United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the quarterly period ended:	March 31, ~~2021~~2022
	or


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			for the transition period from to .

Commission File Number: 001-34624

Umpqua Holdings Corporation

(Exact Name of Registrant as Specified in Its Charter)


Oregon			93-1261319
(State or Other Jurisdiction			(I.R.S. Employer Identification Number)
of Incorporation or Organization)

One SW Columbia Street, Suite ~~1200~~1400

Portland, Oregon ~~97258~~97204

(Address of Principal Executive Offices)(Zip Code)

(503) 727-4100

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


TITLE OF EACH CLASS	TRADING SYMBOL	NAME OF EXCHANGE
Common Stock	UMPQ	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer

☐ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding for each of the issuer's classes of common stock, as of the latest practical date:

Common stock, no par value: ~~220,623,153~~217,046,408 shares outstanding as of ~~April 30, 2021~~May 2, 2022.

Table of Contents

UMPQUA HOLDINGS CORPORATION

FORM 10-Q

Table of Contents


GLOSSARY OF DEFINED TERMS
ACL						Allowance for credit losses
ASU						Accounting Standards Update
~~ATM~~						~~Automated teller machine~~
Bank						Umpqua Bank
Bank Merger						The proposed merger of Columbia State Bank, a Washington state-chartered bank and a wholly owned subsidiary of Columbia, with the Bank, with the Bank as the surviving bank
Basel III						Basel capital framework (third accord)

~~CARES Act~~						~~Coronavirus Aid, Relief and Economic Security Act~~
CECL						Current Expected Credit Losses
Columbia						Columbia Banking System, Inc.
Company						Umpqua Holdings Corporation and its subsidiaries
COVID-19						Coronavirus Disease 2019
CVA						Credit valuation adjustments
DCF						Discounted cash flow
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
Federal Reserve						Board of Governors of the Federal Reserve System
FHLB						Federal Home Loan Bank
FinPac						Financial Pacific Leasing, Inc.

~~FRB~~						~~Federal Reserve Bank~~
GAAP						Generally accepted accounting principles
GDP						Gross Domestic Product
GNMA						Government National Mortgage Association
HELOC						Home equity line of credit
LGD						Loss given default
LIBOR						London Inter-Bank Offered Rate
Mergers						Merger Sub will merge with and into Umpqua, with Umpqua as the surviving entity, and immediately following such merger, Umpqua will merge with and into Columbia, with Columbia as the surviving corporation.
Merger Agreement						Agreement dated as of October 11, 2021, by and among Umpqua, Columbia, and Cascade Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia
Merger Sub						Cascade Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Columbia
MSR						Mortgage servicing rights
~~NOL~~						~~Net operating loss~~

PD						Probability of default
PPP						Paycheck Protection Program

SBA						Small Business Administration
SEC						Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate

TDR						Troubled debt ~~restructured~~restructuring
~~USDA~~Umpqua						~~United States Department of Agriculture~~Umpqua Holdings Corporation and its subsidiaries

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except shares) March 31, 2021 December 31, 2020
ASSETS
Cash and due from banks (restricted cash of $103,941 and $92,955) $ 379,361 $ 370,219
Interest bearing cash and temporary investments (restricted cash of $0 and $2,574) 2,861,820 2,202,962
Total cash and cash equivalents 3,241,181 2,573,181
Investment securities
Equity and other, at fair value 82,771 83,077
Available for sale, at fair value 3,167,825 2,932,558
Held to maturity, at amortized cost 2,954 3,034
Loans held for sale (at fair value: $376,481 and $688,079) 376,481 766,225
Loans and leases (at fair value: $258,203 and $0) 22,160,860 21,779,367
Allowance for credit losses on loans and leases (311,283) (328,401)
Net loans and leases 21,849,577 21,450,966
Restricted equity securities 22,057 41,666
Premises and equipment, net 176,571 178,050
Operating lease right-of-use assets 100,643 104,937
Goodwill 2,715 2,715
Other intangible assets, net 12,230 13,360
Residential mortgage servicing rights, at fair value 100,413 92,907
Bank owned life insurance 322,867 323,470
Deferred tax asset, net 10,905 0
Other assets 567,490 669,029
Total assets $ 30,036,680 $ 29,235,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing $ 10,500,482 $ 9,632,773
Interest bearing 15,386,351 14,989,428
Total deposits 25,886,833 24,622,201
Securities sold under agreements to repurchase 420,402 375,384
Borrowings 281,444 771,482
Junior subordinated debentures, at fair value 281,580 255,217
Junior subordinated debentures, at amortized cost 88,212 88,268
Operating lease liabilities 109,014 113,593
Deferred tax liability, net 0 5,441
Other liabilities 287,326 299,012
Total liabilities 27,354,811 26,530,598
COMMITMENTS AND CONTINGENCIES (NOTE 6) 0 0
SHAREHOLDERS' EQUITY
Common stock, 0 par value, shares authorized: 400,000,000 in 2021 and 2020; issued and outstanding: 220,491,203 in 2021 and 220,226,335 in 2020 3,515,248 3,514,599
Accumulated deficit (871,511) (932,767)
Accumulated other comprehensive income 38,132 122,745
Total shareholders' equity 2,681,869 2,704,577
Total liabilities and shareholders' equity $ 30,036,680 $ 29,235,175


(in thousands, except shares)	March 31, 2022		December 31, 2021
ASSETS
Cash and due from banks (restricted cash of $9,072 and $3,593)	$	307,144	$	222,015
Interest bearing cash and temporary investments (restricted cash of $0 and $400)	2,358,292		2,539,606
Total cash and cash equivalents	2,665,436		2,761,621
Investment securities
Equity and other, at fair value	78,966		81,214
Available for sale, at fair value	3,638,080		3,870,435
Held to maturity, at amortized cost	2,700		2,744
Loans held for sale, at fair value	309,946		353,105
Loans and leases (at fair value: $319,630 and $345,634)	22,975,761		22,553,180
Allowance for credit losses on loans and leases	(248,564)		(248,412)
Net loans and leases	22,727,197		22,304,768
Restricted equity securities	10,889		10,916
Premises and equipment, net	167,369		171,125
Operating lease right-of-use assets	87,333		82,366

Other intangible assets, net	7,815		8,840
Residential mortgage servicing rights, at fair value	165,807		123,615
Bank owned life insurance	328,040		327,745
Deferred tax asset, net	39,051		—
Other assets	408,497		542,442
Total assets	$	30,637,126	$	30,640,936
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	11,058,251	$	11,023,724
Interest bearing	15,641,336		15,570,961
Total deposits	26,699,587		26,594,685
Securities sold under agreements to repurchase	499,539		492,247
Borrowings	6,290		6,329
Junior subordinated debentures, at fair value	305,719		293,081
Junior subordinated debentures, at amortized cost	87,984		88,041
Operating lease liabilities	101,732		95,427
Deferred tax liability, net	—		4,353
Other liabilities	328,677		317,503
Total liabilities	28,029,528		27,891,666
COMMITMENTS AND CONTINGENCIES (NOTE 6)	0		0
SHAREHOLDERS' EQUITY
Common stock, no par value, shares authorized: 400,000,000 in 2022 and 2021; issued and outstanding: 216,966,871 in 2022 and 216,625,506 in 2021	3,443,266		3,444,849
Accumulated deficit	(651,912)		(697,338)
Accumulated other comprehensive (loss) income	(183,756)		1,759
Total shareholders' equity	2,607,598		2,749,270
Total liabilities and shareholders' equity	$	30,637,126	$	30,640,936

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


		Three Months Ended						Three Months Ended
(in thousands, except per share amounts)	(in thousands, except per share amounts)		March 31, 2021		March 31, 2020		(in thousands, except per share amounts)		March 31, 2022		March 31, 2021
INTEREST INCOME	INTEREST INCOME						INTEREST INCOME
Interest and fees on loans and leases	Interest and fees on loans and leases		$	221,141	$	245,993	Interest and fees on loans and leases		$	214,404	$	221,141
Interest and dividends on investment securities:	Interest and dividends on investment securities:						Interest and dividends on investment securities:
Taxable	Taxable		13,112		16,605		Taxable		18,725		13,112
Exempt from federal income tax	Exempt from federal income tax		1,534		1,562		Exempt from federal income tax		1,372		1,534
Dividends	Dividends		598		678		Dividends		86		598
Interest on temporary investments and interest bearing deposits	Interest on temporary investments and interest bearing deposits		624		3,331		Interest on temporary investments and interest bearing deposits		1,353		624
Total interest income	Total interest income		237,009		268,169		Total interest income		235,940		237,009
INTEREST EXPENSE	INTEREST EXPENSE						INTEREST EXPENSE
Interest on deposits	Interest on deposits		10,678		40,290		Interest on deposits		3,916		10,678
Interest on securities sold under agreement to repurchase and federal funds purchased	Interest on securities sold under agreement to repurchase and federal funds purchased		76		395		Interest on securities sold under agreement to repurchase and federal funds purchased		63		76
Interest on borrowings	Interest on borrowings		1,772		4,046		Interest on borrowings		49		1,772
Interest on junior subordinated debentures	Interest on junior subordinated debentures		3,052		4,903		Interest on junior subordinated debentures		3,149		3,052
Total interest expense	Total interest expense		15,578		49,634		Total interest expense		7,177		15,578
Net interest income	Net interest income		221,431		218,535		Net interest income		228,763		221,431
PROVISION FOR CREDIT LOSSES	PROVISION FOR CREDIT LOSSES		0		118,085		PROVISION FOR CREDIT LOSSES		4,804		—
Net interest income after provision for credit losses	Net interest income after provision for credit losses		221,431		100,450		Net interest income after provision for credit losses		223,959		221,431
NON-INTEREST INCOME	NON-INTEREST INCOME						NON-INTEREST INCOME
Service charges on deposits	Service charges on deposits		9,647		11,473		Service charges on deposits		11,583		9,647
Card-based fees	Card-based fees		7,374		7,417		Card-based fees		8,708		7,374
Brokerage revenue	Brokerage revenue		3,915		4,015		Brokerage revenue		11		3,915
Residential mortgage banking revenue, net	Residential mortgage banking revenue, net		65,033		17,540		Residential mortgage banking revenue, net		60,786		65,033
Gain (loss) on sale of debt securities, net			4		(133)
(Loss) gain on equity securities, net			(706)		814
Gain on sale of debt securities, net							Gain on sale of debt securities, net		2		4
Loss on equity securities, net							Loss on equity securities, net		(2,661)		(706)
Gain on loan and lease sales, net	Gain on loan and lease sales, net		1,373		1,167		Gain on loan and lease sales, net		2,337		1,373
Bank owned life insurance income	Bank owned life insurance income		2,071		2,129		Bank owned life insurance income		2,087		2,071
Other income (expense)			20,089		(3,777)
Other (losses) income							Other (losses) income		(2,884)		20,089
Total non-interest income	Total non-interest income		108,800		40,645		Total non-interest income		79,969		108,800
NON-INTEREST EXPENSE	NON-INTEREST EXPENSE						NON-INTEREST EXPENSE
Salaries and employee benefits	Salaries and employee benefits		124,134		109,774		Salaries and employee benefits		113,138		124,134
Occupancy and equipment, net	Occupancy and equipment, net		34,635		37,001		Occupancy and equipment, net		34,829		34,635
Communications	Communications		2,763		3,128		Communications		2,754		2,763
Marketing	Marketing		1,372		2,530		Marketing		2,398		1,372
Services	Services		10,750		10,770		Services		11,337		10,750
FDIC assessments	FDIC assessments		2,599		2,542		FDIC assessments		4,516		2,599
Intangible amortization	Intangible amortization		1,130		1,247		Intangible amortization		1,025		1,130
Merger related expenses							Merger related expenses		2,278		—

Goodwill impairment			0		1,784,936
Other expenses	Other expenses		10,209		10,730		Other expenses		10,155		10,209
Total non-interest expense	Total non-interest expense		187,592		1,962,658		Total non-interest expense		182,430		187,592
Income (loss) before provision for income taxes			142,639		(1,821,563)
Income before provision for income taxes							Income before provision for income taxes		121,498		142,639
Provision for income taxes	Provision for income taxes		34,902		30,384		Provision for income taxes		30,341		34,902
Net income (loss)			$	107,737	$	(1,851,947)
Earnings (loss) per common share:
Net income							Net income		$	91,157	$	107,737
Earnings per common share:							Earnings per common share:
Basic	Basic		$0.49		($8.41)		Basic		$0.42		$0.49
Diluted	Diluted		$0.49		($8.41)		Diluted		$0.42		$0.49
Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:						Weighted average number of common shares outstanding:
Basic	Basic		220,367		220,216		Basic		216,782		220,367
Diluted	Diluted		220,891		220,216		Diluted		217,392		220,891

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended
(in thousands) March 31, 2021 March 31, 2020
Net income (loss) $ 107,737 $ (1,851,947)
Available for sale securities:
Unrealized (losses) gains arising during the period (87,345) 107,761
Income tax benefit (expense) related to unrealized (losses) gains 22,465 (27,717)
Reclassification adjustment for net realized (gains) losses in earnings (4) 133
Income tax expense (benefit) related to realized losses 1 (34)
Net change in unrealized (losses) gains for available for sale securities (64,883) 80,143
Junior subordinated debentures, at fair value:
Unrealized (losses) gains arising during the period (26,562) 78,862
Income tax benefit (expense) related to unrealized gains 6,832 (20,283)
Net change in unrealized (losses) gains for junior subordinated debentures, at fair value (19,730) 58,579
Other comprehensive (loss) income, net of tax (84,613) 138,722
Comprehensive income (loss) $ 23,124 $ (1,713,225)


	Three Months Ended
(in thousands)		March 31, 2022		March 31, 2021
Net income		$	91,157	$	107,737
Available for sale securities:
Unrealized losses arising during the period		(237,046)		(87,345)
Income tax benefit related to unrealized losses		60,968		22,465

Reclassification adjustment for net realized gains in earnings		(2)		(4)
Income tax expense related to realized gains		1		1
Net change in unrealized losses for available for sale securities		(176,079)		(64,883)

Junior subordinated debentures, at fair value:
Unrealized losses arising during the period		(12,703)		(26,562)
Income tax benefit related to unrealized losses		3,267		6,832
Net change in unrealized losses for junior subordinated debentures, at fair value		(9,436)		(19,730)
Other comprehensive loss, net of tax		(185,515)		(84,613)
Comprehensive (loss) income		$	(94,358)	$	23,124

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(UNAUDITED)


	Common Stock			Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)
(in thousands, except shares)	Shares	Amount						Total
Balance at January 1, 2021	220,226,335	$	3,514,599	$	(932,767)	$	122,745	$	2,704,577
Net income				107,737				107,737
Other comprehensive loss, net of tax						(84,613)		(84,613)
Stock-based compensation		2,964						2,964
Stock repurchased and retired	(143,832)	(2,315)						(2,315)
Issuances of common stock under stock plans	408,700	—						—
Cash dividends on common stock ($0.21 per share)				(46,481)				(46,481)

Balance at March 31, 2021	220,491,203	$	3,515,248	$	(871,511)	$	38,132	$	2,681,869
Net income				116,143				116,143
Other comprehensive income, net of tax						12,497		12,497
Stock-based compensation		2,377						2,377
Stock repurchased and retired	(957)	(18)						(18)
Issuances of common stock under stock plans	136,206	34						34
Cash dividends on common stock ($0.21 per share)				(46,586)				(46,586)
Balance at June 30, 2021	220,626,452	$	3,517,641	$	(801,954)	$	50,629	$	2,766,316
Net income				108,066				108,066
Other comprehensive loss, net of tax						(30,420)		(30,420)
Stock-based compensation		2,765						2,765
Stock repurchased and retired	(4,011,808)	(78,321)						(78,321)
Issuances of common stock under stock plans	7,159	—						—
Cash dividends on common stock ($0.21 per share)				(46,027)				(46,027)
Balance at September 30, 2021	216,621,803	$	3,442,085	$	(739,915)	$	20,209	$	2,722,379
Net income				88,354				88,354
Other comprehensive loss, net of tax						(18,450)		(18,450)
Stock-based compensation		2,800						2,800
Stock repurchased and retired	(1,790)	(36)						(36)
Issuances of common stock under stock plans	5,493	—						—
Cash dividends on common stock ($0.21 per share)				(45,777)				(45,777)

Common Stock Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income
(in thousands, except shares) Shares Amount Total
Balance at January 1, 2020 220,229,282 $ 3,514,000 $ 770,366 $ 29,549 $ 4,313,915
Net loss (1,851,947) (1,851,947)
Other comprehensive income, net of tax 138,722 138,722
Stock-based compensation 2,253 2,253
Stock repurchased and retired (486,757) (8,573) (8,573)
Issuances of common stock under stock plans 432,595 0 0
Cash dividends on common stock ($0.21 per share) (46,578) (46,578)
Cumulative effect adjustment (1)
(40,181) (40,181)
Balance at March 31, 2020 220,175,120 $ 3,507,680 $ (1,168,340) $ 168,271 $ 2,507,611
Net income 52,926 52,926
Other comprehensive loss, net of tax (24,663) (24,663)
Stock-based compensation 2,503 2,503
Stock repurchased and retired (3,707) (38) (38)
Issuances of common stock under stock plans 47,694 0 0
Balance at June 30, 2020 220,219,107 $ 3,510,145 $ (1,115,414) $ 143,608 $ 2,538,339
Net income 124,871 124,871
Other comprehensive loss, net of tax (8,586) (8,586)
Stock-based compensation 2,025 2,025
Stock repurchased and retired (1,523) (17) (17)
Issuances of common stock under stock plans 4,614 0 0
Cash dividends on common stock ($0.21 per share) (46,388) (46,388)
Balance at September 30, 2020 220,222,198 $ 3,512,153 $ (1,036,931) $ 135,022 $ 2,610,244
Net income 150,730 150,730
Other comprehensive loss, net of tax (12,277) (12,277)
Stock-based compensation 2,473 2,473
Stock repurchased and retired (2,022) (27) (27)
Issuances of common stock under stock plans 6,159 0 0
Cash dividends on common stock ($0.21 per share) (46,566) (46,566)
Balance at December 31, 2020 220,226,335 $ 3,514,599 $ (932,767) $ 122,745 $ 2,704,577

Balance at January 1, 2021 220,226,335 $ 3,514,599 $ (932,767) $ 122,745 $ 2,704,577
Net income 107,737 107,737
Other comprehensive loss, net of tax (84,613) (84,613)
Stock-based compensation 2,964 2,964
Stock repurchased and retired (143,832) (2,315) (2,315)
Issuances of common stock under stock plans 408,700 0 0
Cash dividends on common stock ($0.21 per share) (46,481) (46,481)
Balance at March 31, 2021 220,491,203 $ 3,515,248 $ (871,511) $ 38,132 $ 2,681,869

~~(1)The cumulative effect adjustment relates to the implementation of new accounting guidance for the allowance for credit losses on January 1, 2020.~~




Balance at December 31, 2021	216,625,506	$	3,444,849	$	(697,338)	$	1,759	$	2,749,270
Net income				91,157				91,157
Other comprehensive loss, net of tax						(185,515)		(185,515)
Stock-based compensation		2,454						2,454
Stock repurchased and retired	(194,792)	(4,037)						(4,037)
Issuances of common stock under stock plans	536,157	—						—
Cash dividends on common stock ($0.21 per share)				(45,731)				(45,731)
Balance at March 31, 2022	216,966,871	$	3,443,266	$	(651,912)	$	(183,756)	$	2,607,598

See notes to condensed consolidated financial statements

Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Three Months Ended					Three Months Ended
(in thousands)	(in thousands)	March 31, 2021		March 31, 2020		(in thousands)	March 31, 2022		March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	107,737	$	(1,851,947)
Adjustments to reconcile net income to net cash used in operating activities:
Goodwill impairment		0		1,784,936
Net income						Net income	$	91,157	$	107,737
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of investment premiums, net	Amortization of investment premiums, net	4,455		3,040		Amortization of investment premiums, net	1,106		4,455
(Gain) loss on sale of investment securities, net		(4)		133
Gain on sale of investment securities, net						Gain on sale of investment securities, net	(2)		(4)

Provision for credit losses	Provision for credit losses	0		118,085		Provision for credit losses	4,804		—
Change in cash surrender value of bank owned life insurance	Change in cash surrender value of bank owned life insurance	(2,105)		(2,163)		Change in cash surrender value of bank owned life insurance	(2,122)		(2,105)
Depreciation, amortization and accretion	Depreciation, amortization and accretion	7,759		10,273		Depreciation, amortization and accretion	7,613		7,759
(Gain) loss on sale of premises and equipment		(149)		18
Gain on sale of premises and equipment						Gain on sale of premises and equipment	(571)		(149)

Additions to residential mortgage servicing rights carried at fair value	Additions to residential mortgage servicing rights carried at fair value	(14,065)		(10,023)		Additions to residential mortgage servicing rights carried at fair value	(7,390)		(14,065)
Change in fair value of residential mortgage servicing rights carried at fair value	Change in fair value of residential mortgage servicing rights carried at fair value	6,559		30,687		Change in fair value of residential mortgage servicing rights carried at fair value	(34,802)		6,559

Stock-based compensation	Stock-based compensation	2,964		2,253		Stock-based compensation	2,454		2,964
Net (increase) decrease in equity and other investments		(400)		182
Loss (gain) on equity securities, net		706		(814)
Net increase in equity and other investments						Net increase in equity and other investments	(413)		(400)
Loss on equity securities, net						Loss on equity securities, net	2,661		706
Gain on sale of loans and leases, net	Gain on sale of loans and leases, net	(50,194)		(38,346)		Gain on sale of loans and leases, net	(4,458)		(50,194)
Change in fair value of loans held for sale	Change in fair value of loans held for sale	24,118		(8,094)		Change in fair value of loans held for sale	11,055		24,118
Origination of loans held for sale	Origination of loans held for sale	(1,635,532)		(1,148,184)		Origination of loans held for sale	(649,122)		(1,635,532)
Proceeds from sales of loans held for sale	Proceeds from sales of loans held for sale	1,837,626		1,235,581		Proceeds from sales of loans held for sale	683,347		1,837,626
Change in other assets and liabilities:	Change in other assets and liabilities:					Change in other assets and liabilities:
Net decrease (increase) in other assets		128,221		(219,567)
Net decrease in other liabilities		(25,683)		(25,117)
Net cash provided by (used in) operating activities		392,013		(119,067)
Net decrease in other assets						Net decrease in other assets	167,911		128,221
Net increase (decrease) in other liabilities						Net increase (decrease) in other liabilities	2,097		(25,683)
Net cash provided by operating activities						Net cash provided by operating activities	275,325		392,013
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities available for sale	Purchases of investment securities available for sale	(555,269)		(140,407)		Purchases of investment securities available for sale	(131,869)		(555,269)

Proceeds from investment securities available for sale	Proceeds from investment securities available for sale	227,122		168,851		Proceeds from investment securities available for sale	126,011		227,122

Purchases of restricted equity securities		(6)		(19,999)

Redemption of restricted equity securities	Redemption of restricted equity securities	19,615		8,400		Redemption of restricted equity securities	28		19,615
Net change in loans and leases	Net change in loans and leases	(267,940)		(109,523)		Net change in loans and leases	(470,337)		(267,940)
Proceeds from sales of loans and leases	Proceeds from sales of loans and leases	82,529		22,038		Proceeds from sales of loans and leases	44,549		82,529
Change in premises and equipment	Change in premises and equipment	(4,007)		(3,943)		Change in premises and equipment	(3,736)		(4,007)
Proceeds from bank owned life insurance death benefits	Proceeds from bank owned life insurance death benefits	2,708		57		Proceeds from bank owned life insurance death benefits	1,111		2,708

Other	Other	135		464		Other	104		129
Net cash used in investing activities	Net cash used in investing activities	$	(495,113)	$	(74,062)	Net cash used in investing activities	$	(434,139)	$	(495,113)

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UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)	UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)					UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (UNAUDITED)
		Three Months Ended					Three Months Ended
(in thousands)	(in thousands)	March 31, 2021		March 31, 2020		(in thousands)	March 31, 2022		March 31, 2021
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit liabilities	Net increase in deposit liabilities	$	1,264,645	$	217,973	Net increase in deposit liabilities	$	104,906	$	1,264,645
Net increase in securities sold under agreements to repurchase	Net increase in securities sold under agreements to repurchase	45,018		34,937		Net increase in securities sold under agreements to repurchase	7,292		45,018
Proceeds from borrowings		0		600,000

Repayment of borrowings	Repayment of borrowings	(490,000)		(310,000)		Repayment of borrowings	—		(490,000)

Dividends paid on common stock	Dividends paid on common stock	(46,248)		(46,248)		Dividends paid on common stock	(45,532)		(46,248)

Repurchase and retirement of common stock	Repurchase and retirement of common stock	(2,315)		(8,573)		Repurchase and retirement of common stock	(4,037)		(2,315)
Net cash provided by financing activities	Net cash provided by financing activities	771,100		488,089		Net cash provided by financing activities	62,629		771,100
Net increase in cash and cash equivalents		668,000		294,960
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(96,185)		668,000
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	2,573,181		1,362,756		Cash and cash equivalents, beginning of period	2,761,621		2,573,181
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	3,241,181	$	1,657,716	Cash and cash equivalents, end of period	$	2,665,436	$	3,241,181

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	15,434	$	53,213	Interest	$	7,667	$	15,434
Income taxes	Income taxes	$	36,404	$	38,732	Income taxes	$	6,051	$	36,404
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:	SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:					SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Changes in unrealized gains and losses on investment securities available for sale, net of taxes	Changes in unrealized gains and losses on investment securities available for sale, net of taxes	$	(64,883)	$	80,143	Changes in unrealized gains and losses on investment securities available for sale, net of taxes	$	(176,079)	$	(64,883)

Changes in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxes	Changes in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxes	$	(19,730)	$	58,579	Changes in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxes	$	(9,436)	$	(19,730)
Cumulative effect adjustment to retained earnings		$	0	$	40,181
Cash dividend declared on common stock and payable after period-end		$	0	$	46,237
Transfer of loans to loans held for sale		$	0	$	10,234

Transfer of loans held for sale to loans	Transfer of loans held for sale to loans	$	212,353	$	0	Transfer of loans held for sale to loans	$	—	$	212,353
Change in GNMA mortgage loans recognized due to repurchase option		$	0	$	992

See notes to condensed consolidated financial statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Summary of Significant Accounting Policies

The accounting and financial reporting policies of Umpqua Holdings Corporation conform to accounting principles generally accepted in the United States of America. All references in this report to "Umpqua," "we," "our," ~~"us," the "Company"~~or "us" or similar references mean ~~Umpqua Holdings Corporation~~the Company and include our consolidated subsidiaries where the context so requires. References to "Bank" refer to our subsidiary Umpqua Bank, an Oregon state-chartered commercial bank. ~~The Bank also has a~~FinPac is the Bank's wholly-owned subsidiary, ~~Financial Pacific Leasing, Inc.,~~ a commercial equipment leasing company. The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and the Bank's wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated. The condensed consolidated financial statements have not been audited. A more detailed description of the Company's accounting policies is included in the ~~2020~~2021 Annual Report filed on Form 10-K. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the ~~2020~~2021 Annual Report filed on Form 10-K.

The results for interim periods are not necessarily indicative of results for the full year or any other interim period. As of March 31, 2021, the impact of COVID-19 continues to unfold and many of the Company's estimates and assumptions require increased judgment and carry a higher degree of variability and volatility, including the allowance for credit losses. The Company is unable to fully predict the impact that COVID-19 will have on its financial position and results of operations due to numerous uncertainties and will continue to assess the potential impacts on its financial position and results of operations. As events continue to evolve and additional information becomes available, estimates may change materially in future periods.

In preparing these condensed consolidated financial statements, the Company has evaluated events and transactions subsequent to March 31, ~~2021~~2022, for potential recognition or disclosure. In management's opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments include normal and recurring accruals considered necessary for a fair and accurate presentation. ~~Certain reclassifications~~The results for interim periods are not necessarily indicative of ~~prior period amounts have been made to conform to current classifications.~~results for the full year or any other interim period.

~~Recent~~Application of new accounting ~~pronouncements~~ guidance

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Reporting.~~ Reporting. This ASU was issued to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference ~~LIBOR~~London Inter-Bank Offered Rate or another reference rate expected to be discontinued. The last expedient is a one-time election to sell or transfer debt securities classified as held to maturity. The expedients are in effect from March 12, 2020, through December 31, 2022. ~~The Company will be able to use the expedients in this guidance to manage through the transition away from LIBOR, specifically for our loan portfolio.~~

In January 2021, the FASB issued ASU No. 2021-01,Reference Rate Reform (Topic 848): Scope. The amendments in this ~~ASU~~Update are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments clarify certain optional expedients and exceptions in Topic ~~848.~~848 for contract modifications. The amendments are in effect from March 12, 2020, through December 31, 2022. This ASU does not have a material impact on the Company's consolidated financial statements.

The Company has an enterprise-wide LIBOR transition program which includes business strategy, product design and pricing strategy, instrument contract remediation, and systems and processes. The Company continues to use the expedients in this guidance to manage through the LIBOR transition, specifically for our loan portfolio. Umpqua has stopped originating new instruments using LIBOR, and consistent with regulatory guidance, Umpqua has stopped extensions of, or any increase in exposure in, current LIBOR instruments.

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Recent accounting pronouncements

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this Update improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amendments improve comparability by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The amendment will be applied prospectively to business combinations occurring on or after the effective date. The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted CECL and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. As the Company has adopted CECL, ASU No. 2022-02 will be effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements.

Note 2 – Investment Securities

The following tables present the amortized cost, unrealized gains, unrealized losses and approximate fair values of debt securities at March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		March 31, 2021									March 31, 2022
(in thousands)	(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Available for sale:	Available for sale:									Available for sale:
U.S. Treasury and agencies	U.S. Treasury and agencies	$	708,821	$	30,012	$	(2,175)	$	736,658	U.S. Treasury and agencies	$	893,811	$	330	$	(31,999)	$	862,142
Obligations of states and political subdivisions	Obligations of states and political subdivisions	263,457		12,698		(1,075)		275,080		Obligations of states and political subdivisions	317,743		2,463		(13,342)		306,864
Residential mortgage-backed securities and collateralized mortgage obligations		2,151,838		39,390		(35,141)		2,156,087
Mortgage-backed securities and collateralized mortgage obligations										Mortgage-backed securities and collateralized mortgage obligations	2,657,494		1,225		(189,645)		2,469,074

Total available for sale securities	Total available for sale securities	$	3,124,116	$	82,100	$	(38,391)	$	3,167,825	Total available for sale securities	$	3,869,048	$	4,018	$	(234,986)	$	3,638,080
Held to maturity:	Held to maturity:									Held to maturity:

Residential mortgage-backed securities and collateralized mortgage obligations		$	2,954	$	842	$	0	$	3,796
Mortgage-backed securities and collateralized mortgage obligations										Mortgage-backed securities and collateralized mortgage obligations	$	2,700	$	759	$	—	$	3,459

Total held to maturity securities	Total held to maturity securities	$	2,954	$	842	$	0	$	3,796	Total held to maturity securities	$	2,700	$	759	$	—	$	3,459

December 31, 2020
(in thousands)
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
Available for sale:
U.S. Treasury and agencies $ 698,243 $ 64,271 $ (312) $ 762,202
Obligations of states and political subdivisions 263,546 15,996 (31) 279,511
Residential mortgage-backed securities and collateralized mortgage obligations 1,839,711 51,583 (449) 1,890,845
Total available for sale securities $ 2,801,500 $ 131,850 $ (792) $ 2,932,558
Held to maturity:
Residential mortgage-backed securities and collateralized mortgage obligations $ 3,034 $ 849 $ 0 $ 3,883
Total held to maturity securities $ 3,034 $ 849 $ 0 $ 3,883

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	December 31, 2021
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Available for sale:
U.S. Treasury and agencies	$	894,969	$	27,279	$	(4,195)	$	918,053
Obligations of states and political subdivisions	320,338		11,734		(1,288)		330,784
Mortgage-backed securities and collateralized mortgage obligations	2,649,048		19,093		(46,543)		2,621,598

Total available for sale securities	$	3,864,355	$	58,106	$	(52,026)	$	3,870,435
Held to maturity:

Mortgage-backed securities and collateralized mortgage obligations	$	2,744	$	770	$	—	$	3,514

Total held to maturity securities	$	2,744	$	770	$	—	$	3,514

The Company elected to exclude accrued interest receivable from the amortized cost basis of debt securities disclosed throughout this note. Interest accrued on investment securities totaled ~~$11.5~~$12.6 million and ~~$8.9~~$10.4 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included in Other Assets.

Debt securities that were in an unrealized loss position as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position.

March 31, 2021
Less than 12 Months 12 Months or Longer Total
(in thousands)
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Available for sale:
U.S. Treasury and agencies $ 39,094 $ 2,175 $ 0 $ 0 $ 39,094 $ 2,175
Obligations of states and political subdivisions 38,507 1,075 0 0 38,507 1,075
Residential mortgage-backed securities and collateralized mortgage obligations 1,023,075 35,141 0 0 1,023,075 35,141
Total temporarily impaired securities $ 1,100,676 $ 38,391 $ 0 $ 0 $ 1,100,676 $ 38,391


	March 31, 2022
	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale:
U.S. Treasury and agencies	$	798,817	$	28,447	$	26,276	$	3,552	$	825,093	$	31,999
Obligations of states and political subdivisions	142,162		12,727		4,400		615		146,562		13,342
Mortgage-backed securities and collateralized mortgage obligations	1,707,308		109,913		671,447		79,732		2,378,755		189,645
Total temporarily impaired securities	$	2,648,287	$	151,087	$	702,123	$	83,899	$	3,350,410	$	234,986

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		December 31, 2020													December 31, 2021
		Less than 12 Months				12 Months or Longer				Total					Less than 12 Months				12 Months or Longer				Total
(in thousands)	(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale:	Available for sale:													Available for sale:
U.S. Treasury and agencies	U.S. Treasury and agencies	$	29,493	$	312	$	0	$	0	$	29,493	$	312	U.S. Treasury and agencies	$	197,529	$	2,749	$	28,378	$	1,446	$	225,907	$	4,195
Obligations of states and political subdivisions	Obligations of states and political subdivisions	4,357		31		0		0		4,357		31		Obligations of states and political subdivisions	75,200		1,153		2,162		135		77,362		1,288
Residential mortgage-backed securities and collateralized mortgage obligations		215,165		449		0		0		215,165		449
Mortgage-backed securities and collateralized mortgage obligations														Mortgage-backed securities and collateralized mortgage obligations	1,777,288		40,579		129,943		5,964		1,907,231		46,543

Total temporarily impaired securities	Total temporarily impaired securities	$	249,015	$	792	$	0	$	0	$	249,015	$	792	Total temporarily impaired securities	$	2,050,017	$	44,481	$	160,483	$	7,545	$	2,210,500	$	52,026

These unrealized losses on the ~~Company's~~ debt securities held by the Company were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not due to the underlying credit of the issuers. Management monitors the published credit ratings of the ~~Company's~~issuers of the debt securities for material rating or outlook changes. Substantially all of the Company's obligations of states and political subdivisions are general obligation issuances. All of the available for sale ~~residential~~ mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at March 31, ~~2021~~2022 are issued or guaranteed by government sponsored enterprises. Because the decline in fair value of the ~~Company's~~ debt securities is attributable to changes in interest rates or widening market spreads and not credit quality, these investments do not have an allowance for credit losses at March 31, ~~2021.~~2022.

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The following table presents the contractual maturities of debt securities at March 31, ~~2021:~~2022:


		Available For Sale				Held To Maturity					Available For Sale				Held To Maturity
(in thousands)	(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	Due within one year	$	7,639	$	7,695	$	0	$	0	Due within one year	$	11,321	$	11,379	$	—	$	—
Due after one year through five years	Due after one year through five years	76,491		79,415		3		3		Due after one year through five years	307,338		300,748		2		2
Due after five years through ten years	Due after five years through ten years	891,005		927,102		9		9		Due after five years through ten years	918,444		883,850		7		7
Due after ten years	Due after ten years	2,148,981		2,153,613		2,942		3,784		Due after ten years	2,631,945		2,442,103		2,691		3,450
Total securities	Total securities	$	3,124,116	$	3,167,825	$	2,954	$	3,796	Total securities	$	3,869,048	$	3,638,080	$	2,700	$	3,459

The following table presents, as of March 31, ~~2021,~~2022, investment securities ~~that~~which were pledged to secure borrowings, public deposits, and repurchase agreements as permitted or required by law:


(in thousands)	(in thousands)	Amortized Cost		Fair Value		(in thousands)	Amortized Cost		Fair Value

To state and local governments to secure public deposits	To state and local governments to secure public deposits	$	253,107	$	262,336	To state and local governments to secure public deposits	$	304,762	$	291,679
Other securities pledged principally to secure repurchase agreements		599,137		621,582
To secure repurchase agreements						To secure repurchase agreements	589,782		568,495
Other securities pledged						Other securities pledged	243,779		232,466
Total pledged securities	Total pledged securities	$	852,244	$	883,918	Total pledged securities	$	1,138,323	$	1,092,640

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Note 3 – Loans and Leases

The following table presents the major types of loans and leases, net of deferred fees and costs, as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Commercial real estate	Commercial real estate					Commercial real estate
Non-owner occupied term, net	Non-owner occupied term, net	$	3,455,773	$	3,505,802	Non-owner occupied term, net	$	3,884,784	$	3,786,887
Owner occupied term, net	Owner occupied term, net	2,358,169		2,333,945		Owner occupied term, net	2,327,899		2,332,422
Multifamily, net	Multifamily, net	3,421,320		3,349,196		Multifamily, net	4,323,633		4,051,202
Construction & development, net	Construction & development, net	876,297		828,478		Construction & development, net	940,286		890,338
Residential development, net	Residential development, net	190,841		192,761		Residential development, net	195,308		206,990
Commercial	Commercial					Commercial
Term, net	Term, net	4,350,763		4,024,467		Term, net	2,772,206		3,008,473
Lines of credit & other, net	Lines of credit & other, net	825,162		862,760		Lines of credit & other, net	871,483		910,733
Leases & equipment finance, net	Leases & equipment finance, net	1,420,977		1,456,630		Leases & equipment finance, net	1,484,252		1,467,676
Residential	Residential					Residential
Mortgage, net	Mortgage, net	3,958,644		3,871,906		Mortgage, net	4,748,266		4,517,266
Home equity loans & lines, net	Home equity loans & lines, net	1,097,168		1,136,064		Home equity loans & lines, net	1,250,702		1,197,170
Consumer & other, net	Consumer & other, net	205,746		217,358		Consumer & other, net	176,942		184,023
Total loans and leases, net of deferred fees and costs	Total loans and leases, net of deferred fees and costs	$	22,160,860	$	21,779,367	Total loans and leases, net of deferred fees and costs	$	22,975,761	$	22,553,180

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the net deferred costs were ~~$18.7~~$68.4 million and ~~$38.6~~$57.5 million, respectively. The Bank ~~is participating~~participated in the PPP to originate SBA loans designated to help businesses maintain their workforce and cover other working capital needs during the COVID-19 pandemic. As of March 31, ~~2021,~~2022, the Bank had approximately ~~18,000~~2,000 PPP loans, totaling ~~$2.0 billion~~$172.8 million remaining in net loans, which are classified as commercial term loans in the table above. As of December 31, ~~2020,~~2021, the Bank had approximately ~~15,000~~4,000 PPP loans totaling ~~$1.8 billion~~$380.4 million in net loans. ~~Net deferred costs include~~The remaining net deferred fees ~~and costs for~~on the ~~origination of~~ PPP loans ~~of $44.4~~were $5.5 million and ~~$26.9~~$11.6 million ~~respectively,~~ as of March 31, ~~2021~~2022 and December 31, 2020. The PPP net deferred fees and costs are a yield adjustment over the remaining term of these loans. The loans are fully guaranteed by the SBA and the maximum term of the loans is either two or five years; however, the majority of the loan balances are expected to be forgiven by the SBA, which will accelerate the recognition of these net deferred fees at the forgiveness date.2021, respectively.

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Total loans and leases also include discounts on acquired loans of ~~$15.7~~$8.3 million and ~~$17.9~~$9.8 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. As of March 31, ~~2021,~~2022, loans totaling ~~$13.5~~$15.1 billion were pledged to secure borrowings and available lines of credit. The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote. Interest accrued on loans totaled ~~$75.7~~$57.3 million and ~~$74.8~~$60.1 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included in Other Assets.

The Bank, through its commercial equipment leasing subsidiary, FinPac, is a provider of commercial equipment leasing and financing. Direct finance leases are included within the ~~lease~~leases and equipment finance segment within the loans and leases, net line item. These direct financing leases typically have terms of three to five ~~years and are considered to be direct financing leases.~~years. Interest income recognized on these leases was $5.1 million for the three months ended March 31, 2022, as compared to $5.6 million for the three months ended March 31, ~~2021, as compared to $6.7 million for the three months ended March 31, 2020.~~2021.

~~Table of Contents~~

Loans and leases sold

In the course of managing the loan and lease portfolio, at certain times, management may decide to sell loans and leases. The following table summarizes the carrying value of loans and leases sold by major loan type during the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended						Three Months Ended
(in thousands)	(in thousands)		March 31, 2021		March 31, 2020		(in thousands)		March 31, 2022		March 31, 2021
Commercial real estate	Commercial real estate						Commercial real estate
Non-owner occupied term, net	Non-owner occupied term, net		$	5,430	$	3,385	Non-owner occupied term, net		$	18,060	$	5,430
Owner occupied term, net	Owner occupied term, net		1,611		5,766		Owner occupied term, net		10,463		1,611

Commercial	Commercial						Commercial
Term, net	Term, net		8,993		11,677		Term, net		12,196		8,993

Leases & equipment finance, net			0		43

Residential	Residential						Residential
Mortgage, net	Mortgage, net		1,323		0		Mortgage, net		1,493		1,323

Consumer & other	Consumer & other		63,799		0		Consumer & other		—		63,799
Total loans and leases sold, net	Total loans and leases sold, net		$	81,156	$	20,871	Total loans and leases sold, net		$	42,212	$	81,156

Note 4 – Allowance for Credit Losses

Allowance for Credit Losses Methodology

In accordance with CECL, the ACL represents management's estimate of lifetime credit losses for assets within its scope, specifically loans and leases and unfunded commitments. To calculate the ACL, management uses models to estimate the PD and LGD for loans utilizing inputs that include forecasted future economic conditions and that are dependent upon specific macroeconomic variables relevant to each of the Bank's loan and lease portfolios. Moody's Analytics, a third party, provided the historical and forward-looking macroeconomic data ~~used~~utilized in ~~the development of~~ the models used to calculate the ACL.

For ACL calculation purposes, the Bank considered the financial and economic environment at the time of assessment and economic scenarios that differed in the levels of severity and sensitivity to the ACL results. At each measurement date, the Bank selects the scenario that reflects its view of future economic conditions and is determined to be the most probable outcome.

All forecasts are updated for each variable where applicable and incorporated as relevant into the ACL calculation. Actual credit loss results and the timing thereof will differ from the estimate of credit losses, either in a strong economy or a recession, as the portfolio will change through time due to growth, risk mitigation actions and other factors. In addition, the scenarios used will differ and change through time as economic conditions change. Economic scenarios might not capture deterioration or improvement in the economy timely enough for the Bank to be able to adequately ~~assess~~address the impact to the ACL.

Select macroeconomic variables are projected over the forecast period, and they could have a material impact in determining the ACL. As the length of the forecast period increases, information about the future becomes less readily available and projections are inherently less certain.

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The following is a discussion of the changes in the factors that influenced management's current estimate of expected credit losses. The changes in the ACL estimate for all portfolio segments, during the three months ended March 31, ~~2021,~~2022, were primarily related to changes in the economic assumptions. Because of the uncertain economic environment due to ~~the COVID-19 pandemic, additional risk associated with payment deferrals,~~Russia's military conflict in Ukraine causing global oil prices to increase, continued supply-chain issues, and increasing interest rates, ~~and unknown fiscal support,~~ the Bank opted to use Moody's ~~Analytics February~~Analytics' March baseline economic forecast for estimating the ACL as of March 31, ~~2021.~~2022.

~~Table of Contents~~

In the baseline scenario selected, the probability that the economy will perform better than this baseline is equal to the probability that it will perform worse and included the following factors:

•U.S. real GDP average annualized growth ~~continues~~of 3.5% in2022, decreasing to ~~be positive over both the short and long term;~~3.1% in 2023;

•U.S. unemployment average rate ~~average~~ of ~~6.1% through 2021;~~

•~~U.S. economy experiences strong growth through~~3.6% for 2022, ~~and normalized growth thereafter;~~

•~~Federal Reserve~~dropping to ~~keep target range for the Fed Funds rate at 0.0% to 0.25% until the second quarter of~~3.4% in 2023;

•~~Net fiscal support over President Biden’s current term expected to be approximately $2 trillion;~~COVID-19 infections abate in March 2022;

•~~Return~~The Federal Reserve is expected to ~~less than 5% unemployment~~increase the federal funds rate consistently throughout 2022 and 2023, reaching a long-run equilibrium of 2.5% by the ~~third quarter~~end of ~~2022.~~2024.

The Bank uses an additional scenario that differs in terms of severity within the variables, both favorable and unfavorable, to assess the sensitivity in the ACL results and to inform qualitative adjustments. The Bank selected the Moody's ~~Analytics February~~Analytics' March S2 scenario for this analysis. In the scenario selected, there is a 75% probability that the economy will perform better, broadly speaking, and a 25% probability that it will perform worse; and the scenario includes the following factors:

•~~Elevated new~~The military conflict between Russia and Ukraine persists longer than anticipated. As a result, worries remain elevated that there could be a major interruption of global oil supplies. This causes oil prices to rise more than in the baseline and thereby increases inflationary pressures. Higher gasoline prices cut into disposable income that would otherwise be available for other spending;

•Supply-chain issues also worsen, increasing shortages of affected goods, also boosting inflation;

•New cases, hospitalizations and deaths from COVID-19 ~~force state~~start to rise again, slowing growth in spending on air travel, retail, and ~~local officials in some areas of the country to keep some nonessential businesses closed or limited, but there is no return to widespread shutdowns;~~hotels;

•~~Consumers are slower~~U.S real GDP average annualized growth of 2.3% through 2022, decreasing to ~~return to spending on travel, retail, and hotel;~~1.4% in 2023;

•~~Slower real GDP growth through 2022 with normalized growth thereafter;~~

•Unemployment~~U.S. unemployment rate average of 6.7% through 2021;~~

•~~Net fiscal support over President Biden’s current term expected~~begins to ~~be approximately $1.6 trillion;~~

•~~Return to less than 5% unemployment by~~increase again in the second quarter of ~~2024.~~2022;

•The economy returns to full employment more slowly than in the baseline, by the fourth quarter of 2023.

The results using the comparison scenario for sensitivity analysis were reviewed by management ~~but management believes~~and were considered when evaluating the ~~baseline scenario better reflects the estimated economic environment.~~qualitative factor adjustments.

The ACL is measured on a collective (pool) basis when similar characteristics exist. The Company has selected models at the portfolio level using a risk-based approach, with larger, more complex portfolios having more complex models. Except as noted below, the macroeconomic variables that are inputs to the models are reasonable and supportable over the life of the loans in that they reasonably project the key economic variables in the near term and then converge to a long run equilibrium trend. These models produce reasonable and supportable estimates of loss over the life of the loans as the projected credit losses will also converge to a steady state in line with the variables applied. The Company measures the ACL using the following methods:

Commercial Real Estate: Non-owner occupied commercial real estate, multifamily, and construction loans are analyzed using a model that uses four primary property variables: net operating income, property value, property type, and location. For PD estimation, the model simulates potential future paths of net operating income given commercial real estate market factors determined from macroeconomic and regional commercial real estate forecasts. Using the resulting expected debt service coverage ratios, together with predicted loan-to-values and other variables, the model estimates PD from the range of conditional possibilities. In addition, the model estimates maturity PD capturing refinance default risk to produce a total PD for the loan. The model estimates LGD, inclusive of principal loss and liquidation expenses, empirically using predicted loan-to-value as well as certain market and other factors. The LGD calculation also includes a separate maturity risk component. The primary economic drivers in the model are GDP ~~Growth,~~growth, U.S. unemployment rate, and 10-Year Treasury yield. These economic drivers are translated into a forecast provided by Moody's Analytics' REIS of real estate metrics, such as rental rates, vacancies, and cap rates. The model produces PD and LGD on a quarter-by-quarter basis for the life of loan.

The owner-occupied commercial real-estate portfolio utilizes a top-down macroeconomic model using linear regression. This model produces portfolio level quarterly net charge-off rates for 10 years and carries forward the last quarter's ~~projected~~ expected loss percentage ~~forward~~projection to remaining periods. The primary economic drivers for this model are the 7-year A vs Aa corporate bond spread and S&P 500 corporate after-tax profits.

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Commercial: Non-homogeneous commercial loans and leases and residential development loans are analyzed in a multi-step process. An initial PD is estimated using a model driven by an obligor's selected financial statement ratios, together with cycle-adjusting information based on the obligor's state and industry. An initial LGD is derived separately based on collateral type using collateral value and a haircut to reflect the loss in liquidation. Another model then applies an auto-regression technique to the initial PD and LGD metrics to estimate the PD and LGD curves according to the macroeconomic scenario over a one-year reasonable and supportable forecast. The primary economic drivers in the model are the S&P 500 Stock Price Index, S&P 500 Market Volatility Index, U.S. unemployment rate, as well as appropriate yield curves and credit spreads. This model utilizes output reversion methodology, which, after one year, reverts on a straight-line basis over two years to long-term PD estimated using financial statement ratios of each obligor.

~~Table of Contents~~

The model for the homogeneous lease and equipment finance agreement portfolio uses lease and equipment finance agreement information, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD values. The PD calculation is based on survival analysis while LGD is calculated using a two-step regression. The model calculates LGD using an estimate of the probability that a defaulted lease or equipment finance agreement will have a loss, and an estimate of the loss amount. The primary economic drivers for the model are GDP, U.S. unemployment rate, and a home price growth index. The model produces PD and LGD curves at the lease or equipment finance agreement level for each month in the forecast horizon.

Residential: The models for residential real estate and home equity lines of credit utilize loan level variables, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD. The U.S. unemployment rate and home price growth rate indexes are primary economic drivers in both the residential real estate and HELOC models. In addition, the prime rate is also a primary driver in the HELOC model. The models focus on establishing an empirical relationship between default probabilities and a set of loan-level, borrower, and macroeconomic credit risk drivers. The LGD calculation for residential real estate is based on an estimate of the probability that a defaulted loan will have a loss, and then an estimate of the loss amount. HELOCs utilize the same model using residential real estate LGD values to assign loans to cohorts based on FICO scores and loan age. The model produces PD and LGD curves at the loan level for each quarter in the forecast horizon.

Consumer: Historical net charge-off information as well as economic forecast assumptions are used to project loss rates for the Consumer segment.

All loans and leases that have not been modeled receive a loss rate via an extrapolated rate methodology. The loans and leases receiving an extrapolated rate are typically newly originated loans and leases or loans and leases without the granularity of data necessary to be modeled. Based on the vintage year, credit classification, and reporting category of the modeled loans and leases, a loss factor is calculated and applied to the non-modeled loans and leases.

Along with the quantitative factors produced by the above models, management also considers prepayment speeds and qualitative factors when determining the ACL. The Company uses a prepayment model that forecasts the constant prepayment rates based on institution specific ~~data.~~data for the commercial real estate, commercial and consumer portfolios and a forward curve approach that changes with macro-economic input variables for the residential portfolio. Below are the nine qualitative factors considered where applicable:

•Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

•Changes in national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

•Changes in the nature and volume of the portfolio and in the terms of loans and leases.

•Changes in the experience, ability, and depth of lending management and other relevant staff.

•Changes in the volume and severity of past due loans and leases, the volume of non-accrual loans and leases, and the volume and severity of adversely classified or graded loans and leases.

•Changes in the quality of the Bank's credit review system.

•Changes in the value of the underlying collateral for collateral-dependent loans and leases.

•The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

•The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Bank's existing portfolio.

The Company evaluated each qualitative factor as of March 31, ~~2021,~~2022, and ~~concluded that a material adjustment~~made qualitative overlay adjustments of approximately $20.1 million to increase the amounts indicated by the models ~~was not~~as considered necessary ~~as the models~~to adequately ~~reflected~~reflect the significant changes in credit conditions and overall portfolio risk.

Table of Contents

Loss factors from the models, prepayment speeds, and qualitative factors are input into the Company's CECL accounting application which aggregates the information. The Company then uses two methods to calculate the current expected credit loss: 1) the discounted cash flow method, which is used for all loans except lines of credit and 2) the non-discounted cash flow method which is used for lines of credit due to difficulty of calculating an effective interest rate when lines have yet to be drawn on. The DCF method utilizes the effective interest rate of individual assets to discount the expected credit losses adjusted for prepayments. The difference in the net present value and the amortized cost of the asset will result in the required allowance. The non-discounted cash flow method uses the exposure at default, along with the expected credit losses adjusted for prepayments to calculate the required allowance.

~~Table of Contents~~

The following tables summarize activity related to the allowance for credit losses by portfolio segment for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:




















	Three Months Ended March 31, 2022
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	99,075	$	117,573	$	29,068	$	2,696	$	248,412
(Recapture) provision for credit losses for loans and leases	(7,462)		8,812		2,872		1,474		5,696

Charge-offs	—		(7,858)		(167)		(885)		(8,910)
Recoveries	25		2,545		173		623		3,366
Net recoveries (charge-offs)	25		(5,313)		6		(262)		(5,544)
Balance, end of period	$	91,638	$	121,072	$	31,946	$	3,908	$	248,564
Reserve for unfunded commitments
Balance, beginning of period	8,461		2,028		1,957		321		12,767
Provision (recapture) for credit losses on unfunded commitments	277		(408)		236		46		151
Balance, end of period	8,738		1,620		2,193		367		12,918
Total allowance for credit losses	$	100,376	$	122,692	$	34,139	$	4,275	$	261,482


													Three Months Ended March 31, 2021

		Three Months Ended March 31, 2021
		Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
(in thousands)												(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases	Allowance for credit losses on loans and leases											Allowance for credit losses on loans and leases
Balance, beginning of period	Balance, beginning of period	$	141,710	$	150,864	$	27,964	$	7,863	$	328,401	Balance, beginning of period	$	141,710	$	150,864	$	27,964	$	7,863	$	328,401
Provision for credit losses for loans and leases		12,426		(4,503)		(6,912)		(485)		526

Provision (recapture) for credit losses for loans and leases												Provision (recapture) for credit losses for loans and leases	12,426		(4,503)		(6,912)		(485)		526
Charge-offs	Charge-offs	(41)		(19,614)		(70)		(1,190)		(20,915)		Charge-offs	(41)		(19,614)		(70)		(1,190)		(20,915)
Recoveries	Recoveries	380		2,091		108		692		3,271		Recoveries	380		2,091		108		692		3,271
Net recoveries (charge-offs)	Net recoveries (charge-offs)	339		(17,523)		38		(498)		(17,644)		Net recoveries (charge-offs)	339		(17,523)		38		(498)		(17,644)
Balance, end of period	Balance, end of period	$	154,475	$	128,838	$	21,090	$	6,880	$	311,283	Balance, end of period	$	154,475	$	128,838	$	21,090	$	6,880	$	311,283
Reserve for unfunded commitments	Reserve for unfunded commitments											Reserve for unfunded commitments
Balance, beginning of period	Balance, beginning of period	15,360		2,190		1,661		1,075		20,286		Balance, beginning of period	$	15,360	$	2,190	$	1,661	$	1,075	$	20,286
Provision (recapture) for credit losses on unfunded commitments	Provision (recapture) for credit losses on unfunded commitments	308		(389)		(373)		(72)		(526)		Provision (recapture) for credit losses on unfunded commitments	308		(389)		(373)		(72)		(526)
Balance, end of period	Balance, end of period	15,668		1,801		1,288		1,003		19,760		Balance, end of period	15,668		1,801		1,288		1,003		19,760
Total allowance for credit losses	Total allowance for credit losses	$	170,143	$	130,639	$	22,378	$	7,883	$	331,043	Total allowance for credit losses	$	170,143	$	130,639	$	22,378	$	7,883	$	331,043

Three Months Ended March 31, 2020
(in thousands) Commercial Real Estate Commercial Residential Consumer & Other Total
Allowance for credit losses on loans and leases
Balance, beginning of period $ 50,847 $ 73,820 $ 24,714 $ 8,248 $ 157,629
Impact of adoption CECL 5,077 44,009 2,099 (1,186) 49,999
Adjusted balance, beginning of period 55,924 117,829 26,813 7,062 207,628
Provision for credit losses for loans and leases 43,608 49,673 7,185 5,036 105,502
Charge-offs 0 (22,608) (11) (1,836) (24,455)
Recoveries 246 1,713 264 522 2,745
Net recoveries (charge-offs) 246 (20,895) 253 (1,314) (21,710)
Balance, end of period $ 99,778 $ 146,607 $ 34,251 $ 10,784 $ 291,420
Reserve for unfunded commitments
Balance, beginning of period $ 534 $ 2,539 $ 149 $ 1,884 $ 5,106
Impact of adoption CECL 4,030 (487) 1,267 (1,572) 3,238
Adjusted balance, beginning of period 4,564 2,052 1,416 312 8,344
Provision for credit losses on unfunded commitments 11,196 875 325 187 12,583
Balance, end of period 15,760 2,927 1,741 499 20,927
Total allowance for credit losses $ 115,538 $ 149,534 $ 35,992 $ 11,283 $ 312,347

Table of Contents

The following table presents the unfunded commitments for the period ended March 31, ~~2021~~2022 and ~~2020:~~

2021:


(in thousands)	Total
Unfunded loan and lease commitments
March 31, 2022	$	7,387,402
March 31, 2021	$	5,809,620
~~March 31, 2020~~	$	~~5,705,316~~

~~Table of Contents~~

Asset Quality and Non-Performing Loans and Leases

The Bank manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department is charged with monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due loans and leases and larger credits, designed to identify potential charges to the allowance for credit losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions and other factors.

Loans and Leases Past Due and Non-Accrual Loans and Leases

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 various government-mandated programs, 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. As of March 31, 2021, loans of approximately $324.0 million are currently deferred under various federal and state guidelines and are classified as current as their contractual payments have been deferred. These deferred loans do not include deferrals of delinquent repurchased GNMA loans as the credit risk of these loans are guaranteed by government programs such as Federal Housing Agency, Veterans Affairs, and USDA Rural Development. At March 31, 2021, approximately $166.3 million of GNMA repurchased loans were on deferral. At December 31, 2020, the Bank had $355.5 million in deferred loans under various federal and state guidelines, excluding GNMA repurchased loans on deferral of $177.7 million.

~~Table of Contents~~

The following tables present the carrying value of the loans and leases past due, by loan and lease class, as of March 31, ~~2021~~2022 and December 31, ~~2020:~~

March 31, 2021
(in thousands) Greater than 30 to 59 Days Past Due 60 to 89 Days Past Due Greater than 90 Days and Accruing Total Past Due
Non-Accrual (1)
Current Total Loans and Leases
Commercial real estate
Non-owner occupied term, net $ 452 $ 1,093 $ 0 $ 1,545 $ 3,602 $ 3,450,626 $ 3,455,773
Owner occupied term, net 1,099 1,069 1 2,169 5,830 2,350,170 2,358,169
Multifamily, net 9,562 1,035 0 10,597 0 3,410,723 3,421,320
Construction & development, net 0 0 0 0 0 876,297 876,297
Residential development, net 0 0 0 0 0 190,841 190,841
Commercial
Term, net 0 57 0 57 4,113 4,346,593 4,350,763
Lines of credit & other, net 2,207 983 756 3,946 310 820,906 825,162
Leases & equipment finance, net 16,270 7,216 0 23,486 15,361 1,382,130 1,420,977
Residential
Mortgage, net 4,855 3,033 22,963 30,851 0 3,927,793 3,958,644
Home equity loans & lines, net 939 384 1,561 2,884 0 1,094,284 1,097,168
Consumer & other, net 618 248 331 1,197 0 204,549 205,746
Total, net of deferred fees and costs $ 36,002 $ 15,118 $ 25,612 $ 76,732 $ 29,216 $ 22,054,912 $ 22,160,860
2021:


	March 31, 2022
(in thousands)	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More and Accruing		Total Past Due		Non-Accrual (1)		Current		Total Loans and Leases
Commercial real estate
Non-owner occupied term, net	$	94	$	—	$	—	$	94	$	3,351	$	3,881,339	$	3,884,784
Owner occupied term, net	253		—		1		254		2,599		2,325,046		2,327,899
Multifamily, net	—		—		—		—		—		4,323,633		4,323,633
Construction & development, net	10,710		—		—		10,710		—		929,576		940,286
Residential development, net	—		—		—		—		—		195,308		195,308
Commercial
Term, net	1,021		339		—		1,360		4,256		2,766,590		2,772,206
Lines of credit & other, net	352		24		8		384		—		871,099		871,483
Leases & equipment finance, net	12,551		7,029		—		19,580		8,159		1,456,513		1,484,252
Residential
Mortgage, net	4,983		2,546		21,683		29,212		—		4,719,054		4,748,266
Home equity loans & lines, net	1,483		292		1,479		3,254		—		1,247,448		1,250,702
Consumer & other, net	462		270		111		843		—		176,099		176,942
Total, net of deferred fees and costs	$	31,909	$	10,500	$	23,282	$	65,691	$	18,365	$	22,891,705	$	22,975,761

(1) Loans and leases on non-accrual with an amortized cost basis of ~~$29.2~~$18.4 million had a related allowance for credit losses of ~~$12.3~~$7.2 million at March 31, ~~2021.~~

2022.

1918

Table of Contents


		December 31, 2020															December 31, 2021
(in thousands)	(in thousands)	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		Greater than 90 Days and Accruing		Total Past Due		Non-Accrual (1)		Current and Other		Total Loans and Leases		(in thousands)	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More and Accruing		Total Past Due		Non-Accrual (1)		Current and Other		Total Loans and Leases
Commercial real estate	Commercial real estate															Commercial real estate
Non-owner occupied term, net	Non-owner occupied term, net	$	1,214	$	21,309	$	815	$	23,338	$	3,809	$	3,478,655	$	3,505,802	Non-owner occupied term, net	$	388	$	1,138	$	—	$	1,526	$	3,384	$	3,781,977	$	3,786,887
Owner occupied term, net	Owner occupied term, net	182		103		208		493		5,984		2,327,468		2,333,945		Owner occupied term, net	101		65		1		167		2,383		2,329,872		2,332,422
Multifamily, net	Multifamily, net	0		215		0		215		0		3,348,981		3,349,196		Multifamily, net	—		—		—		—		—		4,051,202		4,051,202
Construction & development, net	Construction & development, net	3,991		0		0		3,991		0		824,487		828,478		Construction & development, net	—		—		—		—		—		890,338		890,338
Residential development, net	Residential development, net	0		0		0		0		0		192,761		192,761		Residential development, net	—		—		—		—		—		206,990		206,990
Commercial	Commercial															Commercial
Term, net	Term, net	562		0		4		566		2,205		4,021,696		4,024,467		Term, net	4,627		2,345		4		6,976		4,225		2,997,272		3,008,473
Lines of credit & other, net	Lines of credit & other, net	1,491		2,667		7		4,165		336		858,259		862,760		Lines of credit & other, net	300		2		357		659		—		910,074		910,733
Leases & equipment finance, net	Leases & equipment finance, net	14,242		18,220		4,796		37,258		18,742		1,400,630		1,456,630		Leases & equipment finance, net	6,806		8,951		3,799		19,556		8,873		1,439,247		1,467,676
Residential	Residential															Residential
Mortgage, net	Mortgage, net	1,587		3,912		27,713		33,212		0		3,838,694		3,871,906		Mortgage, net	802		3,668		27,249		31,719		—		4,485,547		4,517,266
Home equity loans & lines, net	Home equity loans & lines, net	844		544		2,463		3,851		0		1,132,213		1,136,064		Home equity loans & lines, net	1,214		491		732		2,437		—		1,194,733		1,197,170
Consumer & other, net	Consumer & other, net	678		286		355		1,319		0		216,039		217,358		Consumer & other, net	396		386		194		976		—		183,047		184,023
Total, net of deferred fees and costs	Total, net of deferred fees and costs	$	24,791	$	47,256	$	36,361	$	108,408	$	31,076	$	21,639,883	$	21,779,367	Total, net of deferred fees and costs	$	14,634	$	17,046	$	32,336	$	64,016	$	18,865	$	22,470,299	$	22,553,180

(1) Loans and leases on non-accrual with an amortized cost basis of ~~$31.1~~$18.9 million had a related allowance for credit losses of ~~$16.7~~$7.5 million at December 31, ~~2020.~~2021.

Collateral Dependent Loans and Leases

Loans are classified as collateral dependent when it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes the amortized cost basis of the collateral dependent loans and leases by the type of collateral securing the assets as of March 31, ~~2021.~~2022. There have been no significant changes in the level of collateralization from the prior periods.


(in thousands)	(in thousands)	Residential Real Estate		Commercial Real Estate		General Business Assets		Other		Total		(in thousands)	Residential Real Estate		Commercial Real Estate		General Business Assets		Other		Total
Commercial real estate	Commercial real estate											Commercial real estate
Non-owner occupied term, net	Non-owner occupied term, net	$	0	$	3,280	$	0	$	0	$	3,280	Non-owner occupied term, net	$	—	$	3,088	$	—	$	—	$	3,088
Owner occupied term, net	Owner occupied term, net	0		5,327		0		0		5,327		Owner occupied term, net	—		2,270		—		—		2,270

Commercial	Commercial											Commercial
Term, net	Term, net	961		572		340		2,299		4,172		Term, net	974		520		852		1,502		3,848
Line of credit & other, net	Line of credit & other, net	0		0		100		154		254		Line of credit & other, net	—		—		1		—		1
Leases & equipment finance, net	Leases & equipment finance, net	0		0		15,361		0		15,361		Leases & equipment finance, net	—		—		8,159		—		8,159
Residential	Residential											Residential
Mortgage, net	Mortgage, net	25,496		0		0		0		25,496		Mortgage, net	38,088		—		—		—		38,088
Home equity loans & lines, net	Home equity loans & lines, net	2,396		0		0		0		2,396		Home equity loans & lines, net	3,044		—		—		—		3,044

Total net of deferred fees and costs	Total net of deferred fees and costs	$	28,853	$	9,179	$	15,801	$	2,453	$	56,286	Total net of deferred fees and costs	$	42,106	$	5,878	$	9,012	$	1,502	$	58,498

2019

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Troubled Debt ~~Restructurings~~Restructuring

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, troubled debt restructured loans of ~~$9.9~~$8.4 million and ~~$15.0~~$6.7 million, respectively, were classified as accruing TDR loans. The TDRs were granted in response to borrower financial difficulties, and generally provide for a temporary modification of loan repayment terms. In order for a new TDR loan to be considered for accrual status, the loan's collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow.

The following tables present TDR loans by accrual versus non-accrual status and by portfolio segment as of March 31, ~~2021~~2022 and December 31, ~~2020:~~

March 31, 2021
(in thousands) Accrual Status Non-Accrual Status Total Modification # of Contracts
Commercial real estate, net $ 1,274 $ 88 $ 1,362 7
Residential, net 8,620 0 8,620 50
Consumer & other, net 27 0 27 4
Total, net of deferred fees and costs $ 9,921 $ 88 $ 10,009 61
December 31, 2020
(in thousands) Accrual Status Non-Accrual Status Total Modification # of Contracts
Commercial real estate, net $ 1,345 $ 289 $ 1,634 7
Commercial, net 1,231 0 1,231 1
Residential, net 12,415 0 12,415 75
Total, net of deferred fees and costs $ 14,991 $ 289 $ 15,280 83
2021:


	March 31, 2022
(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts
Commercial real estate, net	$	999	$	53	$	1,052	5

Residential, net	7,387		—		7,387		42
Consumer & other, net	19		—		19		2
Total, net of deferred fees and costs	$	8,405	$	53	$	8,458	49

	December 31, 2021
(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts
Commercial real estate, net	$	1,031	$	59	$	1,090	5

Residential, net	5,641		—		5,641		35
Consumer & other, net	22		—		22		3
Total, net of deferred fees and costs	$	6,694	$	59	$	6,753	43

The following table presents loans that were determined to be TDRs during the three months ended March 31, ~~2021~~2022 and ~~2020:~~

Three Months Ended
(in thousands) March 31, 2021 March 31, 2020
Residential, net $ 1,710 $ 5,678
Consumer & other, net 27 24
Total, net of deferred fees and costs $ 1,737 $ 5,702
2021:


	Three Months Ended
(in thousands)	March 31, 2022		March 31, 2021


Residential, net	$	2,797	$	1,710
Consumer & other, net	—		27
Total, net of deferred fees and costs	$	2,797	$	1,737

Credit Quality Indicators

Management regularly reviews loans and leases in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading. In addition, the board reviews and approves the credit quality indicators each year. The Bank differentiates its lending portfolios into homogeneous and non-homogeneous loans and leases. Homogeneous loans and leases are risk rated on a single risk rating scale based on the past due status of the loan or lease.

2120

Table of Contents

The Bank's risk rating methodology for its non-homogeneous loans and leases uses a dual risk rating approach to assess the credit risk. This approach uses two scales to provide a comprehensive assessment of credit default risk and recovery risk. The probability of default scale measures a borrower's credit default risk using risk ratings ranging from 1 to 16, where a higher rating represents higher risk. For non-homogeneous loans and leases, PD ratings of 1 through 9 are "pass" grades, while PD ratings of 10 and 11 are "watch" grades. PD ratings of 12-16 correspond to the regulatory-defined categories of special mention (12), substandard (13-14), doubtful (15), and loss (16). The loss given default scale measures the amount of loss that may not be recovered in the event of a default, using six alphabetic ratings from A-F, where a higher rating represents higher risk. The LGD scale quantifies recovery risk associated with an event of default and predicts the amount of loss that would be incurred on a loan or lease if a borrower were to experience a major default and includes variables that may be external to the borrower, such as industry, geographic location, and credit cycle stage. It could also include variables specific to the borrower such as their probability of default and bankruptcies as well as variables specific to the loan or lease, including collateral valuation, covenant structure and debt type. The product of the borrower's PD and a loan or lease LGD is the loan or lease expected loss, expressed as a percentage. This provides a common language of credit risk across different loans.

The PD scale estimates the likelihood that a borrower will experience a major default on any of its debt obligations within a specified time period. Examples of major defaults include payments 90 days or more past due, non-accrual classification, bankruptcy filing, or a full or partial charge-off of a loan or lease. As such, the PD scale represents the credit quality indicator for non-homogeneous loans and leases.

The credit quality indicator rating categories follow regulatory classification and can be generally described by the following groupings for loans and leases:

Pass/Watch—A pass loan or lease is a loan or lease with a credit risk level acceptable to the Bank for extending credit and maintaining normal credit monitoring. A watch loan or lease is considered pass rated but has a heightened level of unacceptable default risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower risk rating would be appropriate within a short period of time.

Special Mention—A special mention loan or lease has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. These borrowers have an elevated probability of default but not to the point of a substandard classification.

Substandard—A substandard ~~asset~~loan or lease is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. ~~Assets~~Loans and leases classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans or leases classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.

Loss—Loans or leases classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

2221

Table of Contents

The following tables represent the amortized costs basis of the loans and leases by credit classification and vintage year by loan and lease class of financing receivable as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	229,840	$	898,610	$	428,769	$	609,626	$	435,395	$	1,175,122	$	980	$	3,660	$	3,782,002
	Special mention	914		—		379		—		8,105		13,127		—		—		22,525
	Substandard	—		19,176		1,990		2,590		44,843		10,446		—		968		80,013
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		244		—		—		244
Total non-owner occupied term, net		$	230,754	$	917,786	$	431,138	$	612,216	$	488,343	$	1,198,939	$	980	$	4,628	$	3,884,784
Owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	112,979	$	572,565	$	230,865	$	361,545	$	237,044	$	765,477	$	4,686	$	724	$	2,285,885
	Special mention	—		—		—		6,947		9,938		11,529		—		—		28,414
	Substandard	—		—		1,286		660		837		10,358		—		—		13,141
	Doubtful	—		—		—		—		—		29		—		—		29
	Loss	—		—		—		—		—		430		—		—		430
Total owner occupied term, net		$	112,979	$	572,565	$	232,151	$	369,152	$	247,819	$	787,823	$	4,686	$	724	$	2,327,899
Multifamily, net
Credit quality indicator:
	Pass/Watch	$	491,891	$	1,707,002	$	373,988	$	733,701	$	285,983	$	698,237	$	28,073	$	2,925	$	4,321,800
	Special mention	—		—		—		—		—		1,833		—		—		1,833
	Substandard	—		—		—		—		—��		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total multifamily, net		$	491,891	$	1,707,002	$	373,988	$	733,701	$	285,983	$	700,070	$	28,073	$	2,925	$	4,323,633
Construction & development, net
Credit quality indicator:
	Pass/Watch	$	15,750	$	337,635	$	311,778	$	198,534	$	45,077	$	18,417	$	2,385	$	—	$	929,576
	Special mention	—		—		—		10,710		—		—		—		—		10,710
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total construction & development, net		$	15,750	$	337,635	$	311,778	$	209,244	$	45,077	$	18,417	$	2,385	$	—	$	940,286
Residential development, net
Credit quality indicator:
	Pass/Watch	$	5,557	$	30,570	$	14,004	$	—	$	—	$	—	$	142,450	$	2,727	$	195,308
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total residential development, net		$	5,557	$	30,570	$	14,004	$	—	$	—	$	—	$	142,450	$	2,727	$	195,308

Total commercial real estate		$	856,931	$	3,565,558	$	1,363,059	$	1,924,313	$	1,067,222	$	2,705,249	$	178,574	$	11,004	$	11,671,910

(in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving to Non-Revolving Loans Amortized Cost
March 31, 2021 2021 2020 2019 2018 2017 Prior Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
Pass/Watch $ 96,511 $ 479,661 $ 665,311 $ 470,651 $ 360,770 $ 1,173,416 $ 1,424 $ 5,542 $ 3,253,286
Special mention 0 13,287 2,379 41,110 2,784 74,164 0 0 133,724
Substandard 0 2,892 2,652 20,968 3,044 39,005 0 0 68,561
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 202 0 0 202
Total non-owner occupied term, net $ 96,511 $ 495,840 $ 670,342 $ 532,729 $ 366,598 $ 1,286,787 $ 1,424 $ 5,542 $ 3,455,773
Owner occupied term, net
Credit quality indicator:
Pass/Watch $ 134,192 $ 263,284 $ 410,853 $ 306,434 $ 329,221 $ 817,035 $ 6,226 $ 772 $ 2,268,017
Special mention 0 3,609 8,161 19,944 9,555 21,216 0 0 62,485
Substandard 0 2,653 1,669 2,892 216 18,483 0 1,235 27,148
Doubtful 0 0 0 0 0 89 0 0 89
Loss 0 0 0 0 0 430 0 0 430
Total owner occupied term, net $ 134,192 $ 269,546 $ 420,683 $ 329,270 $ 338,992 $ 857,253 $ 6,226 $ 2,007 $ 2,358,169
Multifamily, net
Credit quality indicator:
Pass/Watch $ 216,623 $ 377,128 $ 862,049 $ 560,483 $ 546,476 $ 816,392 $ 23,292 $ 2,945 $ 3,405,388
Special mention 0 0 0 0 9,469 6,463 0 0 15,932
Substandard 0 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0 0
Total multifamily, net $ 216,623 $ 377,128 $ 862,049 $ 560,483 $ 555,945 $ 822,855 $ 23,292 $ 2,945 $ 3,421,320
Construction & development, net
Credit quality indicator:
Pass/Watch $ 15,237 $ 229,269 $ 292,819 $ 227,787 $ 93,871 $ 257 $ 0 $ 0 $ 859,240
Special mention 0 1,636 0 15,421 0 0 0 0 17,057
Substandard 0 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0 0
Total construction & development, net $ 15,237 $ 230,905 $ 292,819 $ 243,208 $ 93,871 $ 257 $ 0 $ 0 $ 876,297
Residential development, net
Credit quality indicator:
Pass/Watch $ 4,580 $ 18,772 $ 2,099 $ 1,535 $ 0 $ 0 $ 161,335 $ 2,520 $ 190,841
Special mention 0 0 0 0 0 0 0 0 0
Substandard 0 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0 0
Total residential development, net $ 4,580 $ 18,772 $ 2,099 $ 1,535 $ 0 $ 0 $ 161,335 $ 2,520 $ 190,841
Total commercial real estate $ 467,143 $ 1,392,191 $ 2,247,992 $ 1,667,225 $ 1,355,406 $ 2,967,152 $ 192,277 $ 13,014 $ 10,302,400

Table of Contents


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Commercial:
Term, net
Credit quality indicator:
	Pass/Watch	$	111,977	$	930,465	$	241,252	$	181,648	$	162,649	$	350,859	$	676,393	$	13,003	$	2,668,246
	Special mention	—		—		648		70		1,867		30,925		—		1,278		34,788
	Substandard	1,117		—		8,412		—		27,647		4,439		23,200		3,020		67,835
	Doubtful	—		—		920		—		—		—		—		—		920
	Loss	—		—		—		—		417		—		—		—		417
Total term, net		$	113,094	$	930,465	$	251,232	$	181,718	$	192,580	$	386,223	$	699,593	$	17,301	$	2,772,206
Lines of credit & other, net
Credit quality indicator:
	Pass/Watch	$	7,481	$	24,632	$	6,594	$	16,060	$	9,692	$	1,462	$	774,199	$	8,940	$	849,060
	Special mention	—		—		—		—		—		—		13,334		181		13,515
	Substandard	—		946		—		—		—		1,111		3,288		3,563		8,908
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total lines of credit & other, net		$	7,481	$	25,578	$	6,594	$	16,060	$	9,692	$	2,573	$	790,821	$	12,684	$	871,483
Leases & equipment finance, net
Credit quality indicator:
	Pass/Watch	$	216,053	$	516,393	$	286,754	$	239,054	$	116,077	$	66,375	$	—	$	—	$	1,440,706
	Special mention	246		5,464		3,108		3,109		2,161		887		—		—		14,975
	Substandard	1,730		4,601		6,660		2,515		834		427		—		—		16,767
	Doubtful	—		3,330		2,877		2,342		1,372		435		—		—		10,356
	Loss	—		375		475		308		130		160		—		—		1,448
Total leases & equipment finance, net		$	218,029	$	530,163	$	299,874	$	247,328	$	120,574	$	68,284	$	—	$	—	$	1,484,252

Total commercial		$	338,604	$	1,486,206	$	557,700	$	445,106	$	322,846	$	457,080	$	1,490,414	$	29,985	$	5,127,941

Residential:
Mortgage, net
Credit quality indicator:
	Pass/Watch	$	468,454	$	2,284,376	$	518,940	$	517,505	$	165,150	$	764,629	$	—	$	—	$	4,719,054
	Special mention	—		748		1,351		691		81		4,658		—		—		7,529
	Substandard	—		567		1,449		2,747		1,834		11,573		—		—		18,170
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		1,877		—		1,636		—		—		3,513
Total mortgage, net		$	468,454	$	2,285,691	$	521,740	$	522,820	$	167,065	$	782,496	$	—	$	—	$	4,748,266

Home equity loans & lines, net
Credit quality indicator:
	Pass/Watch	$	174	$	710	$	—	$	—	$	18	$	10,005	$	1,204,909	$	31,632	$	1,247,448
	Special mention	—		—		—		—		—		133		1,212		430		1,775
	Substandard	—		—		—		—		—		104		894		346		1,344
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		32		103		—		135
Total home equity loans & lines, net		$	174	$	710	$	—	$	—	$	18	$	10,274	$	1,207,118	$	32,408	$	1,250,702

Total residential		$	468,628	$	2,286,401	$	521,740	$	522,820	$	167,083	$	792,770	$	1,207,118	$	32,408	$	5,998,968

Table of Contents

(in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving to Non-Revolving Loans Amortized Cost
March 31, 2021 2021 2020 2019 2018 2017 Prior Total
Commercial:
Term, net
Credit quality indicator:
Pass/Watch $ 745,516 $ 1,776,691 $ 275,431 $ 264,964 $ 204,944 $ 278,180 $ 664,344 $ 32,876 $ 4,242,946
Special mention 15,000 64 268 30,165 1,245 1,326 18,000 2,183 68,251
Substandard 0 0 1,056 21,451 6,874 1,744 0 6,849 37,974
Doubtful 0 0 0 0 1,017 575 0 0 1,592
Loss 0 0 0 0 0 0 0 0 0
Total term, net $ 760,516 $ 1,776,755 $ 276,755 $ 316,580 $ 214,080 $ 281,825 $ 682,344 $ 41,908 $ 4,350,763
Lines of credit & other, net
Credit quality indicator:
Pass/Watch $ 8,675 $ 31,465 $ 30,177 $ 30,704 $ 5,094 $ 8,741 $ 655,593 $ 3,249 $ 773,698
Special mention 0 2,992 5 5 7 282 36,495 1,117 40,903
Substandard 0 494 460 0 153 1,028 3,123 5,237 10,495
Doubtful 2 0 5 0 0 0 57 0 64
Loss 0 0 0 0 0 0 1 1 2
Total lines of credit & other, net $ 8,677 $ 34,951 $ 30,647 $ 30,709 $ 5,254 $ 10,051 $ 695,269 $ 9,604 $ 825,162
Leases & equipment finance, net
Credit quality indicator:
Pass/Watch $ 150,264 $ 441,607 $ 402,799 $ 209,546 $ 105,250 $ 57,571 $ 0 $ 0 $ 1,367,037
Special mention 374 2,875 6,519 6,511 2,126 2,262 0 0 20,667
Substandard 19 6,249 2,593 7,261 842 999 0 0 17,963
Doubtful 0 2,364 4,700 3,301 1,512 768 0 0 12,645
Loss 0 230 1,253 604 459 119 0 0 2,665
Total leases & equipment finance, net $ 150,657 $ 453,325 $ 417,864 $ 227,223 $ 110,189 $ 61,719 $ 0 $ 0 $ 1,420,977
Total commercial $ 919,850 $ 2,265,031 $ 725,266 $ 574,512 $ 329,523 $ 353,595 $ 1,377,613 $ 51,512 $ 6,596,902
Residential:
Mortgage, net
Credit quality indicator:
Pass/Watch $ 550,324 $ 819,230 $ 973,835 $ 318,656 $ 338,447 $ 927,303 $ 0 $ 0 $ 3,927,795
Special mention 0 0 1,593 762 1,195 4,338 0 0 7,888
Substandard 0 335 1,297 1,270 3,327 14,385 0 0 20,614
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 1,130 0 0 1,217 0 0 2,347
Total mortgage, net $ 550,324 $ 819,565 $ 977,855 $ 320,688 $ 342,969 $ 947,243 $ 0 $ 0 $ 3,958,644
Home equity loans & lines, net
Credit quality indicator:
Pass/Watch $ 0 $ 24 $ 0 $ 20 $ 0 $ 15,433 $ 1,043,242 $ 35,564 $ 1,094,283
Special mention 0 0 0 0 0 181 760 382 1,323
Substandard 0 0 0 0 0 131 101 248 480
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 158 713 211 1,082
Total home equity loans & lines, net $ 0 $ 24 $ 0 $ 20 $ 0 $ 15,903 $ 1,044,816 $ 36,405 $ 1,097,168
Total residential $ 550,324 $ 819,589 $ 977,855 $ 320,708 $ 342,969 $ 963,146 $ 1,044,816 $ 36,405 $ 5,055,812


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Consumer & other, net:
Credit quality indicator:
	Pass/Watch	$	8,489	$	10,539	$	9,596	$	10,302	$	4,579	$	7,660	$	122,707	$	2,225	$	176,097
	Special mention	—		7		10		38		—		222		377		79		733
	Substandard	—		—		—		25		—		—		30		46		101
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		1		7		3		—		11
Total consumer & other, net		$	8,489	$	10,546	$	9,606	$	10,365	$	4,580	$	7,889	$	123,117	$	2,350	$	176,942

Grand total		$	1,672,652	$	7,348,711	$	2,452,105	$	2,902,604	$	1,561,731	$	3,962,988	$	2,999,223	$	75,747	$	22,975,761


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	December 31, 2021	2021		2020		2019		2018		2017		Prior						Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	901,230	$	434,875	$	618,879	$	431,098	$	308,872	$	942,501	$	1,313	$	3,679	$	3,642,447
	Special mention	—		1,311		1,411		12,252		844		38,268		—		—		54,086
	Substandard	19,270		2,214		2,605		53,312		2,990		9,641		—		—		90,032
	Doubtful	—		—		—		—		—		78		—		—		78
	Loss	—		—		—		—		—		244		—		—		244
Total non-owner occupied term, net		$	920,500	$	438,400	$	622,895	$	496,662	$	312,706	$	990,732	$	1,313	$	3,679	$	3,786,887
Owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	594,677	$	237,814	$	369,483	$	245,707	$	227,201	$	601,934	$	5,017	$	737	$	2,282,570
	Special mention	—		—		7,445		10,739		4,936		12,219		—		—		35,339
	Substandard	—		897		674		1,815		—		10,697		—		—		14,083
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		430		—		—		430
Total owner occupied term, net		$	594,677	$	238,711	$	377,602	$	258,261	$	232,137	$	625,280	$	5,017	$	737	$	2,332,422
Multifamily, net
Credit quality indicator:
	Pass/Watch	$	1,700,221	$	380,506	$	748,207	$	346,192	$	334,688	$	510,385	$	26,475	$	2,931	$	4,049,605
	Special mention	—		—		—		—		—		1,597		—		—		1,597
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total multifamily, net		$	1,700,221	$	380,506	$	748,207	$	346,192	$	334,688	$	511,982	$	26,475	$	2,931	$	4,051,202

Table of Contents


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	December 31, 2021	2021		2020		2019		2018		2017		Prior						Total
Construction & development, net
Credit quality indicator:
	Pass/Watch	$	264,489	$	310,207	$	237,435	$	48,911	$	18,375	$	136	$	2,382	$	—	$	881,935
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		8,403		—		—		—		—		8,403
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total construction & development, net		$	264,489	$	310,207	$	237,435	$	57,314	$	18,375	$	136	$	2,382	$	—	$	890,338
Residential development, net
Credit quality indicator:
	Pass/Watch	$	28,744	$	15,623	$	—	$	—	$	—	$	—	$	156,587	$	6,036	$	206,990
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total residential development, net		$	28,744	$	15,623	$	—	$	—	$	—	$	—	$	156,587	$	6,036	$	206,990

Total commercial real estate		$	3,508,631	$	1,383,447	$	1,986,139	$	1,158,429	$	897,906	$	2,128,130	$	191,774	$	13,383	$	11,267,839

Commercial:
Term, net
Credit quality indicator:
	Pass/Watch	$	1,102,310	$	306,969	$	200,352	$	179,217	$	206,405	$	215,105	$	699,230	$	14,075	$	2,923,663
	Special mention	—		4,454		97		28,971		587		825		27,909		1,501		64,344
	Substandard	1,217		9,827		—		1,095		2,648		1,264		—		3,189		19,240
	Doubtful	—		—		—		—		809		—		—		—		809
	Loss	—		—		—		417		—		—		—		—		417
Total term, net		$	1,103,527	$	321,250	$	200,449	$	209,700	$	210,449	$	217,194	$	727,139	$	18,765	$	3,008,473
Lines of credit & other, net
Credit quality indicator:
	Pass/Watch	$	31,836	$	9,170	$	16,529	$	10,945	$	334	$	1,605	$	812,207	$	8,498	$	891,124
	Special mention	—		—		—		—		—		—		8,830		752		9,582
	Substandard	714		414		—		—		—		1,118		3,238		4,540		10,024
	Doubtful	—		—		—		—		—		—		1		—		1
	Loss	—		—		—		—		—		—		1		1		2
Total lines of credit & other, net		$	32,550	$	9,584	$	16,529	$	10,945	$	334	$	2,723	$	824,277	$	13,791	$	910,733
Leases & equipment finance, net
Credit quality indicator:
	Pass/Watch	$	599,301	$	325,379	$	282,101	$	138,627	$	43,950	$	38,965	$	—	$	—	$	1,428,323
	Special mention	2,512		1,965		1,782		1,690		572		130		—		—		8,651
	Substandard	4,280		7,333		2,682		1,448		578		160		—		—		16,481
	Doubtful	3,781		3,232		3,238		1,343		663		636		—		—		12,893
	Loss	614		258		187		84		179		6		—		—		1,328
Total leases & equipment finance, net		$	610,488	$	338,167	$	289,990	$	143,192	$	45,942	$	39,897	$	—	$	—	$	1,467,676

Total commercial		$	1,746,565	$	669,001	$	506,968	$	363,837	$	256,725	$	259,814	$	1,551,416	$	32,556	$	5,386,882

Table of Contents

(in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving to Non-Revolving Loans Amortized Cost
As of December 31, 2020 2020 2019 2018 2017 2016 Prior Total
Construction & development, net
Credit quality indicator:
Pass/Watch $ 146,012 $ 283,052 $ 255,449 $ 127,564 $ 0 $ 372 $ 0 $ 0 $ 812,449
Special mention 1,637 0 14,392 0 0 0 0 0 16,029
Substandard 0 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0 0
Total construction & development, net $ 147,649 $ 283,052 $ 269,841 $ 127,564 $ 0 $ 372 $ 0 $ 0 $ 828,478
Residential development, net
Credit quality indicator:
Pass/Watch $ 17,188 $ 2,571 $ 2,151 $ 0 $ 0 $ 0 $ 163,320 $ 2,507 $ 187,737
Special mention 0 0 0 0 0 0 5,024 0 5,024
Substandard 0 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0 0
Total residential development, net $ 17,188 $ 2,571 $ 2,151 $ 0 $ 0 $ 0 $ 168,344 $ 2,507 $ 192,761
Total commercial real estate $ 1,352,526 $ 2,263,351 $ 1,760,179 $ 1,442,334 $ 931,620 $ 2,247,779 $ 201,033 $ 11,360 $ 10,210,182
Commercial:
Term, net
Credit quality indicator:
Pass/Watch $ 2,146,758 $ 294,576 $ 323,744 $ 240,458 $ 67,502 $ 226,137 $ 626,878 $ 29,598 $ 3,955,651
Special mention 4,859 548 13,395 1,265 273 1,416 1,036 2,259 25,051
Substandard 251 1,105 24,845 7,259 1,137 561 0 8,029 43,187
Doubtful 0 0 0 0 0 578 0 0 578
Loss 0 0 0 0 0 0 0 0 0
Total term, net $ 2,151,868 $ 296,229 $ 361,984 $ 248,982 $ 68,912 $ 228,692 $ 627,914 $ 39,886 $ 4,024,467
Lines of credit & other, net
Credit quality indicator:
Pass/Watch $ 27,503 $ 27,395 $ 26,731 $ 548 $ 1,679 $ 531 $ 709,606 $ 5,578 $ 799,571
Special mention 4,033 0 0 1 77 299 42,882 271 47,563
Substandard 501 472 0 195 377 940 6,958 6,177 15,620
Doubtful 0 0 0 0 0 0 4 0 4
Loss 0 0 0 0 0 0 1 1 2
Total lines of credit & other, net $ 32,037 $ 27,867 $ 26,731 $ 744 $ 2,133 $ 1,770 $ 759,451 $ 12,027 $ 862,760
Leases & equipment finance, net
Credit quality indicator:
Pass/Watch $ 502,305 $ 442,692 $ 239,551 $ 125,619 $ 64,400 $ 7,619 $ 0 $ 0 $ 1,382,186
Special mention 2,321 4,918 7,765 3,797 1,983 99 0 0 20,883
Substandard 6,999 7,193 11,617 1,945 2,081 157 0 0 29,992
Doubtful 2,615 8,255 4,834 2,880 1,343 79 0 0 20,006
Loss 101 1,481 1,015 635 309 22 0 0 3,563
Total leases & equipment finance, net $ 514,341 $ 464,539 $ 264,782 $ 134,876 $ 70,116 $ 7,976 $ 0 $ 0 $ 1,456,630
Total commercial $ 2,698,246 $ 788,635 $ 653,497 $ 384,602 $ 141,161 $ 238,438 $ 1,387,365 $ 51,913 $ 6,343,857

~~Table of Contents~~


(in thousands)	(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost						(in thousands)				Term Loans Amortized Cost Basis by Origination Year																	Revolving Loans Amortized Cost Basis				Revolving to Non-Revolving Loans Amortized Cost
		As of December 31, 2020	2020		2019		2018		2017		2016		Prior						Total			December 31, 2021				2021			2020			2019			2018			2017			Prior					Total
Residential:	Residential:																								Residential:
Mortgage, net	Mortgage, net																						Mortgage, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	809,232	$	1,136,220	$	393,041	$	406,069	$	424,270	$	669,862	$	0	$	0		$	3,838,694			Pass/Watch			$	2,252,704		$	606,671		$	585,923		$	190,673		$	209,990		$	639,585			$	—			$	—			$	4,485,546
		Special mention	0		397		286		688		946		3,183		0		0			5,500				Special mention			372			—			555			81			632			2,830		—				—				4,470
		Substandard	335		1,398		1,822		4,133		6,381		11,113		0		0			25,182				Substandard			—			1,379			4,430			1,147			3,098			15,692		—				—				25,746
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		1,314		0		0		0		1,216		0		0			2,530				Loss			—			—			907			—			—			597		—				—				1,504
Total mortgage, net	Total mortgage, net		$	809,567	$	1,139,329	$	395,149	$	410,890	$	431,597	$	685,374	$	0	$	0		$	3,871,906		Total mortgage, net				$	2,253,076		$	608,050		$	591,815		$	191,901		$	213,720		$	658,704	$	—			$	—			$	4,517,266

Home equity loans & lines, net	Home equity loans & lines, net																						Home equity loans & lines, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	40	$	0	$	20	$	0	$	259	$	16,575	$	1,077,753	$	37,008		$	1,131,655			Pass/Watch			$	972		$	—		$	—		$	18		$	—		$	10,973	$	1,151,063			$	31,708			$	1,194,734
		Special mention	0		0		0		0		0		211		1,537		198			1,946				Special mention			—			—			—			—			—			102		1,355				248				1,705
		Substandard	0		0		0		0		0		43		254		233			530				Substandard			—			—			—			—			—			96		280				213				589
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		182		1,107		644			1,933				Loss			—			—			—			—			—			36		42				64				142
Total home equity loans & lines, net	Total home equity loans & lines, net		$	40	$	0	$	20	$	0	$	259	$	17,011	$	1,080,651	$	38,083		$	1,136,064		Total home equity loans & lines, net				$	972		$	—		$	—		$	18		$	—		$	11,207	$	1,152,740			$	32,233			$	1,197,170

Total residential	Total residential		$	809,607	$	1,139,329	$	395,169	$	410,890	$	431,856	$	702,385	$	1,080,651	$	38,083		$	5,007,970		Total residential				$	2,254,048		$	608,050		$	591,815		$	191,919		$	213,720		$	669,911	$	1,152,740			$	32,233			$	5,714,436

Consumer & other, net:	Consumer & other, net:																						Consumer & other, net:
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	24,408	$	22,802	$	11,372	$	4,170	$	2,582	$	4,101	$	143,813	$	2,789		$	216,037			Pass/Watch			$	15,375		$	10,955		$	12,167		$	5,395		$	3,983		$	5,070	$	128,264			$	1,835			$	183,044
		Special mention	0		95		79		27		28		3		660		74			966				Special mention			—			23			41			1			113			113		391				101				783
		Substandard	0		25		0		0		2		0		205		110			342				Substandard			—			3			15			—			17			25		55				71				186
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		10		3		0			13				Loss			—			—			—			—			—			7		3				—				10
Total consumer & other, net	Total consumer & other, net		$	24,408	$	22,922	$	11,451	$	4,197	$	2,612	$	4,114	$	144,681	$	2,973		$	217,358		Total consumer & other, net				$	15,375		$	10,981		$	12,223		$	5,396		$	4,113		$	5,215	$	128,713			$	2,007			$	184,023

Grand total	Grand total		$	4,884,787	$	4,214,237	$	2,820,296	$	2,242,023	$	1,507,249	$	3,192,716	$	2,813,730	$	104,329		$	21,779,367		Grand total				$	7,524,619		$	2,671,479		$	3,097,145		$	1,719,581		$	1,372,464		$	3,063,070	$	3,024,643			$	80,179			$	22,553,180

Note 5 – Residential Mortgage Servicing Rights

The Company measures its mortgage servicing rights at fair value with changes in fair value reported in residential mortgage banking revenue, net. The following table presents the changes in the Company's residential mortgage servicing rights for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended						Three Months Ended
(in thousands)	(in thousands)		March 31, 2021		March 31, 2020		(in thousands)		March 31, 2022		March 31, 2021
Balance, beginning of period	Balance, beginning of period		$	92,907	$	115,010	Balance, beginning of period		$	123,615	$	92,907
Additions for new MSR capitalized	Additions for new MSR capitalized		14,065		10,023		Additions for new MSR capitalized		7,390		14,065
Changes in fair value:	Changes in fair value:						Changes in fair value:
Changes due to collection/realization of expected cash flows over time	Changes due to collection/realization of expected cash flows over time		(4,545)		(5,329)		Changes due to collection/realization of expected cash flows over time		(5,347)		(4,545)
Changes due to valuation inputs or assumptions (1)	Changes due to valuation inputs or assumptions (1)		(2,014)		(25,358)		Changes due to valuation inputs or assumptions (1)		40,149		(2,014)
Balance, end of period	Balance, end of period		$	100,413	$	94,346	Balance, end of period		$	165,807	$	100,413

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

2726

Table of Contents

Information related to the ~~Bank's~~ serviced loan portfolio as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 is as follows:


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Balance of loans serviced for others	Balance of loans serviced for others	$	13,030,467		$	13,026,720		Balance of loans serviced for others	$	12,810,574		$	12,755,671
MSR as a percentage of serviced loans	MSR as a percentage of serviced loans	0.77		%	0.71		%	MSR as a percentage of serviced loans	1.29		%	0.97		%

The amount of contractually specified servicing fees, late fees and ancillary fees earned, recorded in residential mortgage banking revenue, ~~on the~~ ~~Condensed Consolidated Statements of Income~~, was $9.1 million for the three months ended March 31, ~~2021, as compared to $8.9 million for the three months ended March 31, 2020, respectively.~~2022 and 2021.

Note 6 – Commitments and Contingencies

Financial Instruments with Off-Balance-Sheet Risk — The Company's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of the Bank's business and involve elements of credit, liquidity, and interest rate risk.

The following table presents a summary of the Bank's commitments and contingent liabilities:


(in thousands)	March 31, ~~2021~~2022
Commitments to extend credit	$	~~5,697,859~~7,280,128
Forward sales commitments	$	~~742,907~~507,000
Commitments to originate residential mortgage loans held for sale	$	~~687,418~~307,786
Standby letters of credit	$	~~111,761~~107,274

The Bank is a party to financial instruments with off-balance-sheet credit risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve elements of credit and interest-rate risk similar to the risk involved in on-balance sheet items. The contract or notional amounts of those instruments reflect the extent of the Bank's involvement in particular classes of financial instruments.

The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

There were 0no financial guarantees in connection with standby letters of credit that the Bank was required to perform on during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. At March 31, ~~2021,~~2022, approximately ~~$100.3~~$100.9 million of standby letters of credit expire within one year, and ~~$11.5~~$6.4 million expire thereafter.

Residential mortgage loans sold into the secondary market are sold with limited recourse against the Company, meaning that the Company may be obligated to repurchase or otherwise reimburse the investor for incurred losses on any loans that suffer an early payment default, are not underwritten in accordance with investor guidelines or are determined to have pre-closing borrower misrepresentations. As of March 31, ~~2021,~~2022, the Company had a residential mortgage loan repurchase reserve liability of ~~$1.0 million.~~

~~Commitments~~$361,000. For loans sold to GNMA, the Bank has a unilateral right but not the obligation to repurchase loans that are past due 90 days or more. ~~— In September 2020,~~As of March 31, 2022, the ~~Company and its wholly-owned subsidiary Umpqua Investments, entered into an agreement~~Bank had no recorded liability for the loans subject to sell substantially all of the assets of Umpqua Investments to Steward Partners. In January 2021, the parties terminated the asset purchase agreement and entered into an agreement to sell all of the equity interests of Umpqua Investments to Steward Partners. The sale closed in April 2021.this repurchase right.

Legal Proceedings—~~The Company~~Umpqua is involved in legal proceedings occurring in the ordinary course of business. Based on information currently available, advice of counsel and available insurance coverage, management believes that the eventual outcome of actions against the Company or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on its consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to results of operations for any particular period.

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The Company is the defendant in certain complaints that generally allege that the registration statement filings related to the Merger Agreement contain material omissions of sections of the Securities Exchange Act of 1934, as amended. In addition, the complaints contain allegations of breach of fiduciary duty, aiding and abetting such breach of fiduciary duty, and fraudulent and negligent misrepresentation. The complaints seek various legal and equitable relief, generally including, among other things, orders (i) enjoining the defendants from proceeding with, consummating or closing the proposed transaction until the allegedly omitted information is disclosed, (ii) rescinding the mergers if consummated, or awarding certain damages, (iii) directing the Umpqua board of directors and Columbia board of directors to file a corrected Joint Proxy Statement/Prospectus, and (iv) awarding plaintiffs' costs, including attorneys' fees, and (v) seeking corporate records related to the Merger Agreement.

Contingencies—~~In 2020,~~On October 12, 2021, Umpqua and Columbia announced that their boards of directors unanimously approved a Merger Agreement under which the ~~Company launched "Next Gen 2.0,"~~two companies will combine in an ~~initiative designed to continue to modernize~~all-stock transaction. Under the ~~Bank, advance technology initiatives, and improve operating leverage. As part of this initiative, management continues to evaluate all aspects~~terms of the ~~Company's operations.~~Merger Agreement, Umpqua shareholders will receive 0.5958 of a share of Columbia stock for each Umpqua share they own. Upon completion of the transaction, Umpqua shareholders will own approximately 62% and Columbia shareholders will own approximately 38% of the combined company. The ~~Company consolidated 12 store locations~~merger is expected to close in ~~April 2021. Costs associated with these consolidations~~mid-2022, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals. The Merger Agreement provides certain termination rights for both Umpqua and Columbia and further provides that, upon termination of the Merger Agreement under certain circumstances, Umpqua or Columbia, as applicable, will be ~~included in exit and disposal costs within~~obligated to pay the other ~~expenses in non-interest expense. The Next Gen 2.0 strategy involves evaluation~~party a termination fee of ~~these consolidations and possible future consolidations.~~$145.0 million.

Concentrations of Credit Risk— The Bank grants real estate mortgage, real estate construction, commercial, agricultural and installment loans and leases to customers throughout Oregon, Washington, California, Idaho, and Nevada. In management's judgment, a concentration exists in real estate-related loans, which represented approximately ~~71%~~78% and 76% of the Bank's loan and lease portfolio at ~~both~~ March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Commercial real estate concentrations are managed to ensure geographic and business diversity, primarily in our footprint. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general or caused by the COVID-19 pandemic, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary market areas in particular, could have an adverse impact on the repayment of these loans. Personal and business incomes, proceeds from the sale of real property, or proceeds from refinancing represent the primary sources of repayment for a majority of these loans.

The Bank recognizes the credit risks inherent in dealing with other depository institutions. Accordingly, to prevent excessive exposure to any single correspondent, the Bank has established general standards for selecting correspondent banks as well as internal limits for allowable exposure to any single correspondent. In addition, the Bank has an investment policy that sets forth limitations that apply to all investments with respect to credit rating and concentrations with an issuer.

Note 7 – Derivatives

The Bank may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments and residential mortgage loans held for sale. None of the Company's derivatives are designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy.

The Bank enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities to broker-dealers at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage interest rate lock commitments. Credit risk associated with forward contracts is limited to the replacement cost of those forward contracts in a gain position. There were 0no counterparty default losses on forward contracts in the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Bank limits its exposure to market risk by monitoring differences between commitments to customers and forward contracts with broker-dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the Company completes the transaction by either paying or receiving a fee to or from the broker-dealer equal to the increase or decrease in the market value of the forward contract. At March 31, ~~2021,~~2022, the Bank had commitments to originate mortgage loans held for sale totaling ~~$687.4~~$307.8 million and forward sales commitments of ~~$742.9~~$507.0 million, which are used to hedge both on-balance sheet and off-balance sheet exposures.

The Bank executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of March 31, ~~2021,~~2022, the Bank had ~~890~~948 interest rate swaps with an aggregate notional amount of ~~$6.3~~$7.5 billion related to this program. As of December 31, ~~2020,~~2021, the Bank had ~~886~~936 interest rate swaps with an aggregate notional amount of ~~$6.2~~$7.0 billion related to this program.

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As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the termination value of interest rate swaps in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was ~~$14.5~~$63.7 million and ~~$370,000,~~$8.7 million, respectively. The Bank has collateral posting requirements for initial margins with its clearing members and clearing houses and has been required to post collateral against its obligations under these agreements of ~~$103.9~~$94.9 million and $92.6 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. In 2021, the Bank began to collateralize the majority of its initial margin with U.S. Treasury securities.

The Bank's interest rate swap derivatives are cleared through the Chicago Mercantile Exchange and London Clearing House. These clearing houses characterize the variation margin payments, for certain derivative contracts that are referred to as settled-to-market, as settlements of the derivative's mark-to-market exposure and not collateral. The Company accounts for the variation margin as an adjustment to cash collateral, as well as a corresponding adjustment to the derivative asset and liability. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the variation margin adjustments ~~were negative adjustments~~consisted of ~~$180.4~~a positive adjustment of $16.6 million and ~~$330.5~~a negative adjustment of $172.9 million, respectively.

~~Table of Contents~~

The Bank incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurement of its derivatives. The net CVA reduced the settlement values of the Bank's net derivative assets by ~~$6.7~~$3.0 million and ~~$18.5~~$10.0 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Various factors impact changes in the CVA over time, including changes in the credit spreads of the parties to the contracts, as well as changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

The Bank also executes foreign currency hedges as a service for customers. These foreign currency hedges are then offset with hedges with other third-party banks to limit the Bank's risk exposure.

The Bank's derivative assets are included in other assets, while the derivative liabilities are included in other ~~liabilities on the condensed consolidated balance sheet.~~liabilities. The following table summarizes the types of derivatives, separately by assets and liabilities, and the fair values of such derivatives as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


(in thousands)	(in thousands)	Asset Derivatives				Liability Derivatives				(in thousands)	Asset Derivatives				Liability Derivatives
Derivatives not designated as hedging instrument	Derivatives not designated as hedging instrument	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020		Derivatives not designated as hedging instrument	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Interest rate lock commitments	Interest rate lock commitments	$	14,755	$	28,144	$	0	$	0	Interest rate lock commitments	$	—	$	4,641	$	853	$	—
Interest rate forward sales commitments	Interest rate forward sales commitments	16,364		7		182		7,257		Interest rate forward sales commitments	11,607		615		153		699
Interest rate swaps	Interest rate swaps	188,947		313,090		14,496		370		Interest rate swaps	40,224		171,827		63,678		8,671
Foreign currency derivatives	Foreign currency derivatives	894		1,269		781		1,155		Foreign currency derivatives	240		340		193		305
Total derivative assets and liabilities	Total derivative assets and liabilities	$	220,960	$	342,510	$	15,459	$	8,782	Total derivative assets and liabilities	$	52,071	$	177,423	$	64,877	$	9,675

The gains and losses on the Company's mortgage banking derivatives are included in mortgage banking revenue. The gains and losses on the Company's interest rate swaps and foreign currency derivatives are included in other income. The following table summarizes the types of derivatives and the gains (losses) recorded during the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


(in thousands)	(in thousands)	Three Months Ended			(in thousands)				Three Months Ended
Derivatives not designated as hedging instrument	Derivatives not designated as hedging instrument		March 31, 2021			March 31, 2020		Derivatives not designated as hedging instrument		March 31, 2022		March 31, 2021
Interest rate lock commitments	Interest rate lock commitments		$	(13,389)		$	16,671	Interest rate lock commitments		$	(5,494)	$	(13,389)
Interest rate forward sales commitments	Interest rate forward sales commitments		28,171			(31,052)		Interest rate forward sales commitments		25,251		28,171
Interest rate swaps	Interest rate swaps		11,750			(14,306)		Interest rate swaps		7,047		11,750
Foreign currency derivatives	Foreign currency derivatives		555			424		Foreign currency derivatives		701		555
Total derivative gains (losses)	Total derivative gains (losses)		$	27,087		$	(28,263)	Total derivative gains (losses)		$	27,505	$	27,087

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Note 8 – Earnings ~~(Loss)~~ Per Common Share

The following is a computation of basic and diluted earnings ~~(loss)~~ per common share for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended						Three Months Ended
(in thousands, except per share data)	(in thousands, except per share data)		March 31, 2021		March 31, 2020		(in thousands, except per share data)		March 31, 2022		March 31, 2021
Net income (loss)			$	107,737	$	(1,851,947)
Net income							Net income		$	91,157	$	107,737

Weighted average number of common shares outstanding - basic	Weighted average number of common shares outstanding - basic		220,367		220,216		Weighted average number of common shares outstanding - basic		216,782		220,367
Effect of potentially dilutive common shares (1)	Effect of potentially dilutive common shares (1)		524		0		Effect of potentially dilutive common shares (1)		610		524
Weighted average number of common shares outstanding - diluted	Weighted average number of common shares outstanding - diluted		220,891		220,216		Weighted average number of common shares outstanding - diluted		217,392		220,891
Earnings (loss) per common share:
Earnings per common share:							Earnings per common share:
Basic	Basic		$	0.49	$	(8.41)	Basic		$	0.42	$	0.49
Diluted	Diluted		$	0.49	$	(8.41)	Diluted		$	0.42	$	0.49

(1)Represents the effect of the assumed vesting of non-participating restricted shares based on the treasury stock method.

~~For~~The following table represents the ~~three months ended March 31, 2021 and 2020, respectively, there were 149,000 and 947,000~~ weighted average outstanding restricted shares that were not included in the computation of diluted earnings per ~~common~~ share because their effect would be ~~anti-dilutive.~~anti-dilutive for the three months ended March 31, 2022 and 2021:

Three Months Ended

(in thousands)

March 31, 2022

March 31, 2021

Restricted stock awards

180

149

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Note 9 – Segment Information

~~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 2 segments: Core Banking and Mortgage Banking. ~~The prior periods have been restated to reflect current presentation of segments.~~

The Core Banking segment includes all lines of business, except Mortgage Banking, including wholesale, retail, ~~wealth management,~~and 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~~the serviced loan portfolio, the quarterly changes to the MSR, 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~~the consumer channels and are originated through a variety of channels throughout the Company. Management periodically updates the allocation methods and assumptions within the current segment structure.

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Summarized financial information concerning the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables:


			Three Months Ended March 31, 2021								Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
(in thousands)	(in thousands)		Core Banking		Mortgage Banking		Consolidated		(in thousands)		Core Banking		Mortgage Banking		Consolidated		Core Banking		Mortgage Banking		Consolidated
Net interest income	Net interest income		$	217,574	$	3,857	$	221,431	Net interest income		$	227,087	$	1,676	$	228,763	$	217,574	$	3,857	$	221,431
Provision for credit losses	Provision for credit losses		0		0		0		Provision for credit losses		4,804		—		4,804		—		—		—
Non-interest income	Non-interest income								Non-interest income
										Residential mortgage banking revenue:
		Residential mortgage banking revenue:								Origination and sale	—		16,844		16,844		—		62,505		62,505
		Origination and sale	0		62,505		62,505			Servicing	—		9,140		9,140		—		9,087		9,087
		Servicing	0		9,087		9,087			Change in fair value of MSR asset:
		Change in fair value of MSR asset:								Changes due to collection/realization of expected cash flows over time	—		(5,347)		(5,347)		—		(4,545)		(4,545)
		Changes due to collection/realization of expected cash flows over time	0		(4,545)		(4,545)			Changes due to valuation inputs or assumptions	—		40,149		40,149		—		(2,014)		(2,014)
		Changes due to valuation inputs or assumptions	0		(2,014)		(2,014)			Gain on sale of debt securities, net	2		—		2		4		—		4
		Gain on sale of debt securities, net	4		0		4			Loss on equity securities, net	(2,661)		—		(2,661)		(706)		—		(706)
		Loss on equity securities, net	(706)		0		(706)			Gain on swap derivatives, net	7,047		—		7,047		11,750		—		11,750
		Gain on swap derivatives, net	11,750		0		11,750			Change in fair value of certain loans held for investment	(21,049)		—		(21,049)		(510)		—		(510)
		Non-interest income (excluding above items)	32,403		316		32,719			Non-interest income (excluding above items)	35,650		194		35,844		32,913		316		33,229
		Total Non-interest income	43,451		65,349		108,800			Total non-interest income	18,989		60,980		79,969		43,451		65,349		108,800
Non-interest expense	Non-interest expense								Non-interest expense
										Merger related expenses	2,278		—		2,278		—		—		—
		Exit and disposal costs	1,200		0		1,200			Exit and disposal costs	3,033		—		3,033		1,200		—		1,200
		Non-interest expense (excluding above items)	145,161		41,231		186,392			Non-interest expense (excluding above items)	148,423		28,696		177,119		145,161		41,231		186,392
		Allocated expenses, net (1)	(790)		790		0			Allocated expenses, net (1)	3,735		(3,735)		—		(790)		790		—
		Total non-interest expense	145,571		42,021		187,592			Total non-interest expense	157,469		24,961		182,430		145,571		42,021		187,592
Income before income taxes	Income before income taxes		115,454		27,185		142,639		Income before income taxes		83,803		37,695		121,498		115,454		27,185		142,639
Provision for income taxes	Provision for income taxes		28,106		6,796		34,902		Provision for income taxes		20,917		9,424		30,341		28,106		6,796		34,902
Net income	Net income		$	87,348	$	20,389	$	107,737	Net income		$	62,886	$	28,271	$	91,157	$	87,348	$	20,389	$	107,737
(1) Represents the net internal charges of centrally provided support services and other corporate overhead to the Mortgage Banking segment.
(1) Represents the internal charge of centrally provided support services and other corporate overhead to the Mortgage Banking segment, offset by allocations from the Mortgage Banking segment to Core Banking for new portfolio loan originations and portfolio servicing costs.									(1) Represents the internal charge of centrally provided support services and other corporate overhead to the Mortgage Banking segment, offset by allocations from the Mortgage Banking segment to Core Banking for new portfolio loan originations and portfolio servicing costs.

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Three Months Ended March 31, 2020
(in thousands) Core Banking Mortgage Banking Consolidated
Net interest income $ 216,106 $ 2,429 $ 218,535
Provision for credit losses 118,085 0 118,085
Non-interest income
Residential mortgage banking revenue:
Origination and sale 0 39,347 39,347
Servicing 0 8,880 8,880
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time 0 (5,329) (5,329)
Changes due to valuation inputs or assumptions 0 (25,358) (25,358)
Loss on sale of debt securities, net (133) 0 (133)
Gain on equity securities, net 814 0 814
Loss on swap derivatives, net (14,306) 0 (14,306)
Non-interest income (excluding above items) 36,588 142 36,730
Total Non-interest income 22,963 17,682 40,645
Non-interest expense
Goodwill impairment 1,784,936 0 1,784,936
Exit and disposal costs 524 0 524
Non-interest expense (excluding above items) 147,896 29,302 177,198
Allocated expenses, net (1)
(3,053) 3,053 0
Total non-interest expense 1,930,303 32,355 1,962,658
Loss before income taxes (1,809,319) (12,244) (1,821,563)
Provision (benefit) for income taxes 33,445 (3,061) 30,384
Net loss $ (1,842,764) $ (9,183) $ (1,851,947)
(1) Represents the net internal charges of centrally provided support services and other corporate overhead to the Mortgage Banking segment.


		March 31, 2021						December 31, 2020							March 31, 2022						December 31, 2021
(in thousands)	(in thousands)	Core Banking		Mortgage Banking		Consolidated		Core Banking		Mortgage Banking		Consolidated		(in thousands)	Core Banking		Mortgage Banking		Consolidated		Core Banking		Mortgage Banking		Consolidated
Total assets	Total assets	$	29,529,769	$	506,911	$	30,036,680	$	28,438,813	$	796,362	$	29,235,175	Total assets	$	30,153,079	$	484,047	$	30,637,126	$	30,155,058	$	485,878	$	30,640,936
Loans held for sale	Loans held for sale	$	0	$	376,481	$	376,481	$	78,146	$	688,079	$	766,225	Loans held for sale	$	—	$	309,946	$	309,946	$	—	$	353,105	$	353,105
Total loans and leases	Total loans and leases	$	22,160,860	$	0	$	22,160,860	$	21,779,367	$	0	$	21,779,367	Total loans and leases	$	22,975,761	$	—	$	22,975,761	$	22,553,180	$	—	$	22,553,180
Total deposits	Total deposits	$	25,425,339	$	461,494	$	25,886,833	$	24,200,012	$	422,189	$	24,622,201	Total deposits	$	26,479,078	$	220,509	$	26,699,587	$	26,370,568	$	224,117	$	26,594,685

~~Table of Contents~~

Note 10 – Fair Value Measurement

The following table presents estimated fair values of the Company's financial instruments as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, whether or not recognized or recorded at fair value in the Condensed Consolidated Balance Sheets:


			March 31, 2021				December 31, 2020						March 31, 2022				December 31, 2021
(in thousands)	(in thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value		(in thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:	Financial assets:										Financial assets:
Cash and cash equivalents	Cash and cash equivalents	1	$	3,241,181	$	3,241,181	$	2,573,181	$	2,573,181	Cash and cash equivalents	1	$	2,665,436	$	2,665,436	$	2,761,621	$	2,761,621
Equity and other investment securities	Equity and other investment securities	1,2	82,771		82,771		83,077		83,077		Equity and other investment securities	1,2	78,966		78,966		81,214		81,214
Investment securities available for sale	Investment securities available for sale	2	3,167,825		3,167,825		2,932,558		2,932,558		Investment securities available for sale	1,2	3,638,080		3,638,080		3,870,435		3,870,435
Investment securities held to maturity	Investment securities held to maturity	3	2,954		3,796		3,034		3,883		Investment securities held to maturity	3	2,700		3,459		2,744		3,514
Loans held for sale	Loans held for sale	2	376,481		376,481		766,225		766,225		Loans held for sale	2	309,946		309,946		353,105		353,105
Loans and leases, net	Loans and leases, net	2,3	21,849,577		22,189,061		21,450,966		21,904,189		Loans and leases, net	2,3	22,727,197		22,461,689		22,304,768		22,356,321
Restricted equity securities	Restricted equity securities	1	22,057		22,057		41,666		41,666		Restricted equity securities	1	10,889		10,889		10,916		10,916
Residential mortgage servicing rights	Residential mortgage servicing rights	3	100,413		100,413		92,907		92,907		Residential mortgage servicing rights	3	165,807		165,807		123,615		123,615
Bank owned life insurance	Bank owned life insurance	1	322,867		322,867		323,470		323,470		Bank owned life insurance	1	328,040		328,040		327,745		327,745
Derivatives	Derivatives	2,3	220,960		220,960		342,510		342,510		Derivatives	2,3	52,071		52,071		177,423		177,423
Financial liabilities:	Financial liabilities:										Financial liabilities:
Deposits	Deposits	1,2	$	25,886,833	$	25,897,982	$	24,622,201	$	24,641,876	Deposits	1,2	$	26,699,587	$	26,684,201	$	26,594,685	$	26,593,521
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	2	420,402		420,402		375,384		375,384		Securities sold under agreements to repurchase	2	499,539		499,539		492,247		492,247
Borrowings	Borrowings	2	281,444		282,955		771,482		774,586		Borrowings	2	6,290		6,554		6,329		7,073
Junior subordinated debentures, at fair value	Junior subordinated debentures, at fair value	3	281,580		281,580		255,217		255,217		Junior subordinated debentures, at fair value	3	305,719		305,719		293,081		293,081
Junior subordinated debentures, at amortized cost	Junior subordinated debentures, at amortized cost	3	88,212		72,671		88,268		67,425		Junior subordinated debentures, at amortized cost	3	87,984		77,452		88,041		75,199
Derivatives	Derivatives	2	15,459		15,459		8,782		8,782		Derivatives	2,3	64,877		64,877		9,675		9,675

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Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:

(in thousands)
March 31, 2021
Description Total Level 1 Level 2 Level 3
Financial assets:
Equity and other investment securities
Investments in mutual funds and other securities $ 69,497 $ 52,160 $ 17,337 $ 0
Equity securities held in rabbi trusts 13,274 13,274 0 0
Investment securities available for sale
U.S. Treasury and agencies 736,658 0 736,658 0
Obligations of states and political subdivisions 275,080 0 275,080 0
Residential mortgage-backed securities and collateralized mortgage obligations 2,156,087 0 2,156,087 0
Loans held for sale, at fair value 376,481 0 376,481 0
Loans and leases, at fair value 258,203 0 258,203 0
Residential mortgage servicing rights, at fair value 100,413 0 0 100,413
Derivatives
Interest rate lock commitments 14,755 0 0 14,755
Interest rate forward sales commitments 16,364 0 16,364 0
Interest rate swaps 188,947 0 188,947 0
Foreign currency derivative 894 0 894 0
Total assets measured at fair value $ 4,206,653 $ 65,434 $ 4,026,051 $ 115,168
Financial liabilities:
Junior subordinated debentures, at fair value $ 281,580 $ 0 $ 0 $ 281,580
Derivatives
Interest rate forward sales commitments 182 0 182 0
Interest rate swaps 14,496 0 14,496 0
Foreign currency derivative 781 0 781 0
Total liabilities measured at fair value $ 297,039 $ 0 $ 15,459 $ 281,580


(in thousands)	March 31, 2022
Description	Total		Level 1		Level 2		Level 3
Financial assets:
Equity and other investment securities

Investments in mutual funds and other securities	$	66,031	$	48,694	$	17,337	$	—
Equity securities held in rabbi trusts	12,935		12,935		—		—

Investment securities available for sale
U.S. Treasury and agencies	862,142		85,805		776,337		—
Obligations of states and political subdivisions	306,864		—		306,864		—
Mortgage-backed securities and collateralized mortgage obligations	2,469,074		—		2,469,074		—

Loans held for sale, at fair value	309,946		—		309,946		—
Loans and leases, at fair value	319,630		—		319,630		—
Residential mortgage servicing rights, at fair value	165,807		—		—		165,807
Derivatives

Interest rate forward sales commitments	11,607		—		11,607		—
Interest rate swaps	40,224		—		40,224		—
Foreign currency derivatives	240		—		240		—
Total assets measured at fair value	$	4,564,500	$	147,434	$	4,251,259	$	165,807
Financial liabilities:
Junior subordinated debentures, at fair value	$	305,719	$	—	$	—	$	305,719
Derivatives
Interest rate lock commitments	853		—		—		853
Interest rate forward sales commitments	153		—		153		—
Interest rate swaps	63,678		—		63,678		—
Foreign currency derivatives	193		—		193		—
Total liabilities measured at fair value	$	370,596	$	—	$	64,024	$	306,572

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(in thousands) December 31, 2020
Description Total Level 1 Level 2 Level 3
Financial assets:
Equity and other investment securities
Investments in mutual funds and other securities $ 70,203 $ 52,866 $ 17,337 $ 0
Equity securities held in rabbi trusts 12,814 12,814 0 0
Other investments securities (1)
60 0 60 0
Investment securities available for sale
U.S. Treasury and agencies 762,202 0 762,202 0
Obligations of states and political subdivisions 279,511 0 279,511 0
Residential mortgage-backed securities and collateralized mortgage obligations 1,890,845 0 1,890,845 0
Loans held for sale, at fair value 688,079 0 688,079 0
Residential mortgage servicing rights, at fair value 92,907 0 0 92,907
Derivatives
Interest rate lock commitments 28,144 0 0 28,144
Interest rate forward sales commitments 7 0 7 0
Interest rate swaps 313,090 0 313,090 0
Foreign currency derivative 1,269 0 1,269 0
Total assets measured at fair value $ 4,139,131 $ 65,680 $ 3,952,400 $ 121,051
Financial liabilities:
Junior subordinated debentures, at fair value $ 255,217 $ 0 $ 0 $ 255,217
Derivatives
Interest rate forward sales commitments 7,257 0 7,257 0
Interest rate swaps 370 0 370 0
Foreign currency derivative 1,155 0 1,155 0
Total liabilities measured at fair value $ 263,999 $ 0 $ 8,782 $ 255,217

~~(1)~~ ~~Other investment securities includes securities held by Umpqua Investments as trading debt securities.~~


(in thousands)	December 31, 2021
Description	Total		Level 1		Level 2		Level 3
Financial assets:
Equity and other investment securities

Investments in mutual funds and other securities	$	68,692	$	51,355	$	17,337	$	—
Equity securities held in rabbi trusts	12,522		12,522		—		—

Investment securities available for sale
U.S. Treasury and agencies	918,053		89,038		829,015		—
Obligations of states and political subdivisions	330,784		—		330,784		—
Mortgage-backed securities and collateralized mortgage obligations	2,621,598		—		2,621,598		—

Loans held for sale, at fair value	353,105		—		353,105		—
Loans and leases, at fair value	345,634		—		345,634		—
Residential mortgage servicing rights, at fair value	123,615		—		—		123,615
Derivatives
Interest rate lock commitments	4,641		—		—		4,641
Interest rate forward sales commitments	615		—		615		—
Interest rate swaps	171,827		—		171,827		—
Foreign currency derivatives	340		—		340		—
Total assets measured at fair value	$	4,951,426	$	152,915	$	4,670,255	$	128,256
Financial liabilities:
Junior subordinated debentures, at fair value	$	293,081	$	—	$	—	$	293,081
Derivatives
Interest rate forward sales commitments	699		—		699		—
Interest rate swaps	8,671		—		8,671		—
Foreign currency derivatives	305		—		305		—
Total liabilities measured at fair value	$	302,756	$	—	$	9,675	$	293,081

The following methods were used to estimate the fair value of each class of financial instrument that is carried at fair value in the tables above:

Securities— Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available. Management periodically reviews the pricing information received from the third-party pricing service and compares it to a secondary pricing service, evaluating significant price variances between services to determine an appropriate estimate of fair value to report.

Loans Held for Sale— Fair value for residential mortgage loans originated as held for sale is determined based on quoted secondary market prices for similar loans, including the implicit fair value of embedded servicing rights.

Loans and leases— Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including commercial, real estate and consumer loans. Each loan category is further segregated by fixed and adjustable rate loans. The fair value of loans is calculated by discounting expected cash flows at rates at which similar loans are currently being made. These amounts are discounted further by embedded probable losses expected to be realized in the portfolio. For loans originated as held for sale and transferred into loans held for investment, the fair value is determined based on quoted secondary market prices for similar loans. As of March 31, ~~2021,~~2022, there were ~~$258.2~~$319.6 million in mortgage loans ~~that have been~~recorded at fair value as they were previously transferred from held for sale to loans held for ~~investment, recorded at fair value.~~investment.

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Residential Mortgage Servicing Rights— The fair value of the MSRs is estimated using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income net of servicing costs. This model is periodically validated by an independent model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants.

Junior Subordinated Debentures— The fair value of junior subordinated debentures is estimated using an income approach valuation technique. The significant unobservable input utilized in the estimation of fair value of these instruments is the credit risk adjusted spread. The credit risk adjusted spread represents the nonperformance risk of the liability, contemplating the inherent risk of the obligation. The Company periodically utilizes a valuation firm to determine or validate the reasonableness of inputs and factors that are used to determine the fair value. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, the Company has classified this as a Level 3 fair value measurement.

Derivative Instruments— The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. The fair value of the interest rate swaps is determined using a discounted cash flow technique incorporating credit valuation adjustments to reflect nonperformance risk in the measurement of fair value. Although the Bank has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the CVA associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, ~~2021,~~2022, the Bank has assessed the significance of the impact of the CVA on the overall valuation of its interest rate swap positions and has determined that the CVA are not significant to the overall valuation of its interest rate swap derivatives. As a result, the Bank has classified its interest rate swap derivative valuations in Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table provides a description of the valuation technique, significant unobservable inputs, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at March 31, ~~2021:~~2022:

Financial Instrument

Fair Value (in thousands)

Valuation Technique

Unobservable Input

Range of Inputs

Weighted Average

Assets:

Residential mortgage servicing rights

~~100,413~~165,807

Discounted cash flow

Constant prepayment rate

~~8.12~~6.23% - ~~79.94%~~31.72%

~~17.15%~~7.27%

Discount rate

~~9.50~~9.00% - ~~12.50%~~14.90%

~~9.71%~~9.51%

Liabilities:

Interest rate lock commitments

~~14,755~~853

Internal pricing model

Pull-through rate

~~40.30~~67.72% - 100.00%

~~87.87%~~91.61%

Junior subordinated debentures

~~281,580~~305,719

Discounted cash flow

Credit spread

~~3.60~~2.81% - ~~4.56%~~3.87%

~~4.04%~~3.46%

Generally, increases in the constant prepayment rate or the discount rate utilized in the fair value measurement of the residential mortgage servicing rights will result in a decrease in fair value. Conversely, decreases in the constant prepayment rate or the discount rate will result in an increase in fair value.

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An increase in the pull-through rate utilized in the fair value measurement of the interest rate lock commitment derivative will result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate will result in a decrease in the fair value measurement.

~~Table of Contents~~

Management believes that the credit risk adjusted spread utilized in the fair value measurement of the junior subordinated debentures carried at fair value is indicative of the nonperformance risk premium a willing market participant would require under current market conditions, which is an inactive market. Management attributes the change in fair value of the junior subordinated debentures during the period to a decrease in the credit spread, as well as an increase in the discount rates and an increase in the implied forward curve. Future contractions in the instrument-specific credit risk adjusted spread relative to the spread currently utilized to measure the Company's junior subordinated debentures at fair value as of March 31, 2021, or the passage of time, will result in an increase in the estimated fair value. Generally, an increase in the credit spread will result in a decrease in the estimated fair value. Conversely, a decrease in the credit spread will result in an increase in the estimated fair value.

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended						Three Months Ended
	March 31, 2021						March 31, 2020
(in thousands)	Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value		Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value
Beginning balance	$	92,907	$	28,144	$	255,217	$	115,010	$	7,056	$	274,812

Change included in earnings	(6,559)		(3,458)		2,376		(30,687)		4,694		3,890
Change in fair values included in comprehensive income/loss	0		0		26,562		0		0		(78,862)
Purchases and issuances	14,065		30,175		0		10,023		27,001		0
Sales and settlements	0		(40,106)		(2,575)		0		(15,024)		(4,319)
Ending balance	$	100,413	$	14,755	$	281,580	$	94,346	$	23,727	$	195,521
Change in unrealized gains or losses for the period included in earnings for assets and liabilities held at end of period	$	(2,014)	$	14,755	$	2,376	$	(25,358)	$	23,727	$	3,890
Change in unrealized gains or losses for the period included in other comprehensive income for assets and liabilities held at end of period	$	0	$	0	$	26,562	$	0	$	0	$	(78,862)

														Three Months Ended						Three Months Ended
														March 31, 2022						March 31, 2021
(in thousands)													(in thousands)	Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value		Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value
Beginning balance													Beginning balance	$	123,615	$	4,641	$	(293,081)	$	92,907	$	28,144	$	(255,217)

Change included in earnings													Change included in earnings	34,802		(4,270)		(2,456)		(6,559)		(3,458)		(2,376)
Change in fair values included in comprehensive income/loss													Change in fair values included in comprehensive income/loss	—		—		(12,703)		—		—		(26,562)
Purchases and issuances													Purchases and issuances	7,390		4,651		—		14,065		30,175		—
Sales and settlements													Sales and settlements	—		(5,875)		2,521		—		(40,106)		2,575
Ending balance													Ending balance	$	165,807	$	(853)	$	(305,719)	$	100,413	$	14,755	$	(281,580)
Change in unrealized gains or losses for the period included in earnings for assets held at end of period													Change in unrealized gains or losses for the period included in earnings for assets held at end of period	$	40,149	$	(853)	$	(2,456)	$	(2,014)	$	14,755	$	(2,376)
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at end of period													Change in unrealized gains or losses for the period included in other comprehensive income for assets held at end of period	$	—	$	—	$	(12,703)	$	—	$	—	$	(26,562)

Changes in residential mortgage servicing rights carried at fair value are recorded in residential mortgage banking revenue within non-interest income. Gains (losses) on interest rate lock commitments carried at fair value are recorded in residential mortgage banking revenue within non-interest income. The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities.

The change in fair value of junior subordinated debentures is attributable to the change in the instrument specific credit risk; accordingly, the unrealized ~~losses~~loss on fair value of junior subordinated debentures of ~~$26.6~~$12.7 million for the three months ended March 31, ~~2021,~~2022, are recorded net of tax as an other comprehensive loss of ~~$19.7~~$9.4 million. Comparatively, unrealized ~~gains~~loss of ~~$78.9~~$26.6 million were recorded net of tax as an other comprehensive ~~income~~loss of ~~$58.6~~$19.7 million, for the three months ended March 31, ~~2020.~~2021. The loss recorded the three months ended March 31, 2022 was due primarily to an increase in the implied forward curve, partially offset by an increase in the discount rate, which resulted in an increase in the liability.

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Fair Value of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

From time to time, certain assets are measured at fair value on a nonrecurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment, typically on collateral dependent loans.

~~Table of Contents~~

~~Fair Value of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis~~

The following ~~tables present~~table presents information about the Company's assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. There were no assets or liabilities measured at fair value on a nonrecurring basis as of March 31, 2022, as the loans and leases charged-off either were not collateral dependent or had a net realizable value of zero. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.

March 31, 2021
(in thousands) Total Level 1 Level 2 Level 3
Loans and leases $ 3,477 $ 0 $ 0 $ 3,477
Other real estate owned 1,080 0 0 1,080
Total assets measured at fair value on a nonrecurring basis $ 4,557 $ 0 $ 0 $ 4,557


		December 31, 2020									December 31, 2021
(in thousands)	(in thousands)	Total		Level 1		Level 2		Level 3		(in thousands)	Total		Level 1		Level 2		Level 3

Loans and leases	Loans and leases	$	8,231	$	0	$	0	$	8,231	Loans and leases	$	4,129	$	—	$	—	$	4,129
Goodwill		0		0		0		0
Other real estate owned		1,485		0		0		1,485

Total assets measured at fair value on a nonrecurring basis	Total assets measured at fair value on a nonrecurring basis	$	9,716	$	0	$	0	$	9,716	Total assets measured at fair value on a nonrecurring basis	$	4,129	$	—	$	—	$	4,129

The following table presents the losses resulting from nonrecurring fair value adjustments for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:

Three Months Ended
(in thousands)
March 31, 2021 March 31, 2020
Loans and leases $ 18,313 $ 22,042
Goodwill impairment 0 1,784,936
Other real estate owned 405 117
Total loss from nonrecurring measurements $ 18,718 $ 1,807,095

~~Goodwill was evaluated for impairment as of March 31, 2020, resulting in an impairment charge of $1.8 billion for the three months ended March 31, 2020.~~

The following provides a description of the valuation technique and inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis, excluding goodwill. Unobservable inputs and qualitative information about the unobservable inputs are not presented as the fair value is determined by third-party information for loans and leases and other real estate owned.

The loans and leases amounts above represent collateral dependent loans and leases that have been adjusted to fair value. When a loan or non-homogeneous lease is identified as collateral dependent, the Bank measures the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan or lease, the fair value of collateral is generally estimated by obtaining external appraisals, but in some cases, the value of the collateral may be estimated as having little to no value. When a homogeneous lease or equipment finance agreement becomes 181 days past due, it is determined that the collateral has little to no value. If it is determined that the value of the collateral dependent loan or lease is less than its recorded investment, the Bank recognizes this impairment and adjusts the carrying value of the loan or lease to fair value, less costs to sell, through the allowance for credit losses. The loss represents charge-offs on collateral dependent loans and leases for fair value adjustments based on the fair value of collateral.

~~Table of Contents~~

The other real estate owned amount above represents impaired real estate that has been adjusted to fair value. Other real estate owned represents real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property's new basis. Any write-downs based on the asset's fair value at the date of acquisition are charged to the allowance for credit losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on other real estate owned for fair value adjustments based on the fair value of the real estate.


	Three Months Ended
(in thousands)	March 31, 2022		March 31, 2021



Loans and leases	$	7,791	$	18,313

Total losses from nonrecurring measurements	$	7,791	$	18,313

Fair Value Option

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale and loans held for investment accounted for under the fair value option as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		March 31, 2021						December 31, 2020							March 31, 2022						December 31, 2021
(in thousands)	(in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance		Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance		(in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance		Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance
Loans held for sale	Loans held for sale	$	376,481	$	367,075	$	9,406	$	688,079	$	654,555	$	33,524	Loans held for sale	$	309,946	$	308,904	$	1,042	$	353,105	$	341,008	$	12,097
Loans	Loans	$	258,203	$	254,881	$	3,322	$	0	$	0	$	0	Loans	$	319,630	$	330,103	$	(10,473)	$	345,634	$	335,058	$	10,576

Residential mortgage loans held for sale accounted for under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are reported as a component of residential mortgage banking revenue. For the three months ended March 31, ~~2021,~~2022, the Company recorded a net ~~decrease~~decreases in fair value of ~~$19.6~~$11.1 million. For the three months ended March 31, ~~2020,~~2021, the Company recorded a net ~~increase~~decreases in fair value of ~~$8.1~~$19.6 million.

Certain residential mortgage loans were initially originated for sale and measured at fair ~~valued,~~value; after origination, the loans were transferred to loans held for investment. Gains and losses ~~for~~from changes in fair value for these loans are reported in earnings as a component of other income. For the three months ended March 31, 2022, the Company recorded net decreases in fair value of $21.0 million.

The Company selected the fair value measurement option for certain junior subordinated debentures. The remaining junior subordinated debentures were acquired through previous business combinations and were measured at fair value at the time of acquisition and subsequently measured at amortized cost.

~~Note 11 - Income Taxes~~

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as in the majority of states. As of March 31, 2021, the Company has a net deferred tax asset of $10.9 million, which includes $1.8 million of state net operating loss carry-forwards, expiring in the tax years of 2029-2031. The Company believes that it is more likely than not that the benefit from only certain state NOL carry-forwards will not be realized and therefore has provided a valuation allowance of $1.1 million against the deferred tax assets relating to these NOL carry-forwards. The Company had gross unrecognized tax benefits of $3.4 million as of March 31, 2021. If recognized, the unrecognized tax benefit would reduce the 2021 annual effective tax rate by 0.69%.

The Company's consolidated effective tax rate as a percentage of pre-tax income (loss) for the three months ended March 31, 2021 was 24.5%, respectively, as compared to (1.7)% for the three months ended March 31, 2020. The effective tax rate increased from the prior year primarily due to the impairment of non-deductible goodwill during the three months ended March 31, 2020. Additionally, the effective tax rates differed from the statutory rate principally because of state taxes, non-taxable income arising from bank-owned life insurance, income on tax-exempt investment securities, non-deductible FDIC premiums and tax credits arising from low-income housing investments.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Report contains certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These statements may include statements that expressly or implicitly predict future results, performance or events. Statements other than statements of historical fact are forward-looking statements. You can find many of these statements by looking for words such as "anticipates," "expects," "believes," "estimates," "intends" and "forecast," and words or phrases of similar meaning.

We make forward-looking statements about the proposed transaction between us and Columbia Banking System, Inc.; the projected ~~impact~~impacts on our business operations of the COVID-19 pandemic; ~~Next Gen 2.0 initiatives including store consolidations, operational improvements, and facilities rationalizations;~~ LIBOR; derivatives and hedging; the results and performance of models and economic forecasts used in our calculation of the ACL; projected sources of funds and the Company's liquidity position; our securities portfolio; loan sales; adequacy of our ACL, including the reserve for unfunded commitments; provision for credit losses; non-performing loans and future losses; performance of troubled debt restructurings; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; PPP forgiveness and SBA fees; mortgage volumes and the impact of rate changes; the economic environment; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including mortgage servicing rights values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology. Risks that could cause results to differ from forward-looking statements we make are set forth in our filings with the SEC and include, without limitation: current and future economic and market conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, and any slowdown in economic growth particularly in the western United States; the length and immediate and long-term effects of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions and demand for our products; economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates; our ability to effectively manage problem credits; our ability to successfully implement technology, efficiency and operational excellence initiatives; our ability to successfully develop and market new products and technology; changes in laws or regulations; and our ability to successfully negotiate with landlords or reconfigure facilities. We also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements, applicable law and regulations (including federal securities laws and state and federal banking laws and regulations), and other factors deemed relevant by the Company's Board of Directors, and will be subject to regulatory approval or conditions.

Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Risks and uncertainties include those set forth in our filings with the Securities and Exchange Commission and the following factors that might cause actual results to differ materially from those presented:

•changes in general economic, political, or industry conditions; the ~~significant risks~~magnitude and ~~uncertainties for our~~duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and Umpqua's business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on the economy and financial markets, the continued effectiveness of our work from home arrangements and staffing levels in operational facilities, challenges associated with our return to office plans such as maintaining a safe office environment and integrating at-home and in-office staff, the impact of market participants on which we rely and actions taken by governmental authorities and other third parties in response to the pandemic and the impact of lower equity market valuations on our service and management fee revenue;condition;

•~~continued~~ deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans;

•uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, or any slowdown in economic growth particularly in the western United States;

•volatility and disruptions in global capital and credit markets;

•movements in interest rates;

•transition of LIBOR to other indexes including SOFR;

•competitive pressures, including on product pricing and services;

•our ability to successfully, including on time and on budget, implement and sustain information technology product and system enhancements and operational initiatives;

•our ability to attract new deposits and loans and leases;

•our ability to retain deposits, especially during store ~~consolidations;~~ consolidations and the pendency of the Mergers;

•demand for financial services in our market areas;

•~~competitive market pricing factors;~~

•~~our ability to effectively develop and implement new technology;~~

~~Table of Contents~~

•~~continued market interest rate volatility;~~

•~~prolonged low interest rate environment;~~

•~~continued compression of our net interest margin;~~

•stability, cost, and ~~cost of funding sources;~~

•continued availability of borrowings and other funding sources, such as brokered and public deposits;

•changes in legal or regulatory requirements or the results of regulatory examinations that could increase expenses or restrict growth;

•our ability to manage climate change concerns and related regulations;

•our ability to recruit and retain key management and staff;

•~~availability of, and competition for, acquisition opportunities;~~

•our ability to raise capital or incur debt on reasonable terms;

•regulatory limits on the Bank's ability to pay dividends to the ~~Company;~~ Company and that could impact the timing and amount of dividends to shareholders;

•financial services reform and the impact of legislation and implementing regulations on our business operations, including our compliance costs, interest expense, and revenue;

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•a breach or failure of our operational or security systems, or those of our third-party vendors, including as a result of cyber-attacks;

•success, impact, and timing of Umpqua's business strategies, including market acceptance of any new products or services;

•the occurrence of any event, change, or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement;

•the outcome of legal proceedings;

•delays in completing the proposed transaction with Columbia;

•the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction) to complete the Mergers or the Bank Merger;

•the failure to satisfy any of the other conditions to the proposed transaction with Columbia on a timely basis or at all;

•the possibility that the anticipated benefits of the proposed transaction with Columbia are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Umpqua and Columbia do business;

•certain restrictions during the pendency of the proposed transaction with Columbia that may impact the parties' ability to pursue certain business opportunities or strategic transactions;

•the possibility that the proposed transaction with Columbia may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

•diversion of management's attention from ongoing business operations and opportunities during the pendency of the Mergers;

•potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the transaction and the integration of the two companies and banks;

•economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates;

•our ability to effectively manage problem credits; and

•~~competition, including from financial technology companies.~~our ability to successfully negotiate with landlords or reconfigure facilities.

There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements are made as of the date of this Form 10-Q. We do not intend to update these forward-looking statements. Readers should consider any forward-looking statements in light of this explanation, and we caution readers about relying on forward-looking statements.

General

~~Umpqua Holdings Corporation,~~

The Company is an Oregon corporation isand the financial holding company of ~~Umpqua~~the Bank. The ~~Bank's wholly-owned subsidiary, Financial Pacific Leasing, Inc., is a commercial equipment leasing company.~~

~~Umpqua~~ Bank is the largest bank with headquarters in the Pacific Northwest and is considered one of the most innovative banks in the United States, recognized for its company culture and customer experience strategy. The Bank provides a broad range of banking, ~~wealth management,~~private banking, mortgage and other financial services to corporate, institutional, and individual customers.

FinPac, a commercial equipment leasing company, is a Bank subsidiary. Along with its subsidiaries, the Company is subject to the regulations of state and federal agencies and undergoes regular examinations by these regulatory agencies.

~~Executive Overview~~

~~Recent Developments – COVID-19~~On October 12, 2021, we announced that we and Columbia Banking System, Inc., the parent company of Columbia State Bank entered into a definitive agreement under which the companies will join together in an all-stock combination. Under the terms of the Merger Agreement, Umpqua shareholders will receive 0.5958 of a share of Columbia stock for each Umpqua share they own. Upon completion of the transaction, Umpqua shareholders will own approximately 62% and Columbia shareholders will own approximately 38% of the combined company. Once the transaction is completed, the combined organization will be a leading West Coast franchise with more than $50 billion in assets. The transaction is expected to close in mid-2022, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals.

~~At this time,~~Item 303 of Regulation S-K allows registrants to compare the ~~extent and magnitude~~results of the ~~impact on our business~~most recently completed quarter to the results of either the immediately preceding quarter or the corresponding quarter of the ~~ongoing COVID-19 pandemic~~preceding year. Umpqua has elected to compare our results for the three months ended March 31, 2022 and ~~related governmental reaction due to numerous uncertainties are still not fully known. The impact of COVID-19 continues to evolve~~December 31, 2021, where applicable, throughout this Management's Discussion and the recovery could be slowed or reversed by a number of factors, including a resurgence in COVID-19 infections, whether due to the spread of variants or otherwise, the availability and rate of vaccinations, and the rate in which state and local governments are permitting businesses to re-open.Analysis.

To limit the impact of COVID-19 on our business operations, customers and associates, we have continued to restrict travel, maintain remote-work programs for associates, restrict lobby access to some stores and have customers bank by appointment, online, or via our app, increase facilities cleaning scope and frequency, and deploy resources for programs such as the Payroll Protection Program. We have also addressed other customer needs during the pandemic by continuing to offer our Umpqua Go-To® application which offers customers and associates a safe and effective way to conduct banking.

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While we do not know and cannot quantify all of the specific impacts, the extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which remain uncertain and cannot be predicted, including the scope and duration of the pandemic; actions taken by governmental authorities and other third parties in response to the pandemic; the effect on our customers, counterparties, employees and third party service providers; and the effect on the economy and markets.Executive Overview

The following is a discussion of our results for the three months ended March 31, ~~2021,~~2022, as compared to the applicable prior periods.

Financial Performance

•~~Net income~~Earnings per diluted common share was ~~$0.49~~$0.42 for the three months ended March 31, ~~2021,~~2022, as compared to ~~net loss per diluted common share of $8.41~~$0.41 for the three months ended December 31, 2021. The increase for the three months ended March 31, ~~2020. The increase in net income for the three months ended March 31, 2021, is due~~2022, as compared to the ~~goodwill impairment taken in 2020,~~prior quarter, was primarily driven by a decrease in ~~provision for credit losses~~non-interest expense due to a decline in merger expenses and ansalaries and employee benefits. The increase was offset slightly by declines in ~~residential mortgage banking revenue.~~net interest and non-interest income.

•Net interest margin, on a tax equivalent basis, was ~~3.18%~~3.14% for the three months ended March 31, ~~2021,~~2022, as compared to ~~3.41%~~3.15% for the three months ended ~~March~~December 31, ~~2020.~~2021. The decrease ~~in net interest margin for the three months ended March 31, 2021, compared to the same period in the prior year,~~ was ~~driven by lower yields on interest-earning assets~~ due to the decline in PPP-related fees, offset by upward interest rate ~~cuts~~movements that ~~the Federal Reserve instituted as~~had a ~~response to the COVID-19 pandemic. The decrease was partially offset by increased volume of interest-earning assets, as well as due to a reduction in the cost of interest-bearing liabilities.~~favorable impact on net interest margin.

•Residential mortgage banking revenue was ~~$65.0~~$60.8 million for the three months ended March 31, ~~2021,~~2022, as compared to ~~$17.5~~$43.2 million for the three months ended December 31, 2021. The increase for the three months ended March 31, ~~2020. The increase in residential mortgage banking revenue for~~2022, as compared to the ~~three months ended March 31, 2021~~prior period, was ~~primarily~~ driven by ~~an increase~~increasing rates impacting the valuation of the MSR asset, offset by a reduction in ~~originations due to elevated refinance demand due to lower interest rates. This resulted in an increase in the income~~revenue from the origination and sale of ~~residential~~ mortgages of $23.2 million, for the three months ended March 31, 2021 as compared to the same period in the prior year. The fair value of the MSR asset decreased due to changes to inputs in the valuation model, including changes in discount rates and prepayment speeds, by $2.0 million for the three months ended March 31, 2021, as compared to a decrease of $25.4 million for the three months ended March 31, 2020.$6.8 million.

•For-sale mortgage closed loan volume ~~increased~~decreased by ~~42%~~25% for the three months ended March 31, ~~2021~~2022, as compared to the ~~same period in the prior year.~~three months ended December 31, 2021. In addition, the gain on sale margin ~~increased~~decreased to ~~3.82%~~2.59% for the three months ended March 31, ~~2021,~~2022, as compared to ~~3.43% in~~2.71% for the ~~same period of the prior year.~~three months ended December 31, 2021.

•Total loans and leases were ~~$22.2~~$23.0 billion as of March 31, ~~2021,~~2022, an increase of ~~$381.5~~$422.6 million, as compared to December 31, ~~2020.~~2021. The increase in total loans is primarily due to an increase in the commercial real estate balances of ~~$92.2~~$404.1 million, primarily within multifamily lending, and an increase in ~~net PPP loan~~residential real estate balances of ~~$297.6 million. The change in net PPP loan balances during the quarter was the result of an increase in round two PPP net loan balances of $659.2~~$284.5 million, offset by a decrease of $258.9 million in commercial balances. The decrease in commercial balances mainly relates to the decrease in PPP ~~round one net loan balances~~loans to $207.7 million during the period, as the majority of ~~$361.6 million. The PPP~~these loans ~~may increase loan balances only temporarily~~continue to be forgiven by the SBA, as ~~PPP loan balances will decline as customers complete the applicable loan forgiveness process through the SBA.~~expected.

•Total deposits were ~~$25.9~~$26.7 billion as of March 31, ~~2021,~~2022, an increase of ~~$1.3 billion,~~$104.9 million, compared to December 31, ~~2020.~~2021. This increase was due to growth in demand ~~money market,~~ and savings deposits, ~~which is attributable to higher savings rates and government stimulus payments driving increased average balances per deposit accounts. The increase is~~ partially offset by a decline in money market and time deposits.

•Total consolidated assets were ~~$30.0~~$30.6 billion as of March 31, ~~2021, compared to $29.2 billion at~~2022 and December 31, ~~2020. The increase was mainly due to an~~2021. Total consolidated assets remained relatively flat as the increase in ~~on-balance sheet liquidity,~~loans and leases as well as ~~an increase~~the MSR asset was offset by a decline in ~~loans due to PPP loan production.~~investment securities during the quarter.

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Credit Quality

•Non-performing assets decreased to ~~$56.2~~$43.5 million, or ~~0.19%~~0.14% of total assets, as of March 31, ~~2021, as~~2022, compared to ~~$69.2~~$53.1 million, or ~~0.24%~~0.17% of total assets, as of December 31, ~~2020.~~2021. Non-performing loans and leases were ~~$54.8~~$41.6 million, or ~~0.25%~~0.18% of total loans and leases, as of March 31, ~~2021, as~~2022, compared to ~~$67.4~~$51.2 million, or ~~0.31%~~0.23% of total loans and leases, as of December 31, ~~2020.~~2021.

•The allowance for credit losses ~~on loans and leases~~ was ~~$311.3~~$261.5 million as of March 31, ~~2021, a decrease of $17.1 million, as compared to~~2022, which was relatively consistent with December 31, ~~2020.~~2021. The ~~reserve for unfunded commitments was $19.8 million, as of March 31, 2021, a decrease of $526,000, as compared to December 31, 2020. The decrease~~increase in the allowance for credit losses is due to ~~net charge-offs during~~ the ~~period.~~growth of the loan portfolio, as well as changes in the economic forecasts used in the credit models.

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•The Company had ~~no provision for credit losses for the three months ended March 31, 2021. This was compared to~~ a provision for credit losses of ~~$118.1~~$4.8 million for the three months ended March 31, ~~2020. The decrease~~2022. This compared to a recapture of the ~~same period~~provision for credit losses of $736,000 for the three months ended December 31, 2021. The provision for credit losses in ~~2020,~~the current periods was due to ~~stabilization of credit quality metrics~~allowance requirements for new loan generation, loan mix changes, and changes to the economic forecasts used in credit ~~models as of March 31, 2021.~~models.

Liquidity

•Total cash and cash equivalents was ~~$3.2~~$2.7 billion as of March 31, ~~2021, an increase~~2022, a decrease of ~~$668.0~~$96.2 million from December 31, ~~2020.~~2021. The ~~increase~~decrease in cash and cash equivalents ~~reflects~~is due to an increase in loan production, which outpaced deposit generation for the ~~Bank's current liquidity position with the growth in deposit balances.~~period.

Capital and Growth Initiatives

•In October 2021, Umpqua ~~launched "Next Gen 2.0" as a continuation of our initiative~~and Columbia announced their entering into the Merger Agreement under which the two companies will combine in an all-stock transaction, which is expected to ~~modernize the Bank. Like its predecessor, the Next Gen 2.0 program includes initiatives to grow revenue, invest~~close in strategic areas for future growth, including technology and digital enhancements, and to continue to advance operational excellence goals to reduce operating costs and invest the savings in strategic growth opportunities. We have prioritized converting new PPP customers to expanded relationships with additional products and services, implemented new technology to gain efficiencies and advance the customer experience, and planned consolidation of stores and back office facilities for expense reduction.mid-2022.

•The Company's total risk based capital ratio was ~~15.8%~~14.0% and its Tier 1 common to risk weighted assets ratio was ~~12.6%~~11.4% as of March 31, ~~2021.~~2022. As of December 31, ~~2020,~~2021, the Company's total risk based capital ratio was ~~15.6%~~14.3% and its Tier 1 common to risk weighted assets ratio was ~~12.3%~~11.6%.

•The Company paid a quarterly cash ~~dividend~~dividends of $0.21 per common share to shareholders on February ~~26, 2021 to shareholders of record as of February 16, 2021.~~25, 2022.

~~Summary of~~ Critical Accounting ~~Policies~~Estimates

Our critical accounting ~~policies~~estimates are described in detail in the ~~Summary of~~ Critical Accounting ~~Policies~~Estimates section of the Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on February 25, ~~2021.~~2022. The ~~SEC defines "critical accounting policies"~~condensed 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 ~~those~~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 ~~require application~~could be materially different than originally reported. Management believes that the ACL estimate is important to the portrayal of ~~management's most~~the Company's financial condition and results of operations and requires difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. The Company's critical accounting policies include the allowance for credit losses, residential mortgage servicing rights, and fair value.judgments. There have been no material changes in ~~these policies~~the ACL estimate methodology during the three months ended March 31, ~~2021.~~2022.

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Results of Operations

~~Overview~~

For the three months ended March 31, 2021, net income was $107.7 million or $0.49 per diluted common share, which compares to net loss of $1.9 billion or $8.41 per diluted common share for the three months ended March 31, 2020.

~~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~~Banking, which 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, ~~wealth management,~~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.~~

As a result of the Company's efforts to manage through the pandemic, as well as the beginning phases of Umpqua Next Gen 2.0, we are reporting solid financial trends within the Core Banking segment, including loan portfolio growth, an increase in non-interest income, and lower non-interest expense. The Core Banking segment ~~was responsible for 81% of our reported~~had net income of $62.9 million for the ~~quarter~~three months ended March 31, 2022, compared to net income of $74.2 million for the three months ended December 31, 2021. The decrease in net income is mainly attributable to a decrease in non-interest income, related to the change in fair value of certain residential real estate loans held for investment and an increase in the provision for credit losses, offset by a decrease in non-interest expense.

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The Mortgage Banking segment had net income of $28.3 million for the three months ended March 31, 2022, compared to net income of $14.2 million for the three months ended December 31, 2021. The increase in net income for the three months ended March 31, 2021 for the Core Banking segment, compared to the same period of the prior year is attributable to the goodwill impairment recorded in first quarter of 2020, in addition to the decrease in the provision for credit losses.

~~The increase in net income for the three months ended March 31, 2021~~2022 for the Mortgage Banking segment, compared to the ~~same period of the prior year,~~three months ended December 31, 2021, is attributable to ~~increased residential mortgage banking revenue from strong mortgage production~~an increase in non-interest income due to ~~lower interest rates and higher margins. The fair value~~the increase in the valuation of the MSR asset ~~decreased due to changes to inputs~~as rates increased during the quarter. This resulted in ~~the valuation model, including changes in discount rates and prepayment speeds, by $2.0~~a gain of $34.8 million for the three months ended March 31, ~~2021, as~~2022, compared to a ~~decrease~~gain of ~~$25.4~~$10.1 million for the three months ended ~~March~~December 31, ~~2020.~~2021.

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The following table presents the return on average assets, average common shareholders' equity and average tangible common shareholders' equity for the three months ended March 31, 2022 and December 31, 2021, ~~and 2020.~~respectively. For each period presented, the table includes the calculated ratios based on reported net income. ~~Our~~To the extent return on average common shareholders' equity ~~was negatively impacted as the result of capital required to support goodwill. To the extent this performance metric~~ is used to compare our performance with other financial institutions that do 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 by average shareholders' common equity less average goodwill and other 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

Three Months Ended
(dollars in thousands) March 31, 2021 March 31, 2020
Return on average assets 1.49 % (25.82) %
Return on average common shareholders' equity 16.33 % (174.94) %
Return on average tangible common shareholders' equity 16.43 % (301.30) %
Calculation of average common tangible shareholders' equity:
Average common shareholders' equity $ 2,674,871 $ 4,257,711
Less: average goodwill and other intangible assets, net (15,598) (1,785,608)
Average tangible common shareholders' equity $ 2,659,273 $ 2,472,103


	Three Months Ended
(dollars in thousands)	March 31, 2022			December 31, 2021
Return on average assets	1.21		%	1.13		%
Return on average common shareholders' equity	13.62		%	12.90		%
Return on average tangible common shareholders' equity	13.66		%	12.94		%
Calculation of average common tangible shareholders' equity:
Average common shareholders' equity	$	2,715,059		$	2,717,753
Less: average goodwill and other intangible assets, net	(8,407)			(9,491)
Average tangible common shareholders' equity	$	2,706,652		$	2,708,262

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.

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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 March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Total shareholders' equity	Total shareholders' equity	$	2,681,869		$	2,704,577		Total shareholders' equity	$	2,607,598		$	2,749,270
Subtract:	Subtract:							Subtract:
Goodwill		2,715			2,715

Other intangible assets, net	Other intangible assets, net	12,230			13,360			Other intangible assets, net	7,815			8,840
Tangible common shareholders' equity	Tangible common shareholders' equity	$	2,666,924		$	2,688,502		Tangible common shareholders' equity	$	2,599,783		$	2,740,430
Total assets	Total assets	$	30,036,680		$	29,235,175		Total assets	$	30,637,126		$	30,640,936
Subtract:	Subtract:							Subtract:
Goodwill		2,715			2,715

Other intangible assets, net	Other intangible assets, net	12,230			13,360			Other intangible assets, net	7,815			8,840
Tangible assets	Tangible assets	$	30,021,735		$	29,219,100		Tangible assets	$	30,629,311		$	30,632,096
Tangible common equity ratio	Tangible common equity ratio	8.88		%	9.20		%	Tangible common equity ratio	8.49		%	8.95		%

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or 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.

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Net Interest Income

Net interest income for the three months ended March 31, ~~2021~~2022 was ~~$221.4~~$228.8 million, ~~an increase~~a decrease of ~~$2.9~~$4.6 million compared to the ~~same period in 2020. This increase~~three months ended December 31, 2021. The decrease for the three months ended March 31, 2022 compared to the prior quarter was driven by ~~the lower cost of interest-bearing liabilities~~$4.3 million decline in PPP fees and related interest income due to ~~lower retail and brokered time deposits as~~loan forgiveness that continued through the ~~Bank has allowed these higher-cost deposits to runoff. The decrease in interest expense was partially offset by lower average yields on interest-earning assets for the period.~~quarter.

The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was ~~3.18%~~3.14% for the three months ended March 31, ~~2021,~~2022, as compared to ~~3.41%~~3.15% for the ~~same period in 2020.~~three months ended December 31, 2021. The decrease in net interest margin for the three months ended March 31, 2022, as compared to the three months ended December 31, 2021, ~~primarily resulted from a decrease in the average yields on interest-earning assets, partially offset by~~was due to the decline in the cost of interest-bearing liabilities and the increase in average loan and lease balances. The Federal Open Market Committee expects to maintain the target rates at the current levels until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. Key interest rate declines experienced over the past year have negatively impacted the Company's net interest margin.PPP-related fees accretion.

The yield on loans and leases for the three months ended March 31, ~~2021~~2022 decreased by 5615 basis points as compared to the ~~same period in 2020,~~three months ended December 31, 2021, primarily attributable to a decline of PPP-related fees accretion in addition to an increase in the ~~decrease in short~~average loan and ~~long-term interest rates.~~lease balances. The cost of interest-bearing liabilities ~~decreased 77 basis points,~~remained flat, for the three months ended March 31, ~~2021,~~2022, as compared to the ~~same period in 2020, also due to the decrease in interest rates and corresponding deposit pricing strategy.~~

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 compressed the net interest margin, even as liabilities reprice downward. Further rate changes will continue to have an impact on our net interest margin. In addition, the increase in average loans and leases in the current period is due mostly to PPP loans, which are expected to be short-term in nature due to SBA forgiveness of these loans.

three months ended December 31, 2021.

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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 the three months ended March 31, ~~2021~~2022 and ~~2020:~~December 31, 2021:

(dollars in thousands) Three Months Ended
March 31, 2021 March 31, 2020
Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale $ 703,557 $ 4,845 2.75 % $ 406,434 $ 4,264 4.20 %
Loans and leases (1)
21,692,639 216,296 4.02 % 21,196,989 241,729 4.58 %
Taxable securities 2,945,896 13,710 1.86 % 2,760,461 17,283 2.50 %
Non-taxable securities (2)
252,741 1,915 3.03 % 241,105 1,894 3.14 %
Temporary investments and interest bearing cash 2,483,451 624 0.10 % 1,084,854 3,331 1.23 %
Total interest-earning assets 28,078,284 $ 237,390 3.41 % 25,689,843 $ 268,501 4.19 %
Other assets 1,314,206 3,154,930
Total assets $ 29,392,490 $ 28,844,773
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits $ 3,125,398 $ 414 0.05 % $ 2,471,556 $ 3,543 0.58 %
Money market deposits 7,360,512 1,491 0.08 % 7,107,626 11,759 0.66 %
Savings deposits 1,998,927 163 0.03 % 1,485,171 241 0.07 %
Time deposits 2,681,361 8,610 1.30 % 4,630,956 24,747 2.15 %
Total interest-bearing deposits 15,166,198 10,678 0.29 % 15,695,309 40,290 1.03 %
Repurchase agreements and federal funds purchased 395,946 76 0.08 % 337,796 395 0.47 %
Borrowings 539,077 1,772 1.33 % 906,624 4,046 1.79 %
Junior subordinated debentures 343,473 3,052 3.60 % 361,983 4,903 5.45 %
Total interest-bearing liabilities 16,444,694 $ 15,578 0.38 % 17,301,712 $ 49,634 1.15 %
Non-interest-bearing deposits 9,897,749 6,880,457
Other liabilities 375,176 404,893
Total liabilities 26,717,619 24,587,062
Common equity 2,674,871 4,257,711
Total liabilities and shareholders' equity $ 29,392,490 $ 28,844,773
NET INTEREST INCOME $ 221,812 $ 218,867
NET INTEREST SPREAD 3.03 % 3.04 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
3.18 % 3.41 %
(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 $381,000 for the three months ended March 31, 2021, as compared to $332,000 for the same period in 2020


	Three Months Ended
	March 31, 2022						December 31, 2021
(dollars in thousands)	Average Balance		Interest Income or Expense		Average Yields or Rates		Average Balance		Interest Income or Expense		Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale	$	286,307	$	2,262	3.16	%	$	366,043	$	2,907	3.18	%
Loans and leases (1)	22,566,109		212,142		3.79	%	22,098,818		218,594		3.94	%
Taxable securities	3,659,145		18,811		2.06	%	3,681,650		16,668		1.81	%
Non-taxable securities (2)	234,186		1,726		2.95	%	247,183		1,831		2.96	%
Temporary investments and interest-bearing cash	2,618,528		1,353		0.21	%	3,190,380		1,229		0.15	%
Total interest-earning assets	29,364,275		$	236,294	3.24	%	29,584,074		$	241,229	3.25	%
Other assets	1,233,138						1,302,304
Total assets	$	30,597,413					$	30,886,378
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits	$	3,812,173	$	498	0.05	%	$	3,765,212	$	524	0.06	%
Money market deposits	7,640,810		1,408		0.07	%	7,717,844		1,448		0.07	%
Savings deposits	2,405,958		205		0.03	%	2,342,865		206		0.03	%
Time deposits	1,753,880		1,805		0.42	%	1,864,949		2,179		0.46	%
Total interest-bearing deposits	15,612,821		3,916		0.10	%	15,690,870		4,357		0.11	%
Repurchase agreements and federal funds purchased	486,542		63		0.05	%	484,891		48		0.04	%
Borrowings	6,313		49		3.16	%	6,353		51		3.19	%
Junior subordinated debentures	380,985		3,149		3.35	%	387,471		3,019		3.09	%
Total interest-bearing liabilities	16,486,661		$	7,177	0.18	%	16,569,585		$	7,475	0.18	%
Non-interest-bearing deposits	11,007,034						11,219,766
Other liabilities	388,659						379,274
Total liabilities	27,882,354						28,168,625
Common equity	2,715,059						2,717,753
Total liabilities and shareholders' equity	$	30,597,413					$	30,886,378
NET INTEREST INCOME			$	229,117					$	233,754
NET INTEREST SPREAD					3.06	%					3.07	%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)					3.14	%					3.15	%

(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 $354,000 for the three months ended March 31, 2022, as compared to approximately $375,000 for the three months ended December 31, 2021.

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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 the three months ended March 31, ~~2021~~2022 as compared to ~~the same period in 2020.~~three months ended December 31, 2021. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances.


	Three Months Ended
	March 31, 2022 compared to December 31, 2021
	Increase (decrease) in interest income and expense due to changes in
(in thousands)	Volume		Rate		Total
INTEREST-EARNING ASSETS:
Loans held for sale	$	(630)	$	(15)	$	(645)
Loans and leases	3,760		(10,212)		(6,452)
Taxable securities	(104)		2,247		2,143
Non-taxable securities (1)	(96)		(9)		(105)
Temporary investments and interest bearing cash	(257)		381		124
Total interest-earning assets (1)	2,673		(7,608)		(4,935)
INTEREST-BEARING LIABILITIES:
Interest bearing demand deposits	4		(30)		(26)
Money market deposits	(37)		(3)		(40)
Savings deposits	3		(4)		(1)
Time deposits	(140)		(234)		(374)
Repurchase agreements	—		15		15
Borrowings	—		(2)		(2)
Junior subordinated debentures	(63)		193		130
Total interest-bearing liabilities	(233)		(65)		(298)
Net increase (decrease) in net interest income (1)	$	2,906	$	(7,543)	$	(4,637)
(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.

Three Months Ended March 31,
2021 compared to 2020
Increase (decrease) in interest income and expense due to changes in
(in thousands) Volume Rate Total
INTEREST-EARNING ASSETS:
Loans held for sale $ 2,382 $ (1,801) $ 581
Loans and leases 5,360 (30,793) (25,433)
Taxable securities 1,079 (4,652) (3,573)
Non-taxable securities (1)
89 (68) 21
Temporary investments and interest bearing cash 1,989 (4,696) (2,707)
Total interest-earning assets (1)
10,899 (42,010) (31,111)
INTEREST-BEARING LIABILITIES:
Interest bearing demand deposits 745 (3,874) (3,129)
Money market 403 (10,671) (10,268)
Savings 66 (144) (78)
Time deposits (8,336) (7,801) (16,137)
Repurchase agreements 59 (378) (319)
Borrowings (1,390) (884) (2,274)
Junior subordinated debentures (243) (1,608) (1,851)
Total interest-bearing liabilities (8,696) (25,360) (34,056)
Net increase in net interest income (1)
$ 19,595 $ (16,650) $ 2,945
(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.

Provision for Credit Losses

The Company had noa $4.8 million provision for credit losses for the three months ended March 31, ~~2021. This was~~2022, as compared to a $736,000 recapture of provision for credit losses ~~of $118.1 million~~ for the three months ended December 31, 2021. The March 31, ~~2020. The change in~~2022 provision reflects allowance requirements for new loan generation, loan mix changes, and changes between the ~~provision for credit losses for three months ended~~December 2021 and March ~~31, 2021 as compared to the same prior year period, is primarily attributed to a stabilization of credit quality metrics and~~2022 economic forecasts used in credit models in the current quarter. The Company adopted CECL as of January 1, 2020, so there may be volatility in the provision for credit losses as CECL requires a current expected credit loss for the life of the loan, instead of incurred losses under prior guidance.models. As an annualized percentage of average outstanding loans and leases, the provision (recapture) for credit losses recorded for the three months ended March 31, ~~2021~~2022 was ~~zero~~0.09% as compared to ~~2.24%~~(0.01)% for the ~~same period in 2020.~~three months ended December 31, 2021.

For the three months ended March 31, ~~2021,~~2022, net charge-offs were ~~$17.6~~$5.5 million, as compared to ~~$21.7~~$7.4 million for the three months ended ~~March~~December 31, ~~2020.~~2021. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended March 31, ~~2021 was 0.33%~~2022 were 0.10%, as compared to ~~0.41%~~0.13% for the ~~same period in 2020.~~three months ended December 31, 2021. The majority of net charge-offs relate to leases and equipment finance loans, included within the commercial loan portfolio.

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 ~~$15.4~~$8.2 million as of March 31, ~~2021~~2022 have a related allowance for credit losses of ~~$12.2~~$6.6 million, with the remaining loans written-down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.

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Non-Interest Income

Non-interest income for the three months ended March 31, ~~2021~~2022 was ~~$108.8~~$80.0 million, ~~an increase~~a decrease of ~~$68.2~~$2.8 million ~~or 168% as~~ compared to the ~~same period in 2020.~~three months ended December 31, 2021. The following table presents the key components of non-interest income for the three months ended March 31, ~~2021 and 2020:~~

Three Months Ended
March 31,
(in thousands) 2021 2020 Change Amount Change Percent
Service charges on deposits $ 9,647 $ 11,473 $ (1,826) (16) %
Card-based fees 7,374 7,417 (43) (1) %
Brokerage revenue 3,915 4,015 (100) (2) %
Residential mortgage banking revenue, net 65,033 17,540 47,493 271 %
Gain (loss) on sale of debt securities, net 4 (133) 137 nm
(Loss) gain on equity securities, net (706) 814 (1,520) (187) %
Gain on loan and lease sales, net 1,373 1,167 206 18 %
Bank owned life insurance income 2,071 2,129 (58) (3) %
Other income (expense) 20,089 (3,777) 23,866 nm
Total non-interest income $ 108,800 $ 40,645 $ 68,155 168 %
nm = Not meaningful

~~During the quarter, the Company added the card-based fees line item. Prior period has been reclassified~~2022, compared 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 whenever our customers' debit and credit cards are processed through card payment networks.

~~Service charges on deposits decreased by $1.8 million for~~ the three months ended ~~March~~December 31, 2021 compared to the same period in the prior year. The decrease is primarily related to a change in customers' spending habits as a result of the COVID-19 pandemic, which has resulted in overdraft fees decreasing as customers are keeping more funds liquid and making fewer transactions.2021:


	Three Months Ended
(in thousands)	March 31, 2022		December 31, 2021		Change Amount		Change Percent
Service charges on deposits	$	11,583	$	11,188	$	395	4	%
Card-based fees	8,708		9,355		(647)		(7)	%
Brokerage revenue	11		31		(20)		(65)	%
Residential mortgage banking revenue, net	60,786		43,185		17,601		41	%
Gain on sale of debt securities, net	2		4		(2)		(50)	%
Loss on equity securities, net	(2,661)		(466)		(2,195)		471	%
Gain on loan and lease sales, net	2,337		4,816		(2,479)		(51)	%


Bank owned life insurance income	2,087		2,101		(14)		(1)	%
Other (losses) income	(2,884)		12,524		(15,408)		(123)	%
Total non-interest income	$	79,969	$	82,738	$	(2,769)	(3)	%

Other (losses) income for the three months ended March 31, ~~2021 increased by $23.9 million, when~~2022, as compared to the ~~same period in the prior year,~~three months ended December 31, 2021 decreased primarily due to a ~~gain~~loss on the ~~swap derivative~~ fair value on certain loans held for investment of ~~$11.8~~$21.0 million, as compared to a ~~loss~~gain of ~~$14.3~~$2.7 million, respectively. This decrease was partially offset by a $7.3 million increase in the ~~prior period, due to changes in long-term interest rates.~~gain on swap derivatives over the period.

Residential mortgage banking revenue, which is the primary source of income for the Mortgage Banking segment, increased ~~for the three months ended March 31, 2021, as compared to the same period of 2020, by $47.5 million. The increase for the three month period was~~ primarily ~~driven by an increase in originations in 2021~~ due to ~~elevated~~a gain on the fair value of the MSR as a result of rising rates during the period, offset by lower refinance demand ~~because of lower interest rates, which resulted~~as well as a decline in ~~an increase in revenue related to originations and~~gain on sale ~~of residential mortgages of $23.2 million, as compared to prior year.~~margin. The ~~change in~~gain on the fair value of the MSR asset ~~due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds decreased by $2.0~~was $34.8 million for the three months ended March 31, ~~2021, as~~2022, compared to a ~~decrease~~gain of ~~$25.4~~$10.1 million for the three months ended ~~March~~December 31, ~~2020.~~2021. Revenue related to origination and sale of residential mortgages decreased by $6.8 million, as compared to the prior period.

For-sale mortgage closed loan volume ~~increased 42% or $487.3 million~~ for the three months ended March 31, ~~2021,~~2022, decreased 25% as compared to the three months ended ~~March~~December 31, ~~2020.~~2021. In addition, the gain on sale margin ~~increased~~decreased to ~~3.82%,~~2.59% for the three months ended March 31, ~~2021,~~2022, as compared to ~~3.43% in~~2.71% for the ~~same period of the prior year due to constrained industry capacity.~~three months ended December 31, 2021. Direct expense related to the origination of for-sale mortgage loans as a percentage of loan production was ~~1.90%~~2.20% for the three months ended March 31, ~~2021,~~2022, as compared to ~~2.09% as compared to~~2.08% for the three months ended ~~March~~December 31, ~~2020.~~2021.

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

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Servicing income was $9.1 million for the three months ended March 31, 2021, as compared to $8.9 million, for the same period of 2020. Income was higher primarily due to a larger portfolio of loans serviced for others.

The following table presents our residential mortgage banking revenue for the three months ended March 31, ~~2021~~2022 and ~~2020:~~December 31, 2021:


		Three Months Ended			Three Months Ended
(in thousands)	(in thousands)		March 31, 2021			March 31, 2020		(in thousands)	March 31, 2022			December 31, 2021
Origination and sale	Origination and sale		$	62,505		$	39,347	Origination and sale	$	16,844		$	23,624
Servicing	Servicing		9,087			8,880		Servicing	9,140			9,457
Change in fair value of MSR asset:	Change in fair value of MSR asset:							Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time	Changes due to collection/realization of expected cash flows over time		(4,545)			(5,329)		Changes due to collection/realization of expected cash flows over time	(5,347)			(5,311)
Changes in valuation inputs or assumptions (1)	Changes in valuation inputs or assumptions (1)		(2,014)			(25,358)		Changes in valuation inputs or assumptions (1)	40,149			15,415
Residential mortgage banking revenue, net	Residential mortgage banking revenue, net		$	65,033		$	17,540	Residential mortgage banking revenue, net	$	60,786		$	43,185

LHFS Production Statistics:								LHFS Production Statistics:
Closed loan volume for-sale								Closed loan volume for-sale	$	649,122		$	871,268
Gain on sale margin								Gain on sale margin	2.59		%	2.71		%

(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.

Non-Interest Expense

Non-interest expense for the three months ended March 31, ~~2021~~2022 was ~~$187.6~~$182.4 million, a decrease of ~~$1.8 billion~~$17.3 million or ~~90%, as~~9% compared to ~~the same period in 2020. Excluding the goodwill impairment taken in 2020, non-interest expense, for~~ the three months ended ~~March~~December 31, ~~2021, increased $9.9 million over the same period in the prior year.~~2021. The following table presents the key elements of non-interest expense for the three months ended March 31, ~~2021~~2022 and ~~2020:~~ December 31, 2021.

Three Months Ended
March 31,
(in thousands) 2021 2020 Change Amount Change Percent
Salaries and employee benefits $ 124,134 $ 109,774 $ 14,360 13 %
Occupancy and equipment, net 34,635 37,001 (2,366) (6) %
Communications 2,763 3,128 (365) (12) %
Marketing 1,372 2,530 (1,158) (46) %
Services 10,750 10,770 (20) — %
FDIC assessments 2,599 2,542 57 2 %
Intangible amortization 1,130 1,247 (117) (9) %
Other expenses 10,209 10,730 (521) (5) %
Non-interest expense before goodwill impairment 187,592 177,722 9,870 6 %
Goodwill impairment — 1,784,936 (1,784,936) nm
Total non-interest expense $ 187,592 $ 1,962,658 $ (1,775,066) (90) %
nm = Not meaningful

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


	Three Months Ended
(in thousands)	March 31, 2022		December 31, 2021		Change Amount		Change Percent
Salaries and employee benefits	$	113,138	$	117,477	$	(4,339)	(4)	%
Occupancy and equipment, net	34,829		34,310		519		2	%
Communications	2,754		2,931		(177)		(6)	%
Marketing	2,398		2,304		94		4	%
Services	11,337		12,521		(1,184)		(9)	%
FDIC assessments	4,516		2,896		1,620		56	%

Intangible amortization	1,025		1,130		(105)		(9)	%
Merger related expenses	2,278		15,183		(12,905)		(85)	%
Other expenses	10,155		10,959		(804)		(7)	%
Total non-interest expense	$	182,430	$	199,711	$	(17,281)	(9)	%

Salaries and employee benefits ~~increased by $14.4 million~~decreased for the three months ended March 31, ~~2021 as~~2022, compared to ~~the same period in the prior year. This increase is primarily related to an increase in Mortgage Banking compensation of $11.0 million for~~ the three months ended ~~March~~December 31, 2021, ~~related~~primarily due to ~~higher origination volumes~~a decrease in incentive pay during the ~~period.~~quarter.

~~Occupancy and equipment expense~~Merger related expenses, related to the merger with Columbia, decreased ~~by $2.4 million mainly~~ due to ~~decreased software expenses~~fewer consulting and legal costs incurred related to the merger for the ~~three months ended March 31, 2021 as compared~~first quarter of 2022. The merger with Columbia is expected to ~~the same period~~close in ~~the prior year.~~

mid-2022.

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FINANCIAL CONDITION

Cash and Cash Equivalents

Cash and cash equivalents were ~~$3.2~~$2.7 billion at March 31, ~~2021,~~2022, compared to ~~$2.6~~$2.8 billion at December 31, ~~2020.~~2021. The ~~increase~~decrease of interest bearing cash and temporary investments reflects strong loan portfolio growth of $422.6 million in the period, outpacing deposit growth ~~in the quarter, outpacing loan growth and borrowing declines.~~of $104.9 million. An elevated on-balance sheet liquidity position enhances the Company's liquidity flexibility given the market volatility and uncertainty in the current environment.

Investment Securities

Investment debt securities available for sale were ~~$3.2~~$3.6 billion as of March 31, ~~2021,~~2022, compared to ~~$2.9~~$3.9 billion at December 31, ~~2020.~~2021. The ~~increase~~decrease was due to ~~purchases of $555.3 million of investment securities, offset by sales and paydowns of $227.1 million, as well as~~ a decrease of ~~$87.3~~$237.0 million in fair value of investment securities available for ~~sale.~~sale, due to the increase in rates during the quarter, as well as sales and paydowns of $126.0 million, offset partially by purchases of $131.9 million of investment securities.

The following tables present the available for sale and held to maturity investment debt securities portfolio by major type as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		Investment Securities Available for Sale									Investment Securities Available for Sale
		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(dollars in thousands)	(dollars in thousands)	Fair Value		%		Fair Value		%		(dollars in thousands)	Fair Value		%		Fair Value		%
U.S. Treasury and agencies	U.S. Treasury and agencies	$	736,658	23	%	$	762,202	26	%	U.S. Treasury and agencies	$	862,142	24	%	$	918,053	24	%
Obligations of states and political subdivisions	Obligations of states and political subdivisions	275,080		9	%	279,511		10	%	Obligations of states and political subdivisions	306,864		8	%	330,784		8	%
Residential mortgage-backed securities and collateralized mortgage obligations		2,156,087		68	%	1,890,845		64	%
Mortgage-backed securities and collateralized mortgage obligations										Mortgage-backed securities and collateralized mortgage obligations	2,469,074		68	%	2,621,598		68	%

Total available for sale securities	Total available for sale securities	$	3,167,825	100	%	$	2,932,558	100	%	Total available for sale securities	$	3,638,080	100	%	$	3,870,435	100	%


		Investment Securities Held to Maturity									Investment Securities Held to Maturity
		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(dollars in thousands)	(dollars in thousands)	Amortized Cost		%		Amortized Cost		%		(dollars in thousands)	Amortized Cost		%		Amortized Cost		%

Residential mortgage-backed securities and collateralized mortgage obligations		$	2,954	100	%	$	3,034	100	%
Mortgage-backed securities and collateralized mortgage obligations										Mortgage-backed securities and collateralized mortgage obligations	$	2,700	100	%	$	2,744	100	%

Total held to maturity securities	Total held to maturity securities	$	2,954	100	%	$	3,034	100	%	Total held to maturity securities	$	2,700	100	%	$	2,744	100	%

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 likely 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 were ~~$38.4~~$235.0 million at March 31, ~~2021.~~2022. This consisted primarily of unrealized losses on ~~residential~~ mortgage-backed securities and collateralized mortgage obligations of ~~$35.1~~$189.6 million. The unrealized losses were 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 these debt securities as of March 31, ~~2021.~~

~~Restricted Equity Securities~~

Restricted equity securities were $22.1 million at March 31, 2021 and $41.7 million at December 31, 2020, the majority of which represents the Bank's investment in the FHLB of Des Moines. The decrease is attributable to redemptions of FHLB stock during the period due to decreased FHLB borrowing activity. 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. 2022.

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Loans and Leases

Total loans and leases outstanding at March 31, ~~2021~~2022 were ~~$22.2~~$23.0 billion, an increase of ~~$381.5~~$422.6 million as compared to December 31, ~~2020.~~2021. The increase is attributable to ~~net new~~non-PPP loan growth of $630.2 million, with the majority being in multifamily and ~~lease originations~~residential mortgage loans. PPP loan balances decreased during the quarter by $207.7 million, which related to loan forgiveness and payoffs. The loan to deposit ratio as of ~~$267.9 million, primarily due~~March 31, 2022 is 86%, as compared to ~~our participation in~~85% for the PPP, as well as the transfer of $212.4 million from loans held for sale to loans held for investment. The increase was partially offset by loans sold of $81.2 million and net charge-offs of $17.6 million.year ended December 31, 2021.

The following table presents the concentration distribution of the loan and lease portfolio, net of deferred fees and costs, as of March 31, ~~2021~~2022 and December 31, ~~2020:~~

March 31, 2021 December 31, 2020
(dollars in thousands)
Amount % Amount %
Commercial real estate
Non-owner occupied term, net $ 3,455,773 15 % $ 3,505,802 16 %
Owner occupied term, net 2,358,169 11 % 2,333,945 11 %
Multifamily, net 3,421,320 15 % 3,349,196 15 %
Construction & development, net 876,297 4 % 828,478 4 %
Residential development, net 190,841 1 % 192,761 1 %
Commercial
Term, net 4,350,763 20 % 4,024,467 18 %
Lines of credit & other, net 825,162 4 % 862,760 4 %
Leases & equipment finance, net 1,420,977 6 % 1,456,630 7 %
Residential
Mortgage, net 3,958,644 18 % 3,871,906 18 %
Home equity loans & lines, net 1,097,168 5 % 1,136,064 5 %
Consumer & other, net 205,746 1 % 217,358 1 %
Total, net of deferred fees and costs $ 22,160,860 100 % $ 21,779,367 100 %

2021:

~~As of March 31, 2021, there were $258.2 million in mortgage loans that were transferred from loans held for sale to loans held for investment and are carried at fair value.~~


	March 31, 2022				December 31, 2021
(dollars in thousands)	Amount		%		Amount		%
Commercial real estate
Non-owner occupied term, net	$	3,884,784	17	%	$	3,786,887	17	%
Owner occupied term, net	2,327,899		10	%	2,332,422		10	%
Multifamily, net	4,323,633		19	%	4,051,202		18	%
Construction & development, net	940,286		4	%	890,338		4	%
Residential development, net	195,308		1	%	206,990		1	%
Commercial
Term, net	2,772,206		12	%	3,008,473		13	%
Lines of credit & other, net	871,483		4	%	910,733		4	%
Leases & equipment finance, net	1,484,252		6	%	1,467,676		7	%
Residential
Mortgage, net	4,748,266		21	%	4,517,266		20	%
Home equity loans & lines, net	1,250,702		5	%	1,197,170		5	%
Consumer & other, net	176,942		1	%	184,023		1	%
Total, net of deferred fees and costs	$	22,975,761	100	%	$	22,553,180	100	%

In ~~April~~ 2020, the Bank ~~began originating~~originated loans to qualified small businesses under the PPP administered by the SBA. As of March 31, 2021, we have $2.0 billion of SBA-approved PPP loans, net of related fees and costs, to approximately 18,000 customers, which are classified as commercial term loans. Of the $2.0 billion net PPP loans at March 31, 2021, there were $1.4 billion in net loans to approximately 11,000 customers for round one PPP loans, and there were $659.2 million in net loans to approximately 7,000 customers for round two PPP loans. We will recognize theThe remaining unamortized balance of the PPP-related net loan processing fees ~~of approximately $44.4 million,~~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 ~~accretion~~recognition of these fees.


(dollars in thousands)	March 31, 2022		December 31, 2021
PPP principal balance	$	178,314	$	392,038
PPP deferred fees	(5,524)		(11,598)
Net PPP Balance	$	172,790	$	380,440

PPP loan count	1,976		4,101

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Asset Quality and Non-Performing Assets

The following table summarizes our non-performing assets, ~~and~~ TDR loans, the ACL and asset quality ratios as of March 31, ~~2021~~2022 and December 31, ~~2020:~~

(dollars in thousands)
March 31, 2021 December 31, 2020
Loans and leases on non-accrual status $ 29,216 $ 31,076
Loans and leases past due 90 days or more and accruing 25,612 36,361
Total non-performing loans and leases 54,828 67,437
Other real estate owned 1,405 1,810
Total non-performing assets $ 56,233 $ 69,247
Restructured loans (1)
$ 9,921 $ 14,991
Allowance credit losses on loans and leases $ 311,283 $ 328,401
Reserve for unfunded commitments 19,760 20,286
Allowance for credit losses $ 331,043 $ 348,687
Asset quality ratios:
Non-performing assets to total assets 0.19 % 0.24 %
Non-performing loans and leases to total loans and leases 0.25 % 0.31 %
Allowance for credit losses on loans and leases to total loans and leases 1.40 % 1.51 %
Allowance for credit losses to total loans and leases 1.49 % 1.60 %
Allowance for credit losses to total non-performing loans and leases 604 % 517 %
2021:


	(dollars in thousands)	March 31, 2022			December 31, 2021
Loans and leases on non-accrual status
	Commercial real estate, net	$	5,950		$	5,767
	Commercial, net	12,415			13,098
	Residential, net	—			—
	Consumer & other, net	—			—
	Total loans and leases on non-accrual status	18,365			18,865
Loans and leases past due 90 days or more and accruing
	Commercial real estate, net	1			1
	Commercial, net	8			4,160
	Residential, net	23,162			27,981
	Consumer & other, net	111			194
	Total loans and leases past due 90 days or more and accruing	23,282			32,336
Total non-performing loans and leases		41,647			51,201
Other real estate owned		1,868			1,868
Total non-performing assets		$	43,515		$	53,069
Restructured loans (1)		$	8,405		$	6,694
Allowance for credit losses on loans and leases		$	248,564		$	248,412
Reserve for unfunded commitments		12,918			12,767
Allowance for credit losses		$	261,482		$	261,179
Asset quality ratios:
	Non-performing assets to total assets	0.14		%	0.17		%
	Non-performing loans and leases to total loans and leases	0.18		%	0.23		%
	Allowance for credit losses on loans and leases to total loans and leases	1.08		%	1.10		%
	Allowance for credit losses to total loans and leases	1.14		%	1.16		%
	Allowance for credit losses to total non-performing loans and leases	628		%	510		%

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

At March 31, ~~2021~~2022 and December 31, ~~2020, troubled debt restructurings~~2021, loans of ~~$9.9~~$8.4 million and ~~$15.0~~$6.7 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 ~~further~~ 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. ~~Umpqua is committed to helping borrowers during this unprecedented time of uncertainty and is working with customers on payment deferrals, forbearances, and other loan modifications.~~

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~~COVID-19 Related Payment Deferrals and Forbearance~~

~~A summary of outstanding loan balances with active payment deferral or forbearance as of March 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 % of Loan Portfolio
Commercial real estate
Non-owner occupied term, net 22 $ 111,307 3 %
Owner occupied term, net 13 27,029 1 %
Multifamily, net 2 5,759 — %
Construction & development, net 1 1,636 — %
Commercial
Term, net 5 1,074 — %
Lines of credit & other, net 6 869 — %
Leases & equipment finance, net 539 19,506 1 %
Residential
Mortgage, net 271 152,250 4 %
Home equity loans & lines, net 32 3,828 — %
Consumer & other, net 39 735 — %
Total 930 $ 323,993 1 %

Excluded from the mortgage loans with payment deferrals or forbearance in the above table are $166.3 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 ~~$331.0~~$261.5 million at March 31, ~~2021, a decrease~~2022, an increase of ~~$17.6 million~~$303,000 from ~~$348.7 million at~~ December 31, ~~2020.~~2021. The following table shows the activity in the ACL for the three months ended March 31, ~~2021~~2022 and ~~2020:~~ December 31, 2021:

Three Months Ended
(dollars in thousands) March 31, 2021 March 31, 2020
Allowance for credit losses on loans and leases
Balance, beginning of period $ 328,401 $ 157,629
Impact of adoption of CECL — 49,999
Adjusted balance, beginning of period 328,401 207,628
Provision for credit losses on loans and leases 526 105,502
Charge-offs (20,915) (24,455)
Recoveries 3,271 2,745
Net charge-offs (17,644) (21,710)
Balance, end of period $ 311,283 $ 291,420
Reserve for unfunded commitments
Balance, beginning of period $ 20,286 $ 5,106
Impact of adoption of CECL — 3,238
Adjusted balance, beginning of period 20,286 8,344
(Recapture) provision for credit losses on unfunded commitments (526) 12,583
Balance, end of period 19,760 20,927
Total allowance for credit losses $ 331,043 $ 312,347
As a percentage of average loans and leases (annualized):
Net charge-offs 0.33 % 0.41 %
Provision for credit losses
— % 2.24 %
Recoveries as a percentage of charge-offs 15.64 % 11.22 %

With the adoption of CECL, 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.


		Three Months Ended
(dollars in thousands)		March 31, 2022			December 31, 2021
Allowance for credit losses on loans and leases
Balance, beginning of period		$	248,412		$	257,560
Provision (recapture) for credit losses on loans and leases		5,696			(1,751)
Charge-offs
	Commercial real estate, net	—			(58)
	Commercial, net	(7,858)			(10,197)
	Residential, net	(167)			—
	Consumer & other, net	(885)			(675)
	Total charge-offs	(8,910)			(10,930)
Recoveries
	Commercial real estate, net	25			56
	Commercial, net	2,545			2,585
	Residential, net	173			326
	Consumer & other, net	623			566
	Total recoveries	3,366			3,533
Net charge-offs
	Commercial real estate, net	25			(2)
	Commercial, net	(5,313)			(7,612)
	Residential, net	6			326
	Consumer & other, net	(262)			(109)
Total net charge-offs		(5,544)			(7,397)
Balance, end of period		$	248,564		$	248,412
Reserve for unfunded commitments
Balance, beginning of period		$	12,767		$	11,752
Provision for credit losses on unfunded commitments		151			1,015
Balance, end of period		12,918			12,767
Total allowance for credit losses		$	261,482		$	261,179
As a percentage of average loans and leases (annualized):
Net charge-offs		0.10		%	0.13		%
Provision (recapture) for credit losses		0.09		%	(0.01)		%
Recoveries as a percentage of charge-offs		37.78		%	32.32		%

The provision for credit losses includes the provision (recapture) for loan and lease losses ~~provision (recapture) for unfunded commitments,~~ and the provision for ~~credit losses related to accrued interest on loans. There was no provision of credit losses for the three months ended March 31, 2021.~~unfunded commitments. The ~~decrease from~~increase in the provision ~~for credit losses of $118.1 million for the three months ended March 31, 2020 was~~is due to organic loan growth as well as updates to the ~~stabilization of credit quality metrics and~~ economic forecasts used in credit models.

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The following table sets forth the allocation of the allowance for credit losses on loans and leases and percent of loans in each category to total loans and leases as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(dollars in thousands)	(dollars in thousands)	Amount		% Loans to total loans		Amount		% Loans to total loans		(dollars in thousands)	Amount		% Loans to total loans		Amount		% Loans to total loans
Commercial real estate	Commercial real estate	$	154,475	46	%	$	141,710	47	%	Commercial real estate	$	91,638	51	%	$	99,075	50	%
Commercial	Commercial	128,838		30	%	150,864		29	%	Commercial	121,072		22	%	117,573		24	%
Residential	Residential	21,090		23	%	27,964		23	%	Residential	31,946		26	%	29,068		25	%
Consumer & other	Consumer & other	6,880		1	%	7,863		1	%	Consumer & other	3,908		1	%	2,696		1	%

Allowance for credit losses on loans and leases	Allowance for credit losses on loans and leases	$	311,283			$	328,401			Allowance for credit losses on loans and leases	$	248,564			$	248,412

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

December 31, 2020 Q1 2021 net charge-offs Reserve build/(release) March 31, 2021 % of Loan and Leases Outstanding
Commercial real estate $ 157,070 $ 339 $ 12,734 $ 170,143 1.65 %
Commercial 153,054 (17,523) (4,892) 130,639 1.98 %
Residential 29,625 38 (7,285) 22,378 0.44 %
Consumer 8,938 (498) (557) 7,883 3.83 %
Total allowance for credit losses $ 348,687 $ (17,644) $ — $ 331,043
% of loans and leases outstanding 1.60 % 1.49 %
2022:


(dollars in thousands)	December 31, 2021			Q1 2022 net (charge-offs) recoveries		Reserve build/(release)		March 31, 2022			% of Loan and Leases Outstanding
Commercial real estate	$	107,536		$	25	$	(7,185)	$	100,376		0.86	%
Commercial	119,601			(5,313)		8,404		122,692			2.39	%
Residential	31,025			6		3,108		34,139			0.57	%
Consumer & Other	3,017			(262)		1,520		4,275			2.42	%
Total allowance for credit losses	$	261,179		$	(5,544)	$	5,847	$	261,482		1.14	%
% of loans and leases outstanding	1.16		%					1.14		%

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. For the first quarter of ~~2021,~~2022, the Bank used Moody's ~~February~~Analytics' March baseline economic forecast. Key components include a U.S. ~~economy experiencing strong~~real GDP average annualized growth ~~then normalized growth thereafter, GDP growth over both the short~~of 3.5% in2022, decreasing to 3.1% in 2023, and ~~long term, and~~an average unemployment rate for 2022 of ~~6.1% through 2021 with~~3.6% for 2022, dropping to 3.4% in 2023. The Federal Reserve Fed Funds Rate is expected to increase consistently throughout 2022 and 2023, reaching a ~~return to less than 5% unemployment~~long run equilibrium of 2.5% by the ~~third quarter~~end of ~~2022.~~2024.  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. ~~In addition, the forward-looking assumptions revert to historical data when they reach the point where future assumptions are no longer estimated.~~

We believe that the allowance for credit losses as of March 31, ~~2021~~2022 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 ~~continue to~~ decline, the Bank may need additional provisions for credit losses in future periods.

Residential Mortgage Servicing Rights

The following table presents the changes in our residential mortgage servicing rights portfolio for the three months ended March 31, ~~2021~~2022 and ~~2020:~~ December 31, 2021:


		Three Months Ended			Three Months Ended
(in thousands)	(in thousands)		March 31, 2021			March 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Balance, beginning of period	Balance, beginning of period		$	92,907		$	115,010	Balance, beginning of period	$	123,615	$	105,834
Additions for new MSR capitalized	Additions for new MSR capitalized		14,065			10,023		Additions for new MSR capitalized	7,390		7,677

Changes in fair value:	Changes in fair value:							Changes in fair value:
Changes due to collection/realization of expected cash flows over time	Changes due to collection/realization of expected cash flows over time		(4,545)			(5,329)		Changes due to collection/realization of expected cash flows over time	(5,347)		(5,311)
Changes due to valuation inputs or assumptions (1)	Changes due to valuation inputs or assumptions (1)		(2,014)			(25,358)		Changes due to valuation inputs or assumptions (1)	40,149		15,415
Balance, end of period	Balance, end of period		$	100,413		$	94,346	Balance, end of period	$	165,807	$	123,615

(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.

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Information related to our residential serviced loan portfolio as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was as follows:


(dollars in thousands)	(dollars in thousands)	March 31, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Balance of loans serviced for others	Balance of loans serviced for others	$	13,030,467		$	13,026,720		Balance of loans serviced for others	$	12,810,574		$	12,755,671
MSR as a percentage of serviced loans	MSR as a percentage of serviced loans	0.77		%	0.71		%	MSR as a percentage of serviced loans	1.29		%	0.97		%

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~~fee 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 ~~refinance volumes remain elevated due to continued low mortgage~~ rates increased during the ~~period; however, accelerated~~period and are expected to continue to rise, which has caused prepayment speeds ~~have slowed due~~ to ~~increased long-term interest rates during the latter part of the quarter.~~slow.

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~~The fair value of the MSR asset decreased by $2.0 million for the three months ended March 31, 2021, due~~Due to changes to inputs in the valuation model including changes in discount rates and prepayment ~~speeds.~~speeds, the fair value of the MSR asset increased by $40.1 million for the three months ended March 31, 2022, as compared to an increase of $15.4 million for the three months ended December 31, 2021. The fair value of the MSR asset decreased by ~~$4.5~~$5.3 million, due to the passage of time, including the impact of regularly scheduled repayments, paydowns and payoffs during the three months ended March 31, ~~2021.~~

~~Goodwill~~

~~At both March 31, 2021~~2022 and December 31, 2020, the Company had goodwill of $2.7 million. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired. There were no changes to goodwill during the three months ended March 31, 2021.

Deposits

Total deposits were ~~$25.9~~$26.7 billion at March 31, ~~2021,~~2022, an increase of ~~$1.3 billion,~~$104.9 million, as compared to December 31, ~~2020.~~2021. The increase is mainly attributable to growth in ~~non-interest bearing~~ demand and ~~money market~~savings deposits, offset by a continued decline in time deposits. The increase in non-maturity deposit account categories is driven by increased customer savings rates as customers look to increase their own liquidity in this uncertain environment; in addition, the increase is attributable to the impact of economic assistance payments. Thedeposits and a decrease in ~~time~~money market deposits. Time deposits ~~is mainly due~~continue to decline as the ~~runoff of~~Bank continues to allow these higher-cost ~~time deposits.~~deposits to run off.

The following table presents the deposit balances by category as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(dollars in thousands)	(dollars in thousands)	Amount		%		Amount		%		(dollars in thousands)	Amount		%		Amount		%
Non-interest bearing demand	Non-interest bearing demand	$	10,500,482	41	%	$	9,632,773	39	%	Non-interest bearing demand	$	11,058,251	42	%	$	11,023,724	41	%
Interest bearing demand	Interest bearing demand	3,244,624		12	%	3,051,487		12	%	Interest bearing demand	3,955,329		15	%	3,774,937		14	%
Money market	Money market	7,554,798		29	%	7,173,920		29	%	Money market	7,572,581		28	%	7,611,718		29	%
Savings	Savings	2,109,211		8	%	1,912,752		8	%	Savings	2,429,073		9	%	2,375,723		9	%
Time, greater than $250,000	Time, greater than $250,000	763,532		3	%	899,563		4	%	Time, greater than $250,000	418,319		2	%	480,432		2	%
Time, $250,000 or less	Time, $250,000 or less	1,714,186		7	%	1,951,706		8	%	Time, $250,000 or less	1,266,034		4	%	1,328,151		5	%
Total deposits	Total deposits	$	25,886,833	100	%	$	24,622,201	100	%	Total deposits	$	26,699,587	100	%	$	26,594,685	100	%

The Company's total core deposits, which are deposits less time deposits greater than $250,000 and all brokered deposits, were $26.1 billion at March 31, 2022, compared to $26.0 billion at December 31, 2021. The Company's brokered deposits totaled ~~$382.7~~$140.3 million at March 31, ~~2021,~~2022, compared to ~~$424.1~~$149.9 million at December 31, ~~2020.~~2021.

Borrowings

At March 31, ~~2021,~~2022, the Bank had outstanding ~~$420.4~~$499.5 million of securities sold under agreements to repurchase, an increase of ~~$45.0~~$7.3 million from December 31, ~~2020.~~2021. The Bank had outstanding borrowings consisting of advances from the FHLB of ~~$281.4~~$6.3 million at March 31, ~~2021, which decreased $490.0 million from~~2022 and December 31, ~~2020.~~2021. The ~~decrease is attributable to maturity payoffs during the quarter. The~~remaining FHLB ~~advances are secured by loans and have~~advance has a fixed interest ~~rates ranging from 1.40% to~~rate of 7.10% ~~that mature~~and matures in ~~2021 through~~ 2030.

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Junior Subordinated Debentures

We had junior subordinated debentures with carrying values of ~~$369.8~~$393.7 million and ~~$343.5~~$381.1 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The increase is mainly due to the ~~$26.6~~$12.7 million change in fair value for the junior subordinated debentures elected to be carried at fair value, which is due ~~mostly~~ to ~~an increase in the discount rates offset by a decrease in the credit spread, and~~ an increase in the implied forward curve resulting in increased cash flows, partially offset by an increase in ~~interest cash flows.~~the discount rate caused by an increase in the swap spot curve. As of March 31, ~~2021,~~2022, 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.

~~Table of Contents~~

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 ~~an elevated~~maintaining a sufficient on-balance sheet liquidity position to ~~further enhance~~provide flexibility, ~~due~~ to ~~the increased market volatility~~grow deposit balances and ~~uncertainty~~fund growth in lending and investment portfolios, as ~~a result of the COVID-19 pandemic.~~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~~current economic conditions, as well as meet its working capital and other needs. The Company will continue to prudently evaluate and maintain liquidity sources, including the ~~management~~ability to fund future loan growth and ~~utilization of~~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 represented 6%5% of total deposits at March 31, ~~2021~~2022 and ~~7% of total deposits at~~ December 31, ~~2020.~~2021. 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. 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 ~~$7.6~~$8.9 billion at March 31, ~~2021,~~2022, 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 ~~$683.0 million,~~$1.2 billion, 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 March 31, ~~2021.~~2022. 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 ~~$50.0~~$48.0 million of dividends paid by the Bank to the Company in the three months ended March 31, ~~2021.~~2022. 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 is required 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 Company's Board of Directors and regulators with the opportunity to review final quarterly financial results and financial projections, prior to the announcement of any dividend. ~~The~~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 ~~expects to continue this cadence in future quarters.~~common stock.

As disclosed in the Condensed Consolidated Statements of Cash Flows, net cash provided by operating activities was $275.3 million during the three months ended March 31, 2022, 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 $683.3 million and the decrease in other assets of $167.9 million, offset by originations of loans held for sale of $649.1 million, and the change in fair value of residential mortgage servicing rights carried at fair value of $34.8 million. This compares to net cash provided by operating activities of $392.0 million during the three months ended March 31, 2021, with the difference between cash used in operating activities and net income consisting ~~primarily~~ of proceeds from the sale of loans held for sale of $1.8 billion, and the net decrease in other assets of $128.2 million, offset by originations of loans held for sale of $1.6 billion, and ~~the~~ gain on sale of loans of $50.2 million. ~~This compares to net~~

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Net cash of $434.1 million used in ~~operating~~investing activities ~~of $119.1 million~~ during the three months ended March 31, ~~2020, with the difference between cash used~~2022, consisted principally of net change in ~~operating activities~~loans of $470.3 million and ~~net loss consisting~~purchases of ~~goodwill impairment of $1.8 billion, originations of loans held~~available for sale investment securities of ~~$1.1 billion, the net increase in other assets of $219.6 million, and gain on sale of loans of $38.3~~$131.9 million, offset by proceeds from available for sale investment securities of $126.0 million and the ~~sale~~proceeds from sales of loans ~~held for sale~~and leases of ~~$1.2 billion, provision for loan and lease losses of $118.1 million, and a loss on fair value of residential mortgage servicing rights carried at fair value of $30.7 million~~

~~Net~~$44.5 million. This compares to net cash of $495.1 million used in investing activities during the three months ended March 31, 2021, consisted principally of purchases of available for sale investment securities of $555.3 million, and net loan originations of $267.9 million, offset by proceeds from available for sale investment securities of $227.1 million and the proceeds from sales of loans and leases of $82.5 million. This compares to net cash of $74.1 million used in investing activities during the three months ended March 31, 2020, which primarily consisted ~~principally~~ of purchases of investment securities available for sale of ~~$140.4 million, net loan originations of $109.5~~$555.3 million and ~~purchases~~net change in loans of ~~restricted equity securities of $20.0~~$267.9 million, offset by proceeds from investment securities available for sale of ~~$168.9~~$227.1 million and the proceeds from sales of loans ~~and leases~~ of ~~$22.0~~$82.5 million.

~~Table~~Net cash of ~~Contents~~

~~Net~~$62.6 million provided by financing activities during the three months ended March 31, 2022, primarily consisted of $104.9 million net increase in deposits, offset by $45.5 million of dividends paid on common stock. This compares to net cash of $771.1 million provided by financing activities during the three months ended March 31, 2021, which primarily consisted of $1.3 billion net increase in deposits and ~~the~~ net increase in securities sold under agreements toof repurchase of $45.0 million, offset by $490.0 million repayment of borrowings and $46.2 million of dividends paid on common stock. This compares to net cash of $488.1 million provided by financing activities during the three months ended March 31, 2020, primarily consisted of proceeds from borrowings of $600.0 million and $218.0 million net increase in deposits, offset by $310.0 million repayment of borrowings and $46.2 million of dividends paid on common stock.

Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during ~~2021,~~2022, it is possible that our deposit ~~growth~~balances may not be maintained at previous levels due to pricing pressure ~~store consolidations,~~ or customers' ~~spending habits due to~~behavior in the ~~COVID-19 pandemic.~~current economic environment. 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.

Off-balance-Sheet Arrangements

Information regarding Off-Balance-Sheet Arrangements is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Concentrations of Credit Risk

Information regarding Concentrations of Credit Risk is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Capital Resources

Shareholders' equity at March 31, ~~2021 and~~2022 was $2.6 billion, as compared to $2.7 billion at December 31, ~~2020 was $2.7 billion.~~2021. The ~~change~~decrease in shareholders' equity during the three months ended March 31, ~~2021~~2022 was principally due to the other comprehensive loss, net of tax, of $185.5 million and cash dividends ~~declared,~~paid of $45.7 million, offset by net ~~income.~~income of $91.2 million during the period.

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.

The timing of the quarterly dividend is after each quarter's earnings release to provide the ~~Company's~~ Board ~~of Directors~~ with the opportunity to review final quarterly financial results and financial projections, prior to the announcement of any dividend. ~~The Company expects~~These dividends were made pursuant to ~~continue this cadence~~our existing dividend policy and in ~~future quarters.~~consideration of, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth. On February ~~1, 2021,~~4, 2022, the Company declared a cash dividend ~~for the fourth quarter of 2020~~ in the amount of $0.21 per common share based on fourth quarter ~~2020~~2021 performance, which was paid on February ~~26, 2021.~~25, 2022.

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 three months ended March 31, ~~2021~~2022 and ~~the three months ended March~~December 31, ~~2020.~~

Three Months Ended
March 31, 2021 March 31, 2020
Dividend declared per common share $ 0.21 $ 0.21
Dividend payout ratio 43 % (2) %
2021:


	Three Months Ended
	March 31, 2022			December 31, 2021
Dividend declared per common share	$	0.21		$	0.21
Dividend payout ratio	50		%	51		%

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In July 2021, the Company announced that its Board of Directors approved a 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. As of March 31, ~~2021,~~2022, a total of ~~9.5~~$321.8 million ~~shares are~~remained available ~~for~~to repurchase shares under the ~~Company's~~new share repurchase ~~plan.~~program. During the three months ended March 31, ~~2021,~~2022, no shares were repurchased under ~~this~~the plan.

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 ~~will~~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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The following table shows the Company's consolidated and the Bank's capital adequacy ratios compared to the regulatory minimum capital ratio and the regulatory minimum capital ratio needed to qualify as a "well-capitalized" institution, as calculated under regulatory guidelines of the Basel III at March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:

Actual For Capital Adequacy purposes To be Well Capitalized
(dollars in thousands)
Amount Ratio Amount Ratio Amount Ratio
March 31, 2021
Total Capital
(to Risk Weighted Assets)
Consolidated $ 3,392,620 15.81 % $ 1,716,294 8.00 % $ 2,145,368 10.00 %
Umpqua Bank $ 3,179,886 14.82 % $ 1,716,686 8.00 % $ 2,145,857 10.00 %
Tier I Capital
(to Risk Weighted Assets)
Consolidated $ 2,694,597 12.56 % $ 1,287,221 6.00 % $ 1,716,294 8.00 %
Umpqua Bank $ 2,932,861 13.67 % $ 1,287,514 6.00 % $ 1,716,686 8.00 %
Tier I Common
(to Risk Weighted Assets)
Consolidated $ 2,694,597 12.56 % $ 965,416 4.50 % $ 1,394,489 6.50 %
Umpqua Bank $ 2,932,861 13.67 % $ 965,636 4.50 % $ 1,394,807 6.50 %
Tier I Capital
(to Average Assets)
Consolidated $ 2,694,597 9.18 % $ 1,174,659 4.00 % $ 1,468,324 5.00 %
Umpqua Bank $ 2,932,861 9.98 % $ 1,175,098 4.00 % $ 1,468,873 5.00 %
December 31, 2020
Total Capital
(to Risk Weighted Assets)
Consolidated $ 3,347,926 15.63 % $ 1,713,891 8.00 % $ 2,142,364 10.00 %
Umpqua Bank $ 3,134,116 14.63 % $ 1,713,809 8.00 % $ 2,142,262 10.00 %
Tier I Capital
(to Risk Weighted Assets)
Consolidated $ 2,636,194 12.31 % $ 1,285,418 6.00 % $ 1,713,891 8.00 %
Umpqua Bank $ 2,873,383 13.41 % $ 1,285,357 6.00 % $ 1,713,809 8.00 %
Tier I Common
(to Risk Weighted Assets)
Consolidated $ 2,636,194 12.31 % $ 964,064 4.50 % $ 1,392,536 6.50 %
Umpqua Bank $ 2,873,383 13.41 % $ 964,018 4.50�� % $ 1,392,470 6.50 %
Tier I Capital
(to Average Assets)
Consolidated $ 2,636,194 8.98 % $ 1,174,129 4.00 % $ 1,467,661 5.00 %
Umpqua Bank $ 2,873,383 9.79 % $ 1,174,065 4.00 % $ 1,467,581 5.00 %


	Actual				For Capital Adequacy purposes				To be Well Capitalized
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2022
Total Capital (to Risk Weighted Assets)
Consolidated	$	3,477,154	14.00	%	$	1,986,362	8.00	%	$	2,482,952	10.00	%
Umpqua Bank	$	3,137,804	12.64	%	$	1,986,051	8.00	%	$	2,482,563	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	2,818,265	11.35	%	$	1,489,771	6.00	%	$	1,986,362	8.00	%
Umpqua Bank	$	2,929,914	11.80	%	$	1,489,538	6.00	%	$	1,986,051	8.00	%
Tier I Common (to Risk Weighted Assets)
Consolidated	$	2,818,265	11.35	%	$	1,117,328	4.50	%	$	1,613,919	6.50	%
Umpqua Bank	$	2,929,914	11.80	%	$	1,117,153	4.50	%	$	1,613,666	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	2,818,265	9.19	%	$	1,226,728	4.00	%	$	1,533,409	5.00	%
Umpqua Bank	$	2,929,914	9.55	%	$	1,227,029	4.00	%	$	1,533,786	5.00	%
December 31, 2021
Total Capital (to Risk Weighted Assets)
Consolidated	$	3,429,047	14.26	%	$	1,923,934	8.00	%	$	2,404,917	10.00	%
Umpqua Bank	$	3,085,848	12.83	%	$	1,924,015	8.00	%	$	2,405,019	10.00	%
Tier I Capital (to Risk Weighted Assets)
Consolidated	$	2,785,794	11.58	%	$	1,442,950	6.00	%	$	1,923,934	8.00	%
Umpqua Bank	$	2,893,593	12.03	%	$	1,443,011	6.00	%	$	1,924,015	8.00	%
Tier I Common (to Risk Weighted Assets)
Consolidated	$	2,785,794	11.58	%	$	1,082,213	4.50	%	$	1,563,196	6.50	%
Umpqua Bank	$	2,893,593	12.03	%	$	1,082,258	4.50	%	$	1,563,262	6.50	%
Tier I Capital (to Average Assets)
Consolidated	$	2,785,794	9.01	%	$	1,236,265	4.00	%	$	1,545,331	5.00	%
Umpqua Bank	$	2,893,593	9.36	%	$	1,236,518	4.00	%	$	1,545,648	5.00	%

~~Along with enactment of the CARES Act,~~In 2020, the federal bank regulatory authorities ~~issued an interim final~~finalized a rule to provide banking organizations that ~~are required to implement~~implemented CECL ~~before the end of~~in 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 elected this capital relief ~~and will~~to delay the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital. Currently, the Company is beginning to phase out the cumulative adjustment as calculated at the end of 2021, by adjusting it by 75% through 2022, 50% in 2023, and the remaining 25% in 2024.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our assessment of market risk as of March 31, ~~2021~~2022 indicates there are no material changes in the qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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Item 4. Controls and Procedures

Our management, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, has concluded that our disclosure controls and procedures are effective in timely alerting them to information relating to us that is required to be included in our periodic filings with the SEC. The disclosure controls and procedures were last evaluated by management as of March 31, ~~2021.~~2022.

No change in internal control over financial reporting occurred during the quarter ended March 31, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Due to the nature of our business, we are involved in legal proceedings that arise in the ordinary course of our business. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows. For additional information, please see Note 6 - Commitments and Contingencies.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under "Part I--Item 1A--Risk Factors" in our Form 10-K for the year ended December 31, ~~2020.~~2021. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. There have been no material changes from the risk factors described in our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)Not applicable

(b)Not applicable

(c)The following table provides information about repurchases of common stock by the Company during the quarter ended March 31, ~~2021:~~2022:

Period
Total number of Common Shares Purchased (1)
Average Price Paid per Common Share
Total Number of Shares Purchased as Part of Publicly Announced Plan (2)
Maximum Number of Remaining Shares that May be Purchased at Period End under the Plan
1/1/21 - 1/31/21 1,834 $ 15.43 — 9,524,429
2/1/21 - 2/28/21 98,428 $ 15.44 — 9,524,429
3/1/21 - 3/31/21 43,570 $ 17.59 — 9,524,429
Total for quarter 143,832 $ 16.09 —


Period	Total number of Common Shares Purchased (1)	Average Price Paid per Common Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (2)	Maximum Dollar Value of Shares that May be Purchased at Period End under the Plan
01/01/22 - 01/31/22	807	$	20.31	—	$	321,797,719
02/01/22 - 02/28/22	113,010	$	20.83	—	$	321,797,719
03/01/22 - 03/31/22	80,975	$	20.59	—	$	321,797,719
Total for quarter	194,792	$	20.73	—

(1)Common shares repurchased by the Company during the quarter consist of cancellation of ~~143,832~~194,792 shares to be issued upon vesting of restricted stock awards to pay withholding taxes. During the three months ended March 31, ~~2021,~~2022, there were no shares ~~were~~ repurchased pursuant to the Company's publicly announced corporate stock repurchase plan described in (2) below.

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(2)~~The Company's~~On July 21, 2021, the Company approved a share repurchase ~~plan,~~program which ~~was first approved by its Board of Directors and announced in August 2003, was amended on September 29, 2011~~authorizes the Company to ~~increase the number~~repurchase up to $400 million of common ~~shares available for repurchase~~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 ~~the plan to 15 million shares.~~applicable rules and regulations. As of March 31, ~~2021,~~2022, a total of ~~9.5~~$321.8 million ~~shares~~ remained available ~~for repurchase.~~to repurchase shares. The timing and amount of future repurchases will depend upon the market price for our common stock, laws and regulations restricting repurchases, asset growth, earnings, our capital plan and bank or bank holding company regulatory approvals. In addition, the Company halted repurchases under the program with the announcement of the proposed merger with Columbia and as required under the Merger Agreement.

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

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Item 6. Exhibits


Exhibit #			Description

2.1			(a) Agreement and Plan of Merger by and among Umpqua Holdings Corporation, Columbia Banking System, Inc, and Cascade Merger Sub, Inc..

3.1			~~(a)~~(b) Restated Articles of Incorporation, as amended

3.2			~~(b)~~(c) Bylaws, as amended

4.1			~~(c)~~(d) Specimen Common Stock Certificate

4.2			The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

10.1*			~~Umpqua Holdings Corporation Notice of Performance Share Awardbased on~~ ~~relative~~ ~~TSR performance~~

10.2*			~~(d) Employment Agreement with CEO Cort O'Haver~~

10.3*			~~(e) Form of Employment Agreement with Executive Officers~~

31.1			Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002

31.3			Certification of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002

32			Certification of Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021,~~2022, formatted in Inline XBRL (included in Exhibit 101)



*(a)			~~Compensatory plan or arrangement~~Incorporated by reference to Exhibit 2.1 to Form 8-K filed October 15, 2021

~~(a)~~(b)			Incorporated by reference to Exhibit 3.1 to Form 8-K filed April 23, 2018

~~(b)~~(c)			Incorporated by reference to Exhibit 99.2 to Form 8-K filed March 24, 2020

~~(c)~~(d)			Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-8 (No. 333-77259) filed April 28, 1999

~~(d)~~			~~Incorporated by reference to Exhibit 10.1 to Form 8-K filed April 6, 2021~~

~~(e)~~			~~Incorporated by reference to Exhibit 10.2 to Form 8-K filed April 6, 2021~~

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		UMPQUA HOLDINGS CORPORATION
		(Registrant)

Dated	May ~~6, 2021~~5, 2022	/s/ Cort L. O'Haver
		Cort L. O'Haver President and Chief Executive Officer

Dated	May ~~6, 2021~~5, 2022	/s/ Ronald L. Farnsworth
		Ronald L. Farnsworth Executive Vice President/Chief Financial Officer and Principal Financial Officer

Dated	May ~~6, 2021~~5, 2022	/s/ Lisa M. White
		Lisa M. White Senior Vice President/Corporate Controller and Principal Accounting Officer

6461


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	As of December 31, 2020	2020		2019		2018		2017		2016		Prior						Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	496,412	$	677,975	$	489,350	$	379,691	$	338,257	$	932,207	$	2,855	$	4,139	$	3,320,886
	Special mention	13,281		1,432		40,899		2,800		31,699		27,167		0		0		117,278
	Substandard	3,129		2,668		19,951		3,062		19,806		18,586		0		0		67,202
	Doubtful	0		0		0		0		0		103		0		0		103
	Loss	0		0		0		0		0		333		0		0		333
Total non-owner occupied term, net		$	512,822	$	682,075	$	550,200	$	385,553	$	389,762	$	978,396	$	2,855	$	4,139	$	3,505,802
Owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	284,698	$	414,715	$	321,900	$	344,606	$	257,969	$	610,893	$	6,270	$	783	$	2,241,834
	Special mention	3,641		8,373		13,143		7,365		3,425		18,386		0		0		54,333
	Substandard	2,657		1,694		9,868		2,846		4,356		14,609		282		975		37,287
	Doubtful	0		0		0		0		0		61		0		0		61
	Loss	0		0		0		0		0		430		0		0		430
Total owner occupied term, net		$	290,996	$	424,782	$	344,911	$	354,817	$	265,750	$	644,379	$	6,552	$	1,758	$	2,333,945
Multifamily, net
Credit quality indicator:
	Pass/Watch	$	383,871	$	870,871	$	593,076	$	574,185	$	276,108	$	618,031	$	23,282	$	2,956	$	3,342,380
	Special mention	0		0		0		0		0		6,601		0		0		6,601
	Substandard	0		0		0		215		0		0		0		0		215
	Doubtful	0		0		0		0		0		0		0		0		0
	Loss	0		0		0		0		0		0		0		0		0
Total multifamily, net		$	383,871	$	870,871	$	593,076	$	574,400	$	276,108	$	624,632	$	23,282	$	2,956	$	3,349,196


GLOSSARY		3
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements (unaudited)	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4038
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6157
Item 4.	Controls and Procedures	6158
Part II. OTHER INFORMATION		6158
Item 1.	Legal Proceedings	6158
Item 1A.	Risk Factors	6158
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6158
Item 3.	Defaults Upon Senior Securities	6259
Item 4.	Mine Safety Disclosures	6259
Item 5.	Other Information	6259
Item 6.	Exhibits	6360

SIGNATURES		6461


	Common Stock			Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income
(in thousands, except shares)	Shares	Amount						Total
Balance at January 1, 2020	220,229,282	$	3,514,000	$	770,366	$	29,549	$	4,313,915
Net loss				(1,851,947)				(1,851,947)
Other comprehensive income, net of tax						138,722		138,722
Stock-based compensation		2,253						2,253
Stock repurchased and retired	(486,757)	(8,573)						(8,573)
Issuances of common stock under stock plans	432,595	0						0
Cash dividends on common stock ($0.21 per share)				(46,578)				(46,578)
Cumulative effect adjustment (1)				(40,181)				(40,181)
Balance at March 31, 2020	220,175,120	$	3,507,680	$	(1,168,340)	$	168,271	$	2,507,611
Net income				52,926				52,926
Other comprehensive loss, net of tax						(24,663)		(24,663)
Stock-based compensation		2,503						2,503
Stock repurchased and retired	(3,707)	(38)						(38)
Issuances of common stock under stock plans	47,694	0						0

Balance at June 30, 2020	220,219,107	$	3,510,145	$	(1,115,414)	$	143,608	$	2,538,339
Net income				124,871				124,871
Other comprehensive loss, net of tax						(8,586)		(8,586)
Stock-based compensation		2,025						2,025
Stock repurchased and retired	(1,523)	(17)						(17)
Issuances of common stock under stock plans	4,614	0						0
Cash dividends on common stock ($0.21 per share)				(46,388)				(46,388)
Balance at September 30, 2020	220,222,198	$	3,512,153	$	(1,036,931)	$	135,022	$	2,610,244
Net income				150,730				150,730
Other comprehensive loss, net of tax						(12,277)		(12,277)
Stock-based compensation		2,473						2,473
Stock repurchased and retired	(2,022)	(27)						(27)
Issuances of common stock under stock plans	6,159	0						0
Cash dividends on common stock ($0.21 per share)				(46,566)				(46,566)
Balance at December 31, 2020	220,226,335	$	3,514,599	$	(932,767)	$	122,745	$	2,704,577

















	Three Months Ended March 31, 2020
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	50,847	$	73,820	$	24,714	$	8,248	$	157,629
Impact of adoption CECL	5,077		44,009		2,099		(1,186)		49,999
Adjusted balance, beginning of period	55,924		117,829		26,813		7,062		207,628
Provision for credit losses for loans and leases	43,608		49,673		7,185		5,036		105,502
Charge-offs	0		(22,608)		(11)		(1,836)		(24,455)
Recoveries	246		1,713		264		522		2,745
Net recoveries (charge-offs)	246		(20,895)		253		(1,314)		(21,710)
Balance, end of period	$	99,778	$	146,607	$	34,251	$	10,784	$	291,420
Reserve for unfunded commitments
Balance, beginning of period	$	534	$	2,539	$	149	$	1,884	$	5,106
Impact of adoption CECL	4,030		(487)		1,267		(1,572)		3,238
Adjusted balance, beginning of period	4,564		2,052		1,416		312		8,344
Provision for credit losses on unfunded commitments	11,196		875		325		187		12,583
Balance, end of period	15,760		2,927		1,741		499		20,927
Total allowance for credit losses	$	115,538	$	149,534	$	35,992	$	11,283	$	312,347
























	Three Months Ended March 31,
	2021 compared to 2020
	Increase (decrease) in interest income and expense due to changes in
(in thousands)	Volume		Rate		Total
INTEREST-EARNING ASSETS:
Loans held for sale	$	2,382	$	(1,801)	$	581
Loans and leases	5,360		(30,793)		(25,433)
Taxable securities	1,079		(4,652)		(3,573)
Non-taxable securities (1)	89		(68)		21
Temporary investments and interest bearing cash	1,989		(4,696)		(2,707)
Total interest-earning assets (1)	10,899		(42,010)		(31,111)
INTEREST-BEARING LIABILITIES:
Interest bearing demand deposits	745		(3,874)		(3,129)
Money market	403		(10,671)		(10,268)
Savings	66		(144)		(78)
Time deposits	(8,336)		(7,801)		(16,137)
Repurchase agreements	59		(378)		(319)
Borrowings	(1,390)		(884)		(2,274)
Junior subordinated debentures	(243)		(1,608)		(1,851)
Total interest-bearing liabilities	(8,696)		(25,360)		(34,056)
Net increase in net interest income (1)	$	19,595	$	(16,650)	$	2,945
(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.


	Three Months Ended
	March 31,
(in thousands)		2021		2020		Change Amount		Change Percent
Service charges on deposits		$	9,647	$	11,473	$	(1,826)	(16)	%
Card-based fees		7,374		7,417		(43)		(1)	%
Brokerage revenue		3,915		4,015		(100)		(2)	%
Residential mortgage banking revenue, net		65,033		17,540		47,493		271	%
Gain (loss) on sale of debt securities, net		4		(133)		137		nm
(Loss) gain on equity securities, net		(706)		814		(1,520)		(187)	%
Gain on loan and lease sales, net		1,373		1,167		206		18	%

Bank owned life insurance income		2,071		2,129		(58)		(3)	%
Other income (expense)		20,089		(3,777)		23,866		nm
Total non-interest income		$	108,800	$	40,645	$	68,155	168	%
nm = Not meaningful


	Loans with Deferrals or Forbearances
(dollars in thousands)	Number of Loans	Loan Balance Outstanding		% of Loan Portfolio
Commercial real estate
Non-owner occupied term, net	22	$	111,307	3	%
Owner occupied term, net	13	27,029		1	%
Multifamily, net	2	5,759		—	%
Construction & development, net	1	1,636		—	%

Commercial
Term, net	5	1,074		—	%
Lines of credit & other, net	6	869		—	%
Leases & equipment finance, net	539	19,506		1	%
Residential
Mortgage, net	271	152,250		4	%
Home equity loans & lines, net	32	3,828		—	%
Consumer & other, net	39	735		—	%
Total	930	$	323,993	1	%


	December 31, 2020			Q1 2021 net charge-offs		Reserve build/(release)		March 31, 2021			% of Loan and Leases Outstanding
Commercial real estate	$	157,070		$	339	$	12,734	$	170,143		1.65	%
Commercial	153,054			(17,523)		(4,892)		130,639			1.98	%
Residential	29,625			38		(7,285)		22,378			0.44	%
Consumer	8,938			(498)		(557)		7,883			3.83	%
Total allowance for credit losses	$	348,687		$	(17,644)	$	—	$	331,043
% of loans and leases outstanding	1.60		%					1.49		%