as of December 31, 2021 and 2020:

                                                         December 31, 2021                                     December 31, 2020
(dollars in thousands)                           Amount                   Percentage                   Amount                   Percentage
Commercial real estate
Non-owner occupied term, net              $       3,786,887                         17  %       $       3,505,802                         16  %
Owner occupied term, net                          2,332,422                         10  %               2,333,945                         11  %
Multifamily, net                                  4,051,202                         18  %               3,349,196                         15  %
Construction & development, net                     890,338                          4  %                 828,478                          4  %
Residential development, net                        206,990                          1  %                 192,761                          1  %
Commercial
Term, net                                         3,008,473                         13  %               4,024,467                         18  %
Lines of credit & other, net                        910,733                          4  %                 862,760                          4  %
Leases & equipment finance, net                   1,467,676                          7  %               1,456,630                          7  %

Residential

Mortgage, net                                     4,517,266                         20  %               3,871,906                         18  %
Home equity loans & lines, net                    1,197,170                          5  %               1,136,064                          5  %
Consumer & other, net                               184,023                          1  %                 217,358                          1  %
Total, net of deferred fees and costs     $      22,553,180                        100  %       $      21,779,367                        100  %



The following table presents the maturity distribution of our loan portfolios
and the rate sensitivity of these loans to changes in interest rates as of
December 31, 2021:

                                                                                    By Maturity                                                              Loans Over One Year by Rate Sensitivity
                                                                One Through         Five Through 15
(in thousands)                       One Year or Less           Five Years               Years              Over 15 Years              Total              Fixed Rate            Floating/Adjustable Rate
Commercial real estate             $         949,276          $  2,209,198          $  4,794,003          $    3,315,362          $ 11,267,839          $  1,347,300          $               8,971,263
Commercial                         $       1,765,117          $  2,777,152          $    751,572          $       93,041          $  5,386,882          $  2,359,074          $               1,262,691
Residential                        $           5,591          $     13,079          $    643,176          $    5,052,590          $  5,714,436          $  2,736,739          $               2,972,106
Consumer & other                   $          10,194          $    154,208          $     18,891          $          730          $    184,023          $     49,029          $                 124,800



In April 2020, the Bank began originating loans to qualified small businesses
under the PPP administered by the SBA. The remaining unamortized balance of the
PPP-related net loan processing fees will be recognized as a yield adjustment
over the remaining term of these loans, although the forgiveness of these loans
by the SBA accelerates the recognition of these fees.
 (dollars in thousands)        December 31, 2021       December 31, 2020
PPP principal balance         $          392,038      $        1,777,145
PPP deferred fees                        (11,598)                (26,934)
Net PPP Balance               $          380,440      $        1,750,211

PPP loan count                             4,101                  14,788




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ASSET QUALITY AND NON-PERFORMING ASSETS

The following table summarizes our non-performing assets and restructured loans,
as of December 31, 2021 and 2020:
(dollars in thousands)                                             December 31, 2021         December 31, 2020
Loans and leases on non-accrual status                            $         18,865          $         31,076
Loans and leases past due 90 days or more and accruing                      32,336                    36,361
Total non-performing loans and leases                                       51,201                    67,437
Other real estate owned                                                      1,868                     1,810
Total non-performing assets                                       $         53,069          $         69,247
Restructured loans (1)                                            $          6,694          $         14,991
Allowance for credit losses on loans and leases                   $        248,412          $        328,401
Reserve for unfunded commitments                                            12,767                    20,286
Allowance for credit losses                                       $        261,179          $        348,687
Asset quality ratios:
Non-performing assets to total assets                                         0.17  %                   0.24  %
Non-performing loans and leases to total loans and leases                     0.23  %                   0.31  %

Allowance for credit losses on loan and lease losses to total
loans and leases

                                                              1.10  %                   1.51  %
Allowance for credit losses to total loans and leases                         1.16  %                   1.60  %

Allowance for credit losses to total non-performing loans and
leases

                                                                         510  %                    517  %


(1)Represents accruing TDR loans performing according to their restructured
terms.


At December 31, 2021 and 2020, loans of $6.7 million and $15.0 million,
respectively, were classified as accruing restructured loans. The restructurings
were granted in response to borrower financial difficulty, and generally provide
for a modification of loan repayment terms.

A decline in the economic conditions due to the COVID-19 pandemic as well as in
our general market areas or other factors could adversely impact individual
borrowers or the loan portfolio in general. Accordingly, there can be no
assurance that loans will not become 90 days or more past due, placed on
non-accrual status, restructured or transferred to other real estate owned in
the future.

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COVID-19 Related Payment Deferral and Forbearance


Due to the deterioration of the U.S. economy resulting from the COVID-19
pandemic, the Company has had an increase in loan payment deferral and
forbearance requests. Once a deferral or forbearance request is received, a late
charge waiver is put in place and payments are suspended for an agreed-upon
period. Accrued and unpaid interest during the deferral period will be collected
upon the expiration of the deferral or on a regular repayment schedule at the
end of the deferral period. For certain loan types, the maturity date may be
extended to allow for full amortization. In accordance with the deferral
guidance at the federal and state levels, these loans are generally classified
based on their past due status prior to their deferral period, so they are
classified as performing loans that accrue interest.

A summary of outstanding loan balances with active payment deferral or
forbearance as of December 31, 2021 are shown in the table below, disaggregated
by major types of loans and leases:

                                       Loans with Deferrals or Forbearances
(dollars in thousands)            Number of Loans            Loan Balance Outstanding
Commercial real estate                                13    $                  72,823
Commercial                                             2                          586
Residential                                           91                       45,447
Consumer & other, net                                7                            101
Total                                              113      $                 118,957


Excluded from the mortgage loans with payment deferrals or forbearance in the
above table are $89.8 million of repurchased GNMA loans on deferral, as the
credit risk of these loans are guaranteed by government programs such as the
Federal Housing Agency, Veterans Affairs, and USDA Rural Development.

The Bank continues to monitor COVID-19 deferrals and if a customer continues to
experience financial difficulty after the initial deferral and further
concessions are granted, the loan will be reviewed to determine if a TDR
designation is appropriate.





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ALLOWANCE FOR CREDIT LOSSES

The ACL totaled $261.2 million at December 31, 2021, a decrease of $87.5 million
from the $348.7 million at December 31, 2020. The following table shows the
activity in the ACL for the years ended December 31, 2021 and 2020:
(dollars in thousands)

                                                      2021               2020

Allowance for credit losses on loans and leases

         Balance, beginning of period                                   $ 

328,401 $ 157,629

         Impact of CECL adoption                                                -             49,999
         Adjusted balance, beginning of period                            328,401            207,628

(Recapture) provision for credit losses on loans and leases (35,132)

           191,875

Loans charged-off:

         Commercial real estate, net                                       (1,144)            (1,413)
         Commercial, net                                                  (54,425)           (76,488)
         Residential, net                                                     (70)              (521)
         Consumer & other, net                                             (3,658)            (6,074)
         Total loans charged-off                                          (59,297)           (84,496)
         Recoveries:
         Commercial real estate, net                                          645              1,013
         Commercial, net                                                   10,703              8,045
         Residential, net                                                     924              1,862
         Consumer & other, net                                              2,168              2,474
         Total recoveries                                                  14,440             13,394
         Net charge-offs:
         Commercial real estate, net                                         (499)              (400)
         Commercial, net                                                  (43,722)           (68,443)
         Residential, net                                                     854              1,341
         Consumer & other, net                                             (1,490)            (3,600)
         Total net charge-offs                                            (44,857)           (71,102)
         Balance, end of period                                         $ 248,412          $ 328,401
Reserve for unfunded commitments
         Balance, beginning of period                                   $  

20,286 $ 5,106

         Impact of CECL adoption                                                -              3,238
         Adjusted balance, beginning of period                             20,286              8,344

(Recapture) provision for credit losses on unfunded

         commitments                                                       (7,519)            11,942
         Balance, end of period                                            12,767             20,286
Total allowance for credit losses                                       $ 261,179          $ 348,687
As a percentage of average loans and leases (annualized):
         Net charge-offs                                                     0.20  %            0.32  %
         Commercial real estate                                                 -  %               -  %
         Commercial                                                          0.73  %            1.12  %
         Residential                                                        (0.02) %           (0.03) %
         Consumer & other                                                    0.82  %            1.13  %
         (Recapture) provision for credit losses                            (0.19) %            0.92  %
Recoveries as a percentage of charge-offs                                   24.35  %           15.85  %



With the adoption of CECL as of January 1, 2020, we recorded a one-time
cumulative-effect pre-tax adjustment in the amount of $53.2 million. The
allowance for credit losses on loans and leases increased by $50.0 million and
the allowance for unfunded commitments increased by $3.2 million, resulting in a
January 1, 2020, or day 1, balance of the Allowance for Credit Losses of $216.0
million.

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The (recapture) provision for credit losses includes the (recapture) provision
for credit losses on loans and leases, the (recapture) provision for unfunded
commitments, and the (recapture) provision for credit losses related to accrued
interest on loans. The recapture for credit losses in the current year is due to
the stabilization of credit quality metrics and economic forecasts used in
credit models, as well as loan mix changes.

The following table sets forth the allocation of the allowance for credit losses
on loans and leases and percent of loans and leases in each category to total
loans and leases, net of deferred fees, as of December 31 for each of the last
two years:
                                                   December 31, 2021                       December 31, 2020
(dollars in thousands)                        Amount                 %                Amount                 %
Commercial real estate, net                $   99,075                  50  %       $  141,710                  47  %
Commercial, net                               117,573                  24  %          150,864                  29  %
Residential, net                               29,068                  25  %           27,964                  23  %
Consumer & other, net                           2,696                   1  %            7,863                   1  %
Allowance for credit losses on loans and
leases                                     $  248,412                              $  328,401


The following table shows the change in the allowance for credit losses from
December 31, 2020 to December 31, 2021:

                                                                     2021 net                 Reserve
                                      December 31,                 (charge-offs)            (reduction)          December 31,           % of Loans and
                                          2020                      recoveries                 build                 2021             Leases Outstanding
Commercial real estate                $  157,070                $           (499)         $     (49,035)         $  107,536                       0.95  %
Commercial                               153,054                         (43,722)                10,269             119,601                       2.22  %
Residential                               29,625                             854                    546              31,025                       0.54  %
Consumer                                   8,938                          (1,490)                (4,431)              3,017                       1.64  %
Total allowance for credit
losses                                $  348,687                $        (44,857)         $     (42,651)         $  261,179                       1.16  %
% of loans and leases
outstanding                                 1.60  %                                                                    1.16  %



To calculate the ACL, the CECL models use a forecast of future economic
conditions and are dependent upon specific macroeconomic variables that are
relevant to each of the Bank's loan and lease portfolios. The forward-looking
assumptions revert to historical data when they reach the point where future
assumptions are no longer estimated. As of December 31, 2021, the Bank used
Moody's Analytics November consensus economic forecast to estimate the ACL. Key
macroeconomic variables within this forecast include U.S. real GDP, U.S.
unemployment rate, and Federal Reserve Fed Funds rate. The U.S. real GDP growth
factor forecast used in the model for year one remained consistent at 4.1% as of
December 31, 2021 and December 31, 2020. The U.S. unemployment rate average over
a forecasted two year period improved in year one by 3.3% to 4.1% as of December
31, 2021 compared to 7.4% as of December 31, 2020. The average improved in year
two by 2.2% to 4.0% as of December 31, 2021 compared to 6.2% as of December 31,
2020. The estimated time horizon for increasing the Federal Reserve Fed Funds
Rate from the current target range of 0% to 0.25%  has been shortened to the
fourth quarter of 2022 for the December 31, 2021 estimate, compared to an
estimated time horizon of late 2023 used in the December 31, 2020 estimate. The
models for calculating the ACL are sensitive to changes in these and other
economic variables, which could result in volatility as these assumptions change
over time.

We believe that the allowance for credit losses as of December 31, 2021 is
sufficient to absorb losses inherent in the loan and lease portfolio and in
credit commitments outstanding as of that date based on the information
available. If the economic conditions decline, the Bank may need additional
provisions for credit losses in future periods.

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RESIDENTIAL MORTGAGE SERVICING RIGHTS

The following table presents the key elements of our residential mortgage
servicing rights asset as of December 31, 2021, 2020, and 2019:
(in thousands)

                                                   2021               2020               2019
Balance, beginning of period                                 $  92,907      

$ 115,010 $ 169,025


Additions for new MSR capitalized                               38,522             51,000             25,169
Sale of MSR assets                                                   -                  -            (34,401)

Changes in fair value:

Changes due to collection/realization of expected cash
flows over time

                                                (18,903)           (19,680)           (25,408)
 Changes due to valuation inputs or assumptions (1)             11,089            (53,423)           (19,375)
Balance, end of period                                       $ 123,615      

$ 92,907 $ 115,010



(1) The changes in valuation inputs and assumptions principally reflect changes
in discount rates and prepayment speeds, which are primarily affected by changes
in interest rates.

Information related to our serviced loan portfolio as of December 31, 2021 and
2020 were as follows:
(dollars in thousands)                   December 31, 2021       December 31, 2020
Balance of loans serviced for others    $      12,755,671       $      13,026,720
MSR as a percentage of serviced loans                0.97  %                

0.71 %




Residential mortgage servicing rights are adjusted to fair value quarterly with
the change recorded in residential mortgage banking revenue. The value of
servicing rights can fluctuate based on changes in interest rates and other
factors. Generally, as interest rates decline and borrowers are able to take
advantage of a refinance incentive, prepayments increase, and the total value of
existing servicing rights declines as expectations of future servicing fees
collections decline. Historically, the fair value of our residential mortgage
servicing rights will increase as market rates for mortgage loans rise and
decrease if market rates fall. Mortgage rates increased during the period and
are expected to continue to rise which have caused accelerated prepayment speeds
to slow.

Due to changes to inputs in the valuation model including changes in discount
rates and prepayment speeds, the fair value of the MSR asset increased by $11.1
million for the year ended December 31, 2021, as compared to a decrease of $53.4
million for the year ended December 31, 2020. The fair value of the MSR asset
decreased by $18.9 million due to the passage of time, including the impact of
regularly scheduled repayments, paydowns and payoffs, as compared to the
decrease of $19.7 million in 2020.

GOODWILL AND OTHER INTANGIBLE ASSETS


At December 31, 2021, the Company had no goodwill as compared to $2.7 million at
December 31, 2020. Goodwill impairment of $1.8 billion was recorded during the
year ended December 31, 2020, based on an interim impairment analysis that was
triggered by the decline in interest rates and economic impacts of COVID-19, as
well as declines in the Company's stock price. The remaining goodwill of $2.7
million was reduced due to the sale of Umpqua Investments in April 2021.

At December 31, 2021, we had other intangible assets of $8.8 million, compared
to $13.4 million at December 31, 2020, which decreased as a result of
amortization of the other intangible assets of $4.5 million during the year
ended December 31, 2021. We amortize other intangible assets on an accelerated
or straight-line basis over an estimated ten year life.


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DEPOSITS

Total deposits were $26.6 billion at December 31, 2021, an increase of $2.0
billion, or 8%, compared to year-end 2020. The increase is mainly attributable
to growth in demand, money market and savings deposits, offset by a decline in
time deposits. The increase in non-maturity deposit account categories is
attributable to the impact of economic assistance payments, in addition to
increased customer savings rates as customers continue to increase their own
liquidity in this uncertain economic environment. The decrease in time deposits
is mainly due to the Bank allowing these higher-cost deposits to run off.

The following table presents the deposit balances by major category as of
December 31, 2021 and 2020:

                                    December 31, 2021                 December 31, 2020
(dollars in thousands)              Amount              %             Amount              %
Non-interest bearing demand   $      11,023,724        41  %    $       9,632,773        39  %
Interest bearing demand               3,774,937        14  %            3,051,487        12  %
Money market                          7,611,718        29  %            7,173,920        29  %
Savings                               2,375,723         9  %            1,912,752         8  %
Time, greater than $250,000             480,432         2  %              899,563         4  %
Time, $250,000 or less                1,328,151         5  %            1,951,706         8  %
Total deposits                $      26,594,685       100  %    $      24,622,201       100  %


The following table presents the scheduled maturities of uninsured deposits
greater than $250,000 as of December 31, 2021:
(in thousands)

                                Amount
Three months or less                        $ 140,133

Over three months through six months 104,760
Over six months through twelve months 96,398
Over twelve months

                            139,141

Uninsured deposits, greater than $250,000 $ 480,432



The Company's total core deposits, which are deposits less time deposits greater
than $250,000 and all brokered deposits, were $26.0 billion at December 31,
2021, compared to $23.3 billion at December 31, 2020. The Company's total
brokered deposits were $149.9 million or 1% of total deposits at December 31,
2021, compared to $424.1 million or 2% at December 31, 2020.

BORROWINGS


At December 31, 2021, the Bank had outstanding $492.2 million of securities sold
under agreements to repurchase and no outstanding federal funds purchased
balances. The Bank had outstanding borrowings of $6.3 million at December 31,
2021, consisting of advances from the FHLB, which decreased $765.2 million since
December 31, 2020 as a result of maturity payoffs during the period. The Company
allowed these borrowings to mature, utilizing our excess liquidity.

JUNIOR SUBORDINATED DEBENTURES


We had junior subordinated debentures with carrying values of $381.1 million and
$343.5 million at December 31, 2021 and 2020, respectively. The increase is
mainly due to the $37.9 million change in the fair value for the junior
subordinated debentures elected to be carried at fair value, which is due mostly
to the implied forward curve shifting higher and a decrease in the discount
rate, driven by the decrease in the credit spread. As of December 31, 2021,
substantially all of the junior subordinated debentures had interest rates that
are adjustable on a quarterly basis based on a spread over three month LIBOR.
These instruments mature after June 2023 and we anticipate they will be covered
under pending federal legislation that will allow us to replace the LIBOR index
with SOFR under a safe-harbor provision.


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LIQUIDITY AND CASH FLOW

The principal objective of our liquidity management program is to maintain the
Bank's ability to meet the day-to-day cash flow requirements of our customers
who either wish to withdraw funds or to draw upon credit facilities to meet
their cash needs. The Bank's liquidity strategy includes maintaining a
sufficient on-balance sheet liquidity position to provide flexibility, to grow
deposit balances and fund growth in lending and investment portfolios, as well
as to deleverage non-deposit liabilities as economic conditions permit. As a
result, the Company believes that it has sufficient cash and access to
borrowings to effectively manage through the COVID-19 pandemic as well as meet
its working capital and other needs. The Company will continue to prudently
evaluate and maintain liquidity sources, including the ability to fund future
loan growth and manage our borrowing sources.

We monitor the sources and uses of funds on a daily basis to maintain an
acceptable liquidity position. One source of funds includes public deposits.
Individual state laws require banks to collateralize public deposits, typically
as a percentage of their public deposit balance in excess of FDIC
insurance. Public deposits represent 5% and 7% of total deposits at December 31,
2021 and 2020 respectively. The amount of collateral required varies by state
and may also vary by institution within each state, depending on the individual
state's risk assessment of depository institutions. Changes in the pledging
requirements for uninsured public deposits may require pledging additional
collateral to secure these deposits, drawing on other sources of funds to
finance the purchase of assets that would be available to be pledged to satisfy
a pledging requirement, or could lead to the withdrawal of certain public
deposits from the Bank. At December 31, 2021, the Bank has $1.4 billion in time
deposits scheduled to mature within the next 12 months, which we anticipate the
majority of personal time deposits will renew or transfer to other deposit
products of the Bank at prevailing rates, although no assurance can be given in
this regard. In addition to liquidity from core deposits and the repayments and
maturities of loans and investment securities, the Bank can utilize established
uncommitted federal funds lines of credit, sell securities under agreements to
repurchase, borrow on a secured basis from the FHLB or issue brokered
certificates of deposit.

The Bank had available lines of credit with the FHLB totaling $8.5 billion at
December 31, 2021, subject to certain collateral requirements, namely the amount
of pledged loans and investment securities. The Bank had available lines of
credit with the Federal Reserve totaling $999.5 million, subject to certain
collateral requirements, namely the amount of certain pledged loans. The Bank
had uncommitted federal funds line of credit agreements with additional
financial institutions totaling $460.0 million at December 31, 2021.
Availability of these lines is subject to federal funds balances available for
loan and continued borrower eligibility. These lines are intended to support
short-term liquidity needs, and the agreements may restrict consecutive day
usage.

The Company is a separate entity from the Bank and must provide for its own
liquidity. Substantially all of the Company's revenues are obtained from
dividends declared and paid by the Bank. There were $398.0 million of dividends
paid by the Bank to the Company in 2021, including the special dividend of
$200.0 million paid in July 2021, to fund the repurchase plan announced by the
Company. There are statutory and regulatory provisions that limit the ability of
the Bank to pay dividends to the Company. The Company is required to seek FDIC
and Oregon Division of Financial Regulation approval for quarterly dividends
from Umpqua Bank to the Company. The timing of the quarterly dividend is after
each quarter's earnings release to provide the Board and regulators with the
opportunity to review final quarterly financial results and financial
projections, prior to the announcement of any dividend. Due to the Company's
announcement of its pending merger with Columbia, Umpqua is restricted from
paying quarterly cash dividends in excess of the current level and from
repurchasing shares of Company common stock.

As disclosed in the Consolidated Statements of Cash Flows, net cash provided by
operating activities was $662.7 million during 2021, with the difference between
cash provided by operating activities and net income consisting primarily of
proceeds from the sale of loans held for sale of $5.0 billion, the decrease in
other assets of $153.1 million and deferred income tax expense of $40.8 million,
offset by originations of loans held for sale of $4.7 billion, the gain on sale
of loans of $145.7 million, as well as the (recapture) provision for credit
losses of $42.7 million. This compares to net cash provided by operating
activities of $93.8 million during 2020, with the difference between cash
provided by operating activities and net loss consisting primarily of proceeds
from the sale of loans held for sale of $6.8 billion, non-cash goodwill
impairment of $1.8 billion, as well as the provision for credit losses of $204.9
million, offset by originations of loans held for sale of $6.7 billion, the gain
on sale of loans of $289.2 million, and the increase in other assets of $209.8
million.


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Net cash of $1.5 billion used in investing activities during 2021 consisted
principally of $1.8 billion in purchases of investment securities available for
sale and $735.4 million of the net change in loans and leases, partially offset
by proceeds from investment securities available for sale of $761.2 million and
proceeds from the sale of loans and leases of $246.7 million. This compares to
net cash of $960.1 million used in investing activities during 2020, which
consisted principally of purchases of investment securities available for sale
of $867.7 million, the net changes in loans and leases of $862.1 million, and
the net cash paid in divestiture of stores of $171.4 million, partially offset
by proceeds from investment securities available for sale of $828.8 million and
proceeds from sale of loans and leases of $111.9 million.

Net cash of $1.1 billion provided by financing activities during 2021 primarily
consisted of the $2.0 billion increase in net deposits and the net increase in
securities sold under agreements to repurchase of $116.9 million, partially
offset by repayment of borrowings of $765.0 million, dividends paid on common
stock of $183.7 million, and the repurchase and retirement of common stock of
$80.7 million. This compares to net cash of $2.1 billion provided by financing
activities during 2020 primarily consisted of $2.3 billion increase in net
deposits and proceeds from borrowings of $600.0 million, partially offset by
repayment of borrowings of $735.0 million and dividends paid on common stock of
$185.0 million.

Although we expect the Bank's and the Company's liquidity positions to remain
satisfactory during 2022, it is possible that our deposit balances may not be
maintained at previous levels due to pricing pressure, store consolidations, or
customers' spending habits due to the COVID-19 pandemic. In addition, in order
to generate deposit growth, our pricing may need to be adjusted in a manner that
results in increased interest expense on deposits.


CONCENTRATIONS OF CREDIT RISK

Information regarding Concentrations of Credit Risk is included in Note 2, 4,
and 18 of the Notes to Consolidated Financial Statements in Item 8 below.

CAPITAL RESOURCES


Shareholders' equity at December 31, 2021 and 2020 was $2.7 billion. The
fluctuation in shareholders' equity during the year ended December 31, 2021 was
principally due to net income of $420.3 million for the year ended December 31,
2021, offset by cash dividends paid of $184.9 million, the other comprehensive
loss, net of tax of $121.0 million, and stock repurchased during the period of
$80.7 million.

The Federal Reserve Board has in place guidelines for risk-based capital
requirements applicable to U.S. banks and bank/financial holding companies.
These risk-based capital guidelines take into consideration risk factors, as
defined by regulation, associated with various categories of assets, both on and
off-balance sheet. Refer to the discussion of the capital adequacy requirements
in Supervision and Regulation in Item 1 of this 10-K.

Under the Basel III guidelines, capital strength is measured in three tiers,
which are used in conjunction with risk-adjusted assets to determine the
risk-based capital ratios. The guidelines require an 8% total risk-based capital
ratio, of which 6% must be Tier 1 capital and 4.5% must be CET1. Our CET1
capital primarily includes shareholders' equity less certain deductions for
goodwill and other intangibles, net of taxes, net unrealized gains (losses) on
AFS securities, net of tax, net unrealized gains (losses) related to fair value
of liabilities, net of tax, and certain deferred tax assets that arise from tax
loss and credit carry-forwards, and totaled $2.8 billion at December 31, 2021.
Tier 1 capital is primarily comprised of common equity Tier 1 capital, less
certain additional deductions applied during the phase-in period, totaled $2.8
billion at December 31, 2021. Tier 2 capital components include all, or a
portion of, the allowance for credit losses in excess of Tier 1 statutory limits
and combined trust preferred security debt issuances. The total of Tier 1
capital plus Tier 2 capital components is referred to as Total Risk-Based
Capital, and was $3.4 billion at December 31, 2021. The percentage ratios, as
calculated under the guidelines, were 11.58%, 11.58% and 14.26% for CET1, Tier 1
and Total Risk-Based Capital, respectively, at December 31, 2021. The CET1, Tier
1 and Total Risk-Based Capital ratios at December 31, 2020 were 12.31%, 12.31%
and 15.63%, respectively.


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A minimum leverage ratio is required in addition to the risk-based capital
standards and is defined as period-end shareholders' equity, less accumulated
other comprehensive income, goodwill and deposit-based intangibles, divided by
average assets as adjusted for goodwill and other intangible assets. Although a
minimum leverage ratio of 4% is required for the highest-rated financial holding
companies that are not undertaking significant expansion programs, the Federal
Reserve Board may require a financial holding company to maintain a leverage
ratio greater than 4% if it is experiencing or anticipating significant growth
or is operating with less than well-diversified risks in the opinion of the
Federal Reserve Board. The Federal Reserve Board uses the leverage and
risk-based capital ratios to assess capital adequacy of banks and financial
holding companies. Our consolidated leverage ratios at December 31, 2021 and
2020 were 9.01% and 8.98%, respectively. As of December 31, 2021, the most
recent notification from the FDIC categorized the Bank as "well-capitalized"
under the regulatory framework for prompt corrective action. There are no
conditions or events since that notification that management believes have
changed the Bank's regulatory capital category.

Along with enactment of the CARES Act, the federal bank regulatory authorities
issued an interim final rule to provide banking organizations that are required
to implement CECL before the end of 2020 the option to delay the estimated
impact on regulatory capital by up to two years, with a three-year transition
period to phase out the cumulative benefit to regulatory capital provided during
the two-year delay. The Company has elected this capital relief and delayed the
estimated regulatory capital impact of adopting CECL, relative to the incurred
loss methodology's effect on regulatory capital.

During the year ended December 31, 2021, the Company made no capital
contributions to the Bank. At December 31, 2021, all four of the capital ratios
of the Bank exceeded the minimum ratios required by federal regulation.
Management monitors these ratios on a regular basis to ensure that the Bank
remains within regulatory guidelines.


The Company's dividend policy considers, among other things, earnings,
regulatory capital levels, the overall payout ratio and expected asset growth to
determine the amount of dividends declared, if any, on a quarterly basis. There
is no assurance that future cash dividends on common shares will be declared or
increased. We cannot predict the extent of the economic decline due to COVID-19
or other factors that could result in inadequate earnings, regulatory
restrictions and limitations, changes to our capital requirements, or a decision
to increase capital by retention of earnings, that may result in the inability
to pay dividends at previous levels, or at all. Umpqua is currently restricted
from paying quarterly cash dividends in excess of the current level based on the
Merger Agreement.

During 2021, Umpqua's Board approved dividends of $0.21 for all quarters. The
timing of the quarterly dividend is after each quarter's earnings release to
provide the Board with the opportunity to review final quarterly financial
results and financial projections, prior to the announcement of any dividend.
These dividends were made pursuant to our existing dividend policy and in
consideration of, among other things, earnings, regulatory capital levels, the
overall payout ratio and expected asset growth.

The payment of future cash dividends is at the discretion of our Board and
subject to a number of factors, including results of operations, general
business conditions, growth, financial condition and other factors deemed
relevant by the Board. Further, our ability to pay future cash dividends is
subject to certain regulatory requirements and restrictions discussed in the
Supervision and Regulation section in Item 1 above.


The following table presents cash dividends declared and dividend payout ratios
(dividends declared per common share divided by basic earnings per common share)
for the years ended December 31, 2021, 2020, and 2019:
                                       2021          2020         2019

Dividend declared per common share $ 0.84 $ 0.63 $ 0.84
Dividend payout ratio

                    44  %        (9  %)        52  %



In July 2021, the Company announced that its Board approved a new share
repurchase program, which authorizes the Company to repurchase up to $400
million of common stock over the next twelve months from time to time in open
market transactions, accelerated share repurchases, or in privately negotiated
transactions as permitted under applicable rules and regulations. The program
replaces and supersedes the previously approved share repurchase program, which
was scheduled to expire on July 31, 2021. As of December 31, 2021, a total of
$321.8 million remained available to repurchase shares under the new share
repurchase program. The Company repurchased 4.0 million shares during 2021 under
the new plan.


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The repurchase program is currently halted, based on the announced merger with
Columbia and in accordance with the Merger Agreement. The timing and amount of
future repurchases would depend upon the market price for our common stock,
securities laws restricting repurchases, asset growth, earnings, our capital
plan, and bank or bank holding company regulatory approvals. In addition, our
stock plans provide that option and award holders may pay for the exercise price
and tax withholdings in part or entirely by tendering previously held shares.




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