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:	~~June 30, 2021~~March 31, 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: ~~220,133,236~~217,046,408 shares outstanding as of ~~July 31, 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)


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.


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)	(in thousands, except shares)	June 30, 2021		December 31, 2020		(in thousands, except shares)	March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and due from banks (restricted cash of $91,673 and $92,955)		$	397,526	$	370,219
Interest bearing cash and temporary investments (restricted cash of $357 and $2,574)		2,688,285		2,202,962
Cash and due from banks (restricted cash of $9,072 and $3,593)						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)						Interest bearing cash and temporary investments (restricted cash of $0 and $400)	2,358,292		2,539,606
Total cash and cash equivalents	Total cash and cash equivalents	3,085,811		2,573,181		Total cash and cash equivalents	2,665,436		2,761,621
Investment securities	Investment securities					Investment securities
Equity and other, at fair value	Equity and other, at fair value	82,099		83,077		Equity and other, at fair value	78,966		81,214
Available for sale, at fair value	Available for sale, at fair value	3,473,950		2,932,558		Available for sale, at fair value	3,638,080		3,870,435
Held to maturity, at amortized cost	Held to maturity, at amortized cost	2,876		3,034		Held to maturity, at amortized cost	2,700		2,744
Loans held for sale (at fair value: $429,052 and $688,079)		429,052		766,225
Loans and leases (at fair value: $359,273 and $0)		22,143,739		21,779,367
Loans held for sale, at fair value						Loans held for sale, at fair value	309,946		353,105
Loans and leases (at fair value: $319,630 and $345,634)						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	Allowance for credit losses on loans and leases	(279,887)		(328,401)		Allowance for credit losses on loans and leases	(248,564)		(248,412)
Net loans and leases	Net loans and leases	21,863,852		21,450,966		Net loans and leases	22,727,197		22,304,768
Restricted equity securities	Restricted equity securities	15,247		41,666		Restricted equity securities	10,889		10,916
Premises and equipment, net	Premises and equipment, net	172,546		178,050		Premises and equipment, net	167,369		171,125
Operating lease right-of-use assets	Operating lease right-of-use assets	95,030		104,937		Operating lease right-of-use assets	87,333		82,366
Goodwill		0		2,715

Other intangible assets, net	Other intangible assets, net	11,100		13,360		Other intangible assets, net	7,815		8,840
Residential mortgage servicing rights, at fair value	Residential mortgage servicing rights, at fair value	102,699		92,907		Residential mortgage servicing rights, at fair value	165,807		123,615
Bank owned life insurance	Bank owned life insurance	324,998		323,470		Bank owned life insurance	328,040		327,745

Deferred tax asset, net						Deferred tax asset, net	39,051		—
Other assets	Other assets	625,705		669,029		Other assets	408,497		542,442
Total assets	Total assets	$	30,284,965	$	29,235,175	Total assets	$	30,637,126	$	30,640,936
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	Deposits					Deposits
Non-interest bearing	Non-interest bearing	$	10,718,921	$	9,632,773	Non-interest bearing	$	11,058,251	$	11,023,724
Interest bearing	Interest bearing	15,434,632		14,989,428		Interest bearing	15,641,336		15,570,961
Total deposits	Total deposits	26,153,553		24,622,201		Total deposits	26,699,587		26,594,685
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	480,302		375,384		Securities sold under agreements to repurchase	499,539		492,247
Borrowings	Borrowings	111,405		771,482		Borrowings	6,290		6,329
Junior subordinated debentures, at fair value	Junior subordinated debentures, at fair value	287,723		255,217		Junior subordinated debentures, at fair value	305,719		293,081
Junior subordinated debentures, at amortized cost	Junior subordinated debentures, at amortized cost	88,155		88,268		Junior subordinated debentures, at amortized cost	87,984		88,041
Operating lease liabilities	Operating lease liabilities	106,195		113,593		Operating lease liabilities	101,732		95,427
Deferred tax liability, net	Deferred tax liability, net	2,497		5,441		Deferred tax liability, net	—		4,353
Other liabilities	Other liabilities	288,819		299,012		Other liabilities	328,677		317,503
Total liabilities	Total liabilities	27,518,649		26,530,598		Total liabilities	28,029,528		27,891,666
COMMITMENTS AND CONTINGENCIES (NOTE 6)	COMMITMENTS AND CONTINGENCIES (NOTE 6)	0		0		COMMITMENTS AND CONTINGENCIES (NOTE 6)	0		0
SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Common stock, 0 par value, shares authorized: 400,000,000 in 2021 and 2020; issued and outstanding: 220,626,452 in 2021 and 220,226,335 in 2020		3,517,641		3,514,599
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						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	Accumulated deficit	(801,954)		(932,767)		Accumulated deficit	(651,912)		(697,338)
Accumulated other comprehensive income		50,629		122,745
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(183,756)		1,759
Total shareholders' equity	Total shareholders' equity	2,766,316		2,704,577		Total shareholders' equity	2,607,598		2,749,270
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	30,284,965	$	29,235,175	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				Six Months Ended					Three Months Ended
(in thousands, except per share amounts)	(in thousands, except per share amounts)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 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	$	223,470	$	235,174	$	444,611	$	481,167	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	14,619		9,015		27,731		25,620		Taxable		18,725		13,112
Exempt from federal income tax	Exempt from federal income tax	1,487		1,520		3,021		3,082		Exempt from federal income tax		1,372		1,534
Dividends	Dividends	405		568		1,003		1,246		Dividends		86		598
Interest on temporary investments and interest bearing deposits	Interest on temporary investments and interest bearing deposits	774		403		1,398		3,734		Interest on temporary investments and interest bearing deposits		1,353		624
Total interest income	Total interest income	240,755		246,680		477,764		514,849		Total interest income		235,940		237,009
INTEREST EXPENSE	INTEREST EXPENSE									INTEREST EXPENSE
Interest on deposits	Interest on deposits	7,016		26,222		17,694		66,512		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	68		194		144		589		Interest on securities sold under agreement to repurchase and federal funds purchased		63		76
Interest on borrowings	Interest on borrowings	866		3,839		2,638		7,885		Interest on borrowings		49		1,772
Interest on junior subordinated debentures	Interest on junior subordinated debentures	3,042		3,922		6,094		8,825		Interest on junior subordinated debentures		3,149		3,052
Total interest expense	Total interest expense	10,992		34,177		26,570		83,811		Total interest expense		7,177		15,578
Net interest income	Net interest income	229,763		212,503		451,194		431,038		Net interest income		228,763		221,431
(RECAPTURE) PROVISION FOR CREDIT LOSSES		(22,996)		87,085		(22,996)		205,170
Net interest income after (recapture) provision for credit losses		252,759		125,418		474,190		225,868
PROVISION FOR CREDIT LOSSES										PROVISION FOR CREDIT LOSSES		4,804		—
Net interest income after provision for credit losses										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	10,310		8,757		19,957		20,230		Service charges on deposits		11,583		9,647
Card-based fees	Card-based fees	10,274		5,901		17,648		13,318		Card-based fees		8,708		7,374
Brokerage revenue	Brokerage revenue	1,135		3,805		5,050		7,820		Brokerage revenue		11		3,915
Residential mortgage banking revenue, net	Residential mortgage banking revenue, net	44,443		83,877		109,476		101,417		Residential mortgage banking revenue, net		60,786		65,033
Gain on sale of debt securities, net	Gain on sale of debt securities, net	0		323		4		190		Gain on sale of debt securities, net		2		4
Gain (loss) on equity securities, net		4		240		(702)		1,054
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	5,318		1,074		6,691		2,241		Gain on loan and lease sales, net		2,337		1,373
Bank owned life insurance income	Bank owned life insurance income	2,092		2,116		4,163		4,245		Bank owned life insurance income		2,087		2,071
Other income		17,499		9,387		37,588		5,610
Other (losses) income										Other (losses) income		(2,884)		20,089
Total non-interest income	Total non-interest income	91,075		115,480		199,875		156,125		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	121,573		116,676		245,707		226,450		Salaries and employee benefits		113,138		124,134
Occupancy and equipment, net	Occupancy and equipment, net	34,657		36,171		69,292		73,172		Occupancy and equipment, net		34,829		34,635
Communications	Communications	3,004		2,939		5,767		6,067		Communications		2,754		2,763
Marketing	Marketing	2,054		1,759		3,426		4,289		Marketing		2,398		1,372
Services	Services	13,512		10,356		24,262		21,126		Services		11,337		10,750
FDIC assessments	FDIC assessments	1,607		3,971		4,206		6,513		FDIC assessments		4,516		2,599
Intangible amortization	Intangible amortization	1,130		1,246		2,260		2,493		Intangible amortization		1,025		1,130
Merger related expenses										Merger related expenses		2,278		—

Goodwill impairment		0		0		0		1,784,936
Other expenses	Other expenses	11,863		8,792		22,072		19,522		Other expenses		10,155		10,209
Total non-interest expense	Total non-interest expense	189,400		181,910		376,992		2,144,568		Total non-interest expense		182,430		187,592
Income (loss) before provision for income taxes		154,434		58,988		297,073		(1,762,575)
Income before provision for income taxes										Income before provision for income taxes		121,498		142,639
Provision for income taxes	Provision for income taxes	38,291		6,062		73,193		36,446		Provision for income taxes		30,341		34,902
Net income (loss)		$	116,143	$	52,926	$	223,880	$	(1,799,021)
Earnings (loss) per common share:
Net income										Net income		$	91,157	$	107,737
Earnings per common share:										Earnings per common share:
Basic	Basic	$0.53		$0.24		$1.02		($8.17)		Basic		$0.42		$0.49
Diluted	Diluted	$0.53		$0.24		$1.01		($8.17)		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	220,593		220,210		220,481		220,213		Basic		216,782		220,367
Diluted	Diluted	221,022		220,320		220,928		220,213		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 Six Months Ended
(in thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net income (loss) $ 116,143 $ 52,926 $ 223,880 $ (1,799,021)
Available for sale securities:
Unrealized gains (losses) arising during the period 22,821 4,570 (64,524) 112,331
Income tax (expense) benefit related to unrealized gains (losses) (5,870) (1,175) 16,595 (28,892)
Reclassification adjustment for net realized gains in earnings 0 (323) (4) (190)
Income tax expense related to realized gains 0 83 1 49
Net change in unrealized gains (losses) for available for sale securities 16,951 3,155 (47,932) 83,298
Junior subordinated debentures, at fair value:
Unrealized (losses) gains arising during the period (5,996) (37,450) (32,558) 41,412
Income tax benefit (expense) related to unrealized gains 1,542 9,632 8,374 (10,651)
Net change in unrealized (losses) gains for junior subordinated debentures, at fair value (4,454) (27,818) (24,184) 30,761
Other comprehensive (loss) income, net of tax 12,497 (24,663) (72,116) 114,059
Comprehensive income (loss) $ 128,640 $ 28,263 $ 151,764 $ (1,684,962)


	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									Common Stock				Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income (Loss)
(in thousands, except shares)	(in thousands, except shares)	Shares	Amount								Total		(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
Balance at January 1, 2021																Balance at January 1, 2021		220,226,335		$	3,514,599			$	(932,767)			$	122,745			$	2,704,577
Net income	Net income				124,871								124,871			Net income						107,737								107,737
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax								(8,586)				(8,586)			Other comprehensive loss, net of tax										(84,613)				(84,613)
Stock-based compensation	Stock-based compensation		2,025										2,025			Stock-based compensation				2,964										2,964
Stock repurchased and retired	Stock repurchased and retired	(1,523)	(17)										(17)			Stock repurchased and retired		(143,832)		(2,315)										(2,315)
Issuances of common stock under stock plans	Issuances of common stock under stock plans	4,614	0										0			Issuances of common stock under stock plans		408,700		—										—
Cash dividends on common stock ($0.21 per share)	Cash dividends on common stock ($0.21 per share)				(46,388)								(46,388)			Cash dividends on common stock ($0.21 per share)						(46,481)								(46,481)
Balance at September 30, 2020		220,222,198	$	3,512,153	$	(1,036,931)			$	135,022			$	2,610,244

Balance at March 31, 2021																Balance at March 31, 2021		220,491,203		$	3,515,248	$	(871,511)			$	38,132			$	2,681,869
Net income																Net income						116,143								116,143
Other comprehensive income, net of tax																Other comprehensive income, net of tax										12,497				12,497
Stock-based compensation																Stock-based compensation				2,377										2,377
Stock repurchased and retired																Stock repurchased and retired		(957)		(18)										(18)
Issuances of common stock under stock plans																Issuances of common stock under stock plans		136,206		34										34
Cash dividends on common stock ($0.21 per share)																Cash dividends on common stock ($0.21 per share)						(46,586)								(46,586)
Balance at June 30, 2021																Balance at June 30, 2021		220,626,452		$	3,517,641	$	(801,954)			$	50,629			$	2,766,316
Net income	Net income				150,730								150,730			Net income						108,066								108,066
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax								(12,277)				(12,277)			Other comprehensive loss, net of tax										(30,420)				(30,420)
Stock-based compensation	Stock-based compensation		2,473										2,473			Stock-based compensation				2,765										2,765
Stock repurchased and retired	Stock repurchased and retired	(2,022)	(27)										(27)			Stock repurchased and retired		(4,011,808)		(78,321)										(78,321)
Issuances of common stock under stock plans	Issuances of common stock under stock plans	6,159	0										0			Issuances of common stock under stock plans		7,159		—										—
Cash dividends on common stock ($0.21 per share)	Cash dividends on common stock ($0.21 per share)				(46,566)								(46,566)			Cash dividends on common stock ($0.21 per share)						(46,027)								(46,027)
Balance at December 31, 2020		220,226,335	$	3,514,599	$	(932,767)			$	122,745			$	2,704,577
Balance at September 30, 2021																Balance at September 30, 2021		216,621,803		$	3,442,085	$	(739,915)			$	20,209			$	2,722,379
Net income																Net income						88,354								88,354
Other comprehensive loss, net of tax																Other comprehensive loss, net of tax										(18,450)				(18,450)
Stock-based compensation																Stock-based compensation				2,800										2,800
Stock repurchased and retired																Stock repurchased and retired		(1,790)		(36)										(36)
Issuances of common stock under stock plans																Issuances of common stock under stock plans		5,493		—										—
Cash dividends on common stock ($0.21 per share)																Cash dividends on common stock ($0.21 per share)						(45,777)								(45,777)

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
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

~~(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

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UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 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)		$	223,880	$	(1,799,021)
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	8,181		12,822		Amortization of investment premiums, net	1,106		4,455
Gain on sale of investment securities, net	Gain on sale of investment securities, net	(4)		(190)		Gain on sale of investment securities, net	(2)		(4)

(Recapture) provision for credit losses		(22,996)		205,170
Provision for credit losses						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	(4,236)		(4,319)		Change in cash surrender value of bank owned life insurance	(2,122)		(2,105)
Depreciation, amortization and accretion	Depreciation, amortization and accretion	15,769		20,015		Depreciation, amortization and accretion	7,613		7,759
Loss (gain) on sale of premises and equipment		593		(3)
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	(22,395)		(23,470)		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	12,603		42,124		Change in fair value of residential mortgage servicing rights carried at fair value	(34,802)		6,559

Stock-based compensation	Stock-based compensation	5,341		4,756		Stock-based compensation	2,454		2,964
Net decrease (increase) in equity and other investments		276		(739)
Loss (gain) on equity securities, net		702		(1,054)
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	(87,786)		(119,647)		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	17,215		(14,273)		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	(2,888,555)		(2,974,279)		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	2,973,721		3,023,664		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		49,333		(265,107)
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	4,755		(36,279)		Net increase (decrease) in other liabilities	2,097		(25,683)
Net cash provided by (used in) operating activities		286,397		(144,894)
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	(1,023,892)		(353,601)		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	408,950		401,464		Proceeds from investment securities available for sale	126,011		227,122

Purchases of restricted equity securities		(34)		(19,999)

Redemption of restricted equity securities	Redemption of restricted equity securities	26,453		12,400		Redemption of restricted equity securities	28		19,615
Net change in loans and leases	Net change in loans and leases	(213,070)		(1,566,117)		Net change in loans and leases	(470,337)		(267,940)
Proceeds from sales of loans and leases	Proceeds from sales of loans and leases	140,011		41,386		Proceeds from sales of loans and leases	44,549		82,529
Change in premises and equipment	Change in premises and equipment	(8,822)		(9,171)		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

Net cash received from sale of Umpqua Investments, Inc.		10,781		0

Other	Other	1,734		938		Other	104		129
Net cash used in investing activities	Net cash used in investing activities	$	(655,181)	$	(1,492,643)	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)
		Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 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	$	1,531,374	$	2,363,045	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	104,918		87,106		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	(660,000)		(410,000)		Repayment of borrowings	—		(490,000)

Net proceeds from issuance of common stock		34		0

Dividends paid on common stock	Dividends paid on common stock	(92,579)		(92,485)		Dividends paid on common stock	(45,532)		(46,248)

Repurchase and retirement of common stock	Repurchase and retirement of common stock	(2,333)		(8,611)		Repurchase and retirement of common stock	(4,037)		(2,315)
Net cash provided by financing activities	Net cash provided by financing activities	881,414		2,539,055		Net cash provided by financing activities	62,629		771,100
Net increase in cash and cash equivalents		512,630		901,518
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	$	3,085,811	$	2,264,274	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	$	26,646	$	87,742	Interest	$	7,667	$	15,434
Income taxes	Income taxes	$	78,592	$	68,332	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	$	(47,932)	$	83,298	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	$	(24,184)	$	30,761	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

Transfer of loans to loans held for sale		$	0	$	9,674

Transfer of loans held for sale to loans	Transfer of loans held for sale to loans	$	315,887	$	0	Transfer of loans held for sale to loans	$	—	$	212,353
Change in GNMA mortgage loans recognized due to repurchase option		$	0	$	(1,752)

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," or "us" or similar references mean 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. FinPac is the Bank's wholly-owned subsidiary, 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.

In preparing these condensed consolidated financial statements, the Company has evaluated events and transactions subsequent to ~~June 30, 2021,~~March 31, 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. The results for interim periods are not necessarily indicative of results for the full year or any other interim period. Certain reclassifications of prior period amounts have been made to conform to current classifications, including the reclassification of the line items within non-interest income to add the card-based fees line item, as well as changes to our segment reporting structure.

~~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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 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	$	733,702	$	41,980	$	(1,314)	$	774,368	U.S. Treasury and agencies	$	893,811	$	330	$	(31,999)	$	862,142
Obligations of states and political subdivisions	Obligations of states and political subdivisions	265,179		13,331		(384)		278,126		Obligations of states and political subdivisions	317,743		2,463		(13,342)		306,864
Residential mortgage-backed securities and collateralized mortgage obligations		2,408,539		34,789		(21,872)		2,421,456
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	$	3,407,420	$	90,100	$	(23,570)	$	3,473,950	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		$	2,876	$	814	$	0	$	3,690
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	$	2,876	$	814	$	0	$	3,690	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 ~~$9.5~~$12.6 million and ~~$8.9~~$10.4 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and is included in Other Assets.

~~Table of Contents~~

Debt securities that were in an unrealized loss position as of ~~June 30, 2021~~March 31, 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.


		June 30, 2021													March 31, 2022
		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	$	65,717	$	1,314	$	0	$	0	$	65,717	$	1,314	U.S. Treasury and agencies	$	798,817	$	28,447	$	26,276	$	3,552	$	825,093	$	31,999
Obligations of states and political subdivisions	Obligations of states and political subdivisions	31,867		384		0		0		31,867		384		Obligations of states and political subdivisions	142,162		12,727		4,400		615		146,562		13,342
Residential mortgage-backed securities and collateralized mortgage obligations		1,227,877		21,872		0		0		1,227,877		21,872
Mortgage-backed securities and collateralized mortgage obligations														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	Total temporarily impaired securities	$	1,325,461	$	23,570	$	0	$	0	$	1,325,461	$	23,570	Total temporarily impaired securities	$	2,648,287	$	151,087	$	702,123	$	83,899	$	3,350,410	$	234,986

December 31, 2020
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 $ 29,493 $ 312 $ 0 $ 0 $ 29,493 $ 312
Obligations of states and political subdivisions 4,357 31 0 0 4,357 31
Residential mortgage-backed securities and collateralized mortgage obligations 215,165 449 0 0 215,165 449
Total temporarily impaired securities $ 249,015 $ 792 $ 0 $ 0 $ 249,015 $ 792


	December 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	$	197,529	$	2,749	$	28,378	$	1,446	$	225,907	$	4,195
Obligations of states and political subdivisions	75,200		1,153		2,162		135		77,362		1,288
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	$	2,050,017	$	44,481	$	160,483	$	7,545	$	2,210,500	$	52,026

These unrealized losses on the 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 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 ~~June 30, 2021~~March 31, 2022 are issued or guaranteed by government sponsored enterprises. Because the decline in fair value of the 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 ~~June 30, 2021.~~March 31, 2022.

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The following table presents the contractual maturities of debt securities at ~~June 30, 2021:~~March 31, 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	$	10,037	$	10,095	$	0	$	0	Due within one year	$	11,321	$	11,379	$	—	$	—
Due after one year through five years	Due after one year through five years	106,685		111,680		2		2		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	884,024		930,794		8		8		Due after five years through ten years	918,444		883,850		7		7
Due after ten years	Due after ten years	2,406,674		2,421,381		2,866		3,680		Due after ten years	2,631,945		2,442,103		2,691		3,450
Total securities	Total securities	$	3,407,420	$	3,473,950	$	2,876	$	3,690	Total securities	$	3,869,048	$	3,638,080	$	2,700	$	3,459

The following table presents, as of ~~June 30, 2021,~~March 31, 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	$	319,811	$	328,578	To state and local governments to secure public deposits	$	304,762	$	291,679
Other securities pledged principally to secure repurchase agreements		693,391		724,146
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	$	1,013,202	$	1,052,724	Total pledged securities	$	1,138,323	$	1,092,640

~~Table of Contents~~

Note 3 – Loans and Leases

The following table presents the major types of loans and leases, net of deferred fees and costs, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(in thousands)	(in thousands)	June 30, 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	$	3,580,386	$	3,505,802	Non-owner occupied term, net	$	3,884,784	$	3,786,887
Owner occupied term, net	Owner occupied term, net	2,398,326		2,333,945		Owner occupied term, net	2,327,899		2,332,422
Multifamily, net	Multifamily, net	3,553,704		3,349,196		Multifamily, net	4,323,633		4,051,202
Construction & development, net	Construction & development, net	857,866		828,478		Construction & development, net	940,286		890,338
Residential development, net	Residential development, net	193,904		192,761		Residential development, net	195,308		206,990
Commercial	Commercial					Commercial
Term, net	Term, net	3,748,269		4,024,467		Term, net	2,772,206		3,008,473
Lines of credit & other, net	Lines of credit & other, net	908,518		862,760		Lines of credit & other, net	871,483		910,733
Leases & equipment finance, net	Leases & equipment finance, net	1,437,372		1,456,630		Leases & equipment finance, net	1,484,252		1,467,676
Residential	Residential					Residential
Mortgage, net	Mortgage, net	4,145,432		3,871,906		Mortgage, net	4,748,266		4,517,266
Home equity loans & lines, net	Home equity loans & lines, net	1,118,278		1,136,064		Home equity loans & lines, net	1,250,702		1,197,170
Consumer & other, net	Consumer & other, net	201,684		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	$	22,143,739	$	21,779,367	Total loans and leases, net of deferred fees and costs	$	22,975,761	$	22,553,180

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the net deferred costs were ~~$27.4~~$68.4 million and ~~$38.6~~$57.5 million, respectively. The Bank 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 ~~June 30, 2021,~~March 31, 2022, the Bank had approximately ~~14,000~~2,000 PPP loans, totaling ~~$1.4 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 ~~for~~on the ~~origination of~~ PPP loans ~~of $36.8~~were $5.5 million and ~~$26.9~~$11.6 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. 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.

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Total loans and leases also include discounts on acquired loans of ~~$13.4~~$8.3 million and ~~$17.9~~$9.8 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. As of ~~June 30, 2021,~~March 31, 2022, loans totaling $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 ~~$71.5~~$57.3 million and ~~$74.8~~$60.1 million as of ~~June 30, 2021~~March 31, 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 ~~$5.6 million and $11.2~~$5.1 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, as compared to ~~$7.1 million and $13.8~~$5.6 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 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	$	17,866	$	6,373	$	23,296	$	9,758	Non-owner occupied term, net		$	18,060	$	5,430
Owner occupied term, net	Owner occupied term, net	10,812		3,426		12,423		9,192		Owner occupied term, net		10,463		1,611
Multifamily, net		3,776		0		3,776		0

Commercial	Commercial									Commercial
Term, net	Term, net	19,321		8,475		28,314		20,152		Term, net		12,196		8,993

Leases & equipment finance, net		0		0		0		43

Residential	Residential									Residential
Mortgage, net	Mortgage, net	389		0		1,712		0		Mortgage, net		1,493		1,323

Consumer & other	Consumer & other	0		0		63,799		0		Consumer & other		—		63,799
Total loans and leases sold, net	Total loans and leases sold, net	$	52,164	$	18,274	$	133,320	$	39,145	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 utilized in 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 ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, were primarily related to changes in the economic assumptions.~~The~~ Because of the uncertain economic environment due to Russia's military conflict in Ukraine causing global oil prices to increase, continued supply-chain issues, and increasing interest rates, the Bank opted to use Moody's Analytics' ~~May consensus~~March baseline economic forecast for estimating the ACL as of June 30, 2021. This scenario is based on Moody's Analytics' review of a variety of surveys of baseline forecasts of the U.S. economy. These surveys vary in date of latest vintage, number of updates per year, list of variables forecast, duration of forecast, frequency of data (quarterly or annual), and the number of respondents. In the preparation of the Moody's Analytics consensus forecast, the focus is on the next three to five years, since that is the most typical duration in the surveyed results. Moody's Analytics' approach is to give greater consideration to the most recently produced forecasts, since they will include the most up-to-date historical information, and to those variables for which the number of surveyed responses is largest.March 31, 2022.

~~Table of Contents~~

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

•U.S. real GDP average annualized growth of ~~7.4%~~3.5% in ~~2021;~~2022, decreasing to 3.1% in 2023;

•U.S. unemployment average rate ~~average~~ of ~~5.5%~~3.6% for 2022, dropping to 3.4% in ~~2021 with return to less than 5.0% unemployment by Q4 2021;~~2023;

•~~COVID~~COVID-19 infections abate in ~~June 2021;~~March 2022;

•The Federal Reserve is expected to ~~keep target range for~~increase the ~~Fed Funds~~federal funds rate ~~at 0.0% to 0.25% until early 2023.~~consistently throughout 2022 and 2023, reaching a long-run equilibrium of 2.5% by the end of 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' ~~May~~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:

•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 ~~diminish more slowly than anticipated, delaying~~start to rise again, slowing growth in spending on air travel, retail, and hotels;

•U.S real GDP average annualized growth of 2.3% through 2022, decreasing to 1.4% in 2023;

•Unemploymentbegins to increase again in the ~~reopening~~second quarter of ~~some businesses in some areas of the country;~~2022;

•The ~~stimulus is less effective~~economy returns to full employment more slowly than ~~expected because of slower consumer spending. More of the funds end up in savings and thus fiscal multipliers are smaller than assumed~~ in the ~~consensus scenario;~~

•~~U.S. real GDP annualized growth~~baseline, by the fourth quarter of ~~5.7% in 2021;~~

•~~U.S. unemployment rate average of 6.3% in 2021 with return to less than 5.0% unemployment by Q3 2022;~~

•~~COVID infections abate in October 2021;~~

•~~Federal Reserve to keep target range for the Fed Funds rate near 0.0% until Q2 2024.~~2023.

The results using the comparison scenario for sensitivity analysis were reviewed by management and were considered when evaluating the qualitative ~~factors~~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, 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 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 ~~June 30, 2021,~~March 31, 2022, and made ~~certain~~ qualitative overlay adjustments of approximately $20.1 million to increase the amounts indicated by the models as considered necessary 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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended June 30, 2021
(in thousands)		Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period		$	154,475	$	128,838	$	21,090	$	6,880	$	311,283

(Recapture) provision for credit losses for loans and leases		(25,484)		5,964		3,997		(2,252)		(17,775)

Charge-offs		(129)		(16,093)		0		(857)		(17,079)
Recoveries		89		2,681		209		479		3,458
Net (charge-offs) recoveries		(40)		(13,412)		209		(378)		(13,621)
Balance, end of period		$	128,951	$	121,390	$	25,296	$	4,250	$	279,887
Reserve for unfunded commitments
Balance, beginning of period		$	15,668	$	1,801	$	1,288	$	1,003	$	19,760

(Recapture) provision for credit losses on unfunded commitments		(5,574)		344		422		(413)		(5,221)
Balance, end of period		10,094		2,145		1,710		590		14,539
Total allowance for credit losses		$	139,045	$	123,535	$	27,006	$	4,840	$	294,426

		Six Months Ended June 30, 2021											Three Months Ended March 31, 2022
(in thousands)	(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total		(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	$	99,075	$	117,573	$	29,068	$	2,696	$	248,412
(Recapture) provision for credit losses for loans and leases	(Recapture) provision for credit losses for loans and leases	(13,058)		1,461		(2,915)		(2,737)		(17,249)		(Recapture) provision for credit losses for loans and leases	(7,462)		8,812		2,872		1,474		5,696

Charge-offs	Charge-offs	(170)		(35,707)		(70)		(2,047)		(37,994)		Charge-offs	—		(7,858)		(167)		(885)		(8,910)
Recoveries	Recoveries	469		4,772		317		1,171		6,729		Recoveries	25		2,545		173		623		3,366
Net recoveries (charge-offs)	Net recoveries (charge-offs)	299		(30,935)		247		(876)		(31,265)		Net recoveries (charge-offs)	25		(5,313)		6		(262)		(5,544)
Balance, end of period	Balance, end of period	$	128,951	$	121,390	$	25,296	$	4,250	$	279,887	Balance, end of period	$	91,638	$	121,072	$	31,946	$	3,908	$	248,564
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	8,461		2,028		1,957		321		12,767
(Recapture) provision for credit losses on unfunded commitments		(5,266)		(45)		49		(485)		(5,747)
Provision (recapture) for credit losses on unfunded commitments												Provision (recapture) for credit losses on unfunded commitments	277		(408)		236		46		151
Balance, end of period	Balance, end of period	10,094		2,145		1,710		590		14,539		Balance, end of period	8,738		1,620		2,193		367		12,918
Total allowance for credit losses	Total allowance for credit losses	$	139,045	$	123,535	$	27,006	$	4,840	$	294,426	Total allowance for credit losses	$	100,376	$	122,692	$	34,139	$	4,275	$	261,482

















	Three Months Ended March 31, 2021
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	141,710	$	150,864	$	27,964	$	7,863	$	328,401
Provision (recapture) for credit losses for loans and leases	12,426		(4,503)		(6,912)		(485)		526
Charge-offs	(41)		(19,614)		(70)		(1,190)		(20,915)
Recoveries	380		2,091		108		692		3,271
Net recoveries (charge-offs)	339		(17,523)		38		(498)		(17,644)
Balance, end of period	$	154,475	$	128,838	$	21,090	$	6,880	$	311,283
Reserve for unfunded commitments
Balance, beginning of period	$	15,360	$	2,190	$	1,661	$	1,075	$	20,286
Provision (recapture) for credit losses on unfunded commitments	308		(389)		(373)		(72)		(526)
Balance, end of period	15,668		1,801		1,288		1,003		19,760
Total allowance for credit losses	$	170,143	$	130,639	$	22,378	$	7,883	$	331,043

Table of Contents

Three Months Ended June 30, 2020
(in thousands) Commercial Real Estate Commercial Residential Consumer & Other Total
Allowance for credit losses on loans and leases
Balance, beginning of period $ 99,778 $ 146,607 $ 34,251 $ 10,784 $ 291,420
Provision for credit losses for loans and leases 52,890 21,301 6,157 1,136 81,484
Charge-offs 0 (17,549) (143) (1,761) (19,453)
Recoveries 160 2,256 283 595 3,294
Net recoveries (charge-offs) 160 (15,293) 140 (1,166) (16,159)
Balance, end of period $ 152,828 $ 152,615 $ 40,548 $ 10,754 $ 356,745
Reserve for unfunded commitments
Balance, beginning of period $ 15,760 $ 2,927 $ 1,741 $ 499 $ 20,927
Provision (recapture) for credit losses on unfunded commitments 5,048 (6) 320 79 5,441
Balance, end of period 20,808 2,921 2,061 578 26,368
Total allowance for credit losses $ 173,636 $ 155,536 $ 42,609 $ 11,332 $ 383,113
Six Months Ended June 30, 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 CECL adoption 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 96,498 70,974 13,342 6,172 186,986
Charge-offs 0 (40,157) (154) (3,597) (43,908)
Recoveries 406 3,969 547 1,117 6,039
Net recoveries (charge-offs) 406 (36,188) 393 (2,480) (37,869)
Balance, end of period $ 152,828 $ 152,615 $ 40,548 $ 10,754 $ 356,745
Reserve for unfunded commitments
Balance, beginning of period $ 534 $ 2,539 $ 149 $ 1,884 $ 5,106
Impact of CECL adoption 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 16,244 869 645 266 18,024
Balance, end of period 20,808 2,921 2,061 578 26,368
Total allowance for credit losses $ 173,636 $ 155,536 $ 42,609 $ 11,332 $ 383,113

The following table presents the unfunded commitments for the period ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


(in thousands)	Total
Unfunded loan and lease commitments
~~June 30,~~March 31, 2022	$	7,387,402
March 31, 2021	$	~~6,022,792~~
~~June 30, 2020~~	$	~~5,849,611~~5,809,620

~~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

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 is determined by the LGD calculated by the CECL model and therefore leases and equipment finance agreements on non-accrual will have an allowance for credit losses until they become 181 days past due, at which time they are charged-off. The Company recognized 0no interest income on non-accrual loans and leases during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

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 June 30, 2021, loans of approximately $167.3 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 June 30, 2021, approximately $150.6 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 2021															March 31, 2022
(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		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		Total Loans and Leases
Commercial real estate	Commercial real estate															Commercial real estate
Non-owner occupied term, net	Non-owner occupied term, net	$	0	$	434	$	0	$	434	$	3,563	$	3,576,389	$	3,580,386	Non-owner occupied term, net	$	94	$	—	$	—	$	94	$	3,351	$	3,881,339	$	3,884,784
Owner occupied term, net	Owner occupied term, net	224		1,797		1		2,022		5,471		2,390,833		2,398,326		Owner occupied term, net	253		—		1		254		2,599		2,325,046		2,327,899
Multifamily, net	Multifamily, net	578		0		0		578		0		3,553,126		3,553,704		Multifamily, net	—		—		—		—		—		4,323,633		4,323,633
Construction & development, net	Construction & development, net	0		0		0		0		0		857,866		857,866		Construction & development, net	10,710		—		—		10,710		—		929,576		940,286
Residential development, net	Residential development, net	0		0		0		0		0		193,904		193,904		Residential development, net	—		—		—		—		—		195,308		195,308
Commercial	Commercial															Commercial
Term, net	Term, net	265		141		8		414		3,875		3,743,980		3,748,269		Term, net	1,021		339		—		1,360		4,256		2,766,590		2,772,206
Lines of credit & other, net	Lines of credit & other, net	194		3,080		1		3,275		124		905,119		908,518		Lines of credit & other, net	352		24		8		384		—		871,099		871,483
Leases & equipment finance, net	Leases & equipment finance, net	8,933		7,966		2,246		19,145		7,640		1,410,587		1,437,372		Leases & equipment finance, net	12,551		7,029		—		19,580		8,159		1,456,513		1,484,252
Residential	Residential															Residential
Mortgage, net	Mortgage, net	1,422		3,117		24,888		29,427		0		4,116,005		4,145,432		Mortgage, net	4,983		2,546		21,683		29,212		—		4,719,054		4,748,266
Home equity loans & lines, net	Home equity loans & lines, net	1,195		141		1,760		3,096		0		1,115,182		1,118,278		Home equity loans & lines, net	1,483		292		1,479		3,254		—		1,247,448		1,250,702
Consumer & other, net	Consumer & other, net	802		357		240		1,399		0		200,285		201,684		Consumer & other, net	462		270		111		843		—		176,099		176,942
Total, net of deferred fees and costs	Total, net of deferred fees and costs	$	13,613	$	17,033	$	29,144	$	59,790	$	20,673	$	22,063,276	$	22,143,739	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 ~~$20.7~~$18.4 million had a related allowance for credit losses of ~~$6.3~~$7.2 million at ~~June 30, 2021.~~March 31, 2022.

2018

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 ~~June 30, 2021.~~March 31, 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	$	3,259	$	0	$	0	$	3,259	Non-owner occupied term, net	$	—	$	3,088	$	—	$	—	$	3,088
Owner occupied term, net	Owner occupied term, net	0		5,005		0		0		5,005		Owner occupied term, net	—		2,270		—		—		2,270

Commercial	Commercial											Commercial
Term, net	Term, net	424		547		669		1,863		3,503		Term, net	974		520		852		1,502		3,848
Line of credit & other, net	Line of credit & other, net	0		0		40		86		126		Line of credit & other, net	—		—		1		—		1
Leases & equipment finance, net	Leases & equipment finance, net	0		0		7,640		0		7,640		Leases & equipment finance, net	—		—		8,159		—		8,159
Residential	Residential											Residential
Mortgage, net	Mortgage, net	28,116		0		0		0		28,116		Mortgage, net	38,088		—		—		—		38,088
Home equity loans & lines, net	Home equity loans & lines, net	3,101		0		0		0		3,101		Home equity loans & lines, net	3,044		—		—		—		3,044

Total net of deferred fees and costs	Total net of deferred fees and costs	$	31,641	$	8,811	$	8,349	$	1,949	$	50,750	Total net of deferred fees and costs	$	42,106	$	5,878	$	9,012	$	1,502	$	58,498

2119

Table of Contents

Troubled Debt ~~Restructurings~~Restructuring

At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, troubled debt restructured loans of ~~$13.1~~$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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 2021								March 31, 2022
(in thousands)	(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts	(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts
Commercial real estate, net	Commercial real estate, net	$	1,288	$	79	$	1,367	7	Commercial real estate, net	$	999	$	53	$	1,052	5

Residential, net	Residential, net	11,753		0		11,753		68	Residential, net	7,387		—		7,387		42
Consumer & other, net	Consumer & other, net	31		0		31		5	Consumer & other, net	19		—		19		2
Total, net of deferred fees and costs	Total, net of deferred fees and costs	$	13,072	$	79	$	13,151	80	Total, net of deferred fees and costs	$	8,405	$	53	$	8,458	49

		December 31, 2020								December 31, 2021
(in thousands)	(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts	(in thousands)	Accrual Status		Non-Accrual Status		Total Modification		# of Contracts
Commercial real estate, net	Commercial real estate, net	$	1,345	$	289	$	1,634	7	Commercial real estate, net	$	1,031	$	59	$	1,090	5
Commercial, net		1,231		0		1,231		1

Residential, net	Residential, net	12,415		0		12,415		75	Residential, net	5,641		—		5,641		35

Consumer & other, net									Consumer & other, net	22		—		22		3
Total, net of deferred fees and costs	Total, net of deferred fees and costs	$	14,991	$	289	$	15,280	83	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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(in thousands)	March 31, 2022		March 31, 2021

Commercial, net		$	0	$	8,508	$	0	$	8,508

Residential, net	Residential, net	2,532		756		4,242		6,434		Residential, net	$	2,797	$	1,710
Consumer & other, net	Consumer & other, net	9		50		36		74		Consumer & other, net	—		27
Total, net of deferred fees and costs	Total, net of deferred fees and costs	$	2,541	$	9,314	$	4,278	$	15,016	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.

2220

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.

2321

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(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
		June 30, 2021	2021		2020		2019		2018		2017		Prior						Total			March 31, 2022				2022			2021			2020			2019			2018			Prior					Total
Commercial real estate:	Commercial real estate:																								Commercial real estate:
Non-owner occupied term, net	Non-owner occupied term, net																						Non-owner occupied term, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	367,243	$	461,782	$	649,801	$	459,252	$	344,447	$	1,101,517	$	1,438	$	4,086		$	3,389,566			Pass/Watch			$	229,840		$	898,610		$	428,769		$	609,626		$	435,395		$	1,175,122			$	980			$	3,660			$	3,782,002
		Special mention	10,800		2,232		5,828		40,838		2,768		60,785		0		0			123,251				Special mention			914			—			379			—			8,105			13,127		—				—				22,525
		Substandard	831		2,034		2,637		20,911		3,128		37,784		0		0			67,325				Substandard			—			19,176			1,990			2,590			44,843			10,446		—				968				80,013
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		244		0		0			244				Loss			—			—			—			—			—			244		—				—				244
Total non-owner occupied term, net	Total non-owner occupied term, net		$	378,874	$	466,048	$	658,266	$	521,001	$	350,343	$	1,200,330	$	1,438	$	4,086		$	3,580,386		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	Owner occupied term, net																						Owner occupied term, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	329,351	$	260,024	$	389,611	$	289,634	$	303,909	$	740,316	$	5,205	$	759		$	2,318,809			Pass/Watch			$	112,979		$	572,565		$	230,865		$	361,545		$	237,044		$	765,477	$	4,686			$	724			$	2,285,885
		Special mention	557		897		7,579		20,882		10,196		18,878		0		0			58,989				Special mention			—			—			—			6,947			9,938			11,529		—				—				28,414
		Substandard	0		0		891		2,891		211		16,027		0		0			20,020				Substandard			—			—			1,286			660			837			10,358		—				—				13,141
		Doubtful	0		0		0		0		0		78		0		0			78				Doubtful			—			—			—			—			—			29		—				—				29
		Loss	0		0		0		0		0		430		0		0			430				Loss			—			—			—			—			—			430		—				—				430
Total owner occupied term, net	Total owner occupied term, net		$	329,908	$	260,921	$	398,081	$	313,407	$	314,316	$	775,729	$	5,205	$	759		$	2,398,326		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	Multifamily, net																						Multifamily, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	603,948	$	369,149	$	843,505	$	499,080	$	495,286	$	705,357	$	22,941	$	2,940		$	3,542,206			Pass/Watch			$	491,891		$	1,707,002		$	373,988		$	733,701		$	285,983		$	698,237	$	28,073			$	2,925			$	4,321,800
		Special mention	0		0		0		0		0		2,095		0		0			2,095				Special mention			—			—			—			—			—			1,833		—				—				1,833
		Substandard	0		0		0		0		9,403		0		0		0			9,403				Substandard			—			—			—			—			—��			—		—				—				—
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		0		0		0			0				Loss			—			—			—			—			—			—		—				—				—
Total multifamily, net	Total multifamily, net		$	603,948	$	369,149	$	843,505	$	499,080	$	504,689	$	707,452	$	22,941	$	2,940		$	3,553,704		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	Construction & development, net																						Construction & development, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	47,913	$	278,333	$	282,973	$	159,126	$	67,967	$	214	$	0	$	0		$	836,526			Pass/Watch			$	15,750		$	337,635		$	311,778		$	198,534		$	45,077		$	18,417	$	2,385			$	—			$	929,576
		Special mention	0		1,635		0		11,693		0		0		0		0			13,328				Special mention			—			—			—			10,710			—			—		—				—				10,710
		Substandard	0		0		0		8,012		0		0		0		0			8,012				Substandard			—			—			—			—			—			—		—				—				—
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		0		0		0			0				Loss			—			—			—			—			—			—		—				—				—
Total construction & development, net	Total construction & development, net		$	47,913	$	279,968	$	282,973	$	178,831	$	67,967	$	214	$	0	$	0		$	857,866		Total construction & development, net				$	15,750		$	337,635		$	311,778		$	209,244		$	45,077		$	18,417	$	2,385			$	—			$	940,286
Residential development, net	Residential development, net																						Residential development, net
Credit quality indicator:	Credit quality indicator:																						Credit quality indicator:
		Pass/Watch	$	11,419	$	19,512	$	0	$	0	$	0	$	0	$	155,115	$	7,858		$	193,904			Pass/Watch			$	5,557		$	30,570		$	14,004		$	—		$	—		$	—	$	142,450			$	2,727			$	195,308
		Special mention	0		0		0		0		0		0		0		0			0				Special mention			—			—			—			—			—			—		—				—				—
		Substandard	0		0		0		0		0		0		0		0			0				Substandard			—			—			—			—			—			—		—				—				—
		Doubtful	0		0		0		0		0		0		0		0			0				Doubtful			—			—			—			—			—			—		—				—				—
		Loss	0		0		0		0		0		0		0		0			0				Loss			—			—			—			—			—			—		—				—				—
Total residential development, net	Total residential development, net		$	11,419	$	19,512	$	0	$	0	$	0	$	0	$	155,115	$	7,858		$	193,904		Total residential development, net				$	5,557		$	30,570		$	14,004		$	—		$	—		$	—	$	142,450			$	2,727			$	195,308

Total commercial real estate	Total commercial real estate		$	1,372,062	$	1,395,598	$	2,182,825	$	1,512,319	$	1,237,315	$	2,683,725	$	184,699	$	15,643		$	10,584,186		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

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, 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)	(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
																						December 31, 2021				2021			2020			2019			2018			2017			Prior								Total
Construction & development, net																									Construction & development, net
Credit quality indicator:																									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																									Total construction & development, net				$	264,489		$	310,207		$	237,435		$	57,314		$	18,375		$	136		$	2,382			$	—		$	890,338
Residential development, net																									Residential development, net
Credit quality indicator:																									Credit quality indicator:
																										Pass/Watch			$	28,744		$	15,623		$	—		$	—		$	—		$	—		$	156,587			$	6,036		$	206,990
																										Special mention			—			—			—			—			—			—			—				—			—
																										Substandard			—			—			—			—			—			—			—				—			—
																										Doubtful			—			—			—			—			—			—			—				—			—
																										Loss			—			—			—			—			—			—			—				—			—
Total residential development, net																									Total residential development, net				$	28,744		$	15,623		$	—		$	—		$	—		$	—		$	156,587			$	6,036		$	206,990

Total commercial real estate																									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
		June 30, 2021	2021		2020		2019		2018		2017		Prior				Revolving Loans Amortized Cost Basis						Revolving to Non-Revolving Loans Amortized Cost				Total
Commercial:	Commercial:																			Commercial:
Term, net	Term, net																								Term, net
Credit quality indicator:	Credit quality indicator:																								Credit quality indicator:
		Pass/Watch	$	1,033,785	$	962,345	$	262,608	$	256,230	$	194,263	$	261,426	$	642,063				$	22,184					$	3,634,904	Pass/Watch			$	1,102,310		$	306,969		$	200,352		$	179,217		$	206,405		$	215,105			$	699,230		$	14,075		$	2,923,663
		Special mention	15,000		235		0		29,674		613		1,649		27,087			1,750					76,008			Special mention			—			4,454			97			28,971			587			825			27,909				1,501			64,344
		Substandard	18,491		11		1,800		1,454		6,720		1,572		0			5,952					36,000			Substandard			1,217			9,827			—			1,095			2,648			1,264			—				3,189			19,240
		Doubtful	0		6		0		417		932		2		0			0					1,357			Doubtful			—			—			—			—			809			—			—				—			809
		Loss	0		0		0		0		0		0		0			0					0			Loss			—			—			—			417			—			—			—				—			417
Total term, net	Total term, net		$	1,067,276	$	962,597	$	264,408	$	287,775	$	202,528	$	264,649	$	669,150		$	29,886				$	3,748,269	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	Lines of credit & other, net																								Lines of credit & other, net
Credit quality indicator:	Credit quality indicator:																								Credit quality indicator:
		Pass/Watch	$	20,553	$	18,984	$	17,698	$	18,413	$	379	$	2,019	$	799,448		$	4,003				$	881,497		Pass/Watch			$	31,836		$	9,170		$	16,529		$	10,945		$	334		$	1,605		$	812,207			$	8,498		$	891,124
		Special mention	0		0		0		134		0		249		15,318			2,106					17,807			Special mention			—			—			—			—			—			—			8,830				752			9,582
		Substandard	0		489		441		0		85		958		3,167			4,072					9,212			Substandard			714			414			—			—			—			1,118			3,238				4,540			10,024
		Doubtful	0		0		0		0		0		0		0			0					0			Doubtful			—			—			—			—			—			—			1				—			1
		Loss	0		0		0		0		0		0		1			1					2			Loss			—			—			—			—			—			—			1				1			2
Total lines of credit & other, net	Total lines of credit & other, net		$	20,553	$	19,473	$	18,139	$	18,547	$	464	$	3,226	$	817,934		$	10,182				$	908,518	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	Leases & equipment finance, net																								Leases & equipment finance, net
Credit quality indicator:	Credit quality indicator:																								Credit quality indicator:
		Pass/Watch	$	314,467	$	404,999	$	360,495	$	184,314	$	84,164	$	49,925	$	0		$	0				$	1,398,364		Pass/Watch			$	599,301		$	325,379		$	282,101		$	138,627		$	43,950		$	38,965		$	—			$	—		$	1,428,323
		Special mention	1,254		1,954		3,269		3,067		731		331		0			0					10,606			Special mention			2,512			1,965			1,782			1,690			572			130			—				—			8,651
		Substandard	893		6,407		2,394		6,947		1,012		882		0			0					18,535			Substandard			4,280			7,333			2,682			1,448			578			160			—				—			16,481
		Doubtful	475		2,226		3,293		1,498		529		238		0			0					8,259			Doubtful			3,781			3,232			3,238			1,343			663			636			—				—			12,893
		Loss	0		355		716		293		198		46		0			0					1,608			Loss			614			258			187			84			179			6			—				—			1,328
Total leases & equipment finance, net	Total leases & equipment finance, net		$	317,089	$	415,941	$	370,167	$	196,119	$	86,634	$	51,422	$	0		$	0				$	1,437,372	Total leases & equipment finance, net				$	610,488		$	338,167		$	289,990		$	143,192		$	45,942		$	39,897		$	—			$	—		$	1,467,676

Total commercial	Total commercial		$	1,404,918	$	1,398,011	$	652,714	$	502,441	$	289,626	$	319,297	$	1,487,084		$	40,068				$	6,094,159	Total commercial				$	1,746,565		$	669,001		$	506,968		$	363,837		$	256,725		$	259,814		$	1,551,416			$	32,556		$	5,386,882

Residential:
Mortgage, net
Credit quality indicator:
		Pass/Watch	$	1,156,224	$	793,299	$	828,396	$	258,517	$	280,694	$	798,874	$	0		$	0				$	4,116,004
		Special mention	248		0		899		496		563		2,334		0			0					4,540
		Substandard	0		591		2,835		1,254		3,087		16,134		0			0					23,901
		Doubtful	0		0		0		0		0		0		0			0					0
		Loss	0		0		911		0		0		76		0			0					987
Total mortgage, net			$	1,156,472	$	793,890	$	833,041	$	260,267	$	284,344	$	817,418	$	0		$	0				$	4,145,432

Home equity loans & lines, net
Credit quality indicator:
		Pass/Watch	$	123	$	9	$	0	$	19	$	0	$	14,114	$	1,066,462		$	34,455				$	1,115,182
		Special mention	0		0		0		0		0		86		818			432					1,336
		Substandard	0		0		0		0		0		55		1,083			228					1,366
		Doubtful	0		0		0		0		0		0		0			0					0
		Loss	0		0		0		0		0		192		2			200					394
Total home equity loans & lines, net			$	123	$	9	$	0	$	19	$	0	$	14,447	$	1,068,365		$	35,315				$	1,118,278

Total residential			$	1,156,595	$	793,899	$	833,041	$	260,286	$	284,344	$	831,865	$	1,068,365		$	35,315				$	5,263,710

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
June 30, 2021 2021 2020 2019 2018 2017 Prior Total
Consumer & other, net:
Credit quality indicator:
Pass/Watch $ 11,492 $ 14,519 $ 17,174 $ 8,162 $ 5,474 $ 6,812 $ 133,940 $ 2,712 $ 200,285
Special mention 0 11 42 7 200 165 632 101 1,158
Substandard 0 0 18 30 0 33 134 16 231
Doubtful 0 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 7 3 0 10
Total consumer & other, net $ 11,492 $ 14,530 $ 17,234 $ 8,199 $ 5,674 $ 7,017 $ 134,709 $ 2,829 $ 201,684
Grand total $ 3,945,067 $ 3,602,038 $ 3,685,814 $ 2,283,245 $ 1,816,959 $ 3,841,904 $ 2,874,857 $ 93,855 $ 22,143,739

(in thousands) Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving to Non-Revolving Loans Amortized Cost
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

~~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, 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
		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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(in thousands)		March 31, 2022		March 31, 2021
Balance, beginning of period	Balance, beginning of period	$	100,413	$	94,346	$	92,907	$	115,010	Balance, beginning of period		$	123,615	$	92,907
Additions for new MSR capitalized	Additions for new MSR capitalized	8,330		13,447		22,395		23,470		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	(4,366)		(5,042)		(8,911)		(10,371)		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)	(1,678)		(6,395)		(3,692)		(31,753)		Changes due to valuation inputs or assumptions (1)		40,149		(2,014)
Balance, end of period	Balance, end of period	$	102,699	$	96,356	$	102,699	$	96,356	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.

2826

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Information related to the ~~Bank's~~ serviced loan portfolio as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 is as follows:


(dollars in thousands)	(dollars in thousands)	June 30, 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	$	12,897,032		$	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	0.80		%	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 and $18.2~~ million for the three ~~and six~~ months ended ~~June 30, 2021, respectively, as compared to $8.5 million~~March 31, 2022 and ~~$17.4 million for the three and six months ended June 30, 2020, respectively.~~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)	~~June 30, 2021~~March 31, 2022
Commitments to extend credit	$	~~5,907,432~~7,280,128
Forward sales commitments	$	~~683,567~~507,000
Commitments to originate residential mortgage loans held for sale	$	~~534,438~~307,786
Standby letters of credit	$	~~115,360~~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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. At ~~June 30, 2021,~~March 31, 2022, approximately ~~$105.4~~$100.9 million of standby letters of credit expire within one year, and ~~$10.0~~$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 ~~June 30, 2021,~~March 31, 2022, the Company had a residential mortgage loan repurchase reserve liability of ~~$855,000.~~$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.As of March 31, 2022, the Bank had no recorded liability for the loans subject to 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.

2927

Table of Contents

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. The Company consolidated 12 store locations in April 2021, with additional consolidations expected by the end~~Merger Agreement, Umpqua shareholders will receive 0.5958 of a share of Columbia stock for each Umpqua share they own. Upon completion of the ~~year. Costs associated with these consolidations~~transaction, Umpqua shareholders will own approximately 62% and Columbia shareholders will own approximately 38% of the combined company. The merger is expected to close in 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 ~~73%~~78% and ~~71%~~76% of the Bank's loan and lease portfolio at ~~June 30, 2021~~March 31, 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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 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 ~~June 30, 2021,~~March 31, 2022, the Bank had commitments to originate mortgage loans held for sale totaling ~~$534.4~~$307.8 million and forward sales commitments of ~~$683.6~~$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 ~~June 30, 2021,~~March 31, 2022, the Bank had ~~916~~948 interest rate swaps with an aggregate notional amount of ~~$6.6~~$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.

Table of Contents

As of ~~June 30, 2021~~March 31, 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 ~~$4.9~~$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 ~~$91.7~~$94.9 million and $92.6 million as of ~~June 30, 2021~~March 31, 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.

~~Table of Contents~~

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the variation margin adjustments ~~were negative adjustments~~consisted of ~~$227.1~~a positive adjustment of $16.6 million and ~~$330.5~~a negative adjustment of $172.9 million, respectively.

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 ~~$11.2~~$3.0 million and ~~$18.5~~$10.0 million as of ~~June 30, 2021~~March 31, 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 ~~June 30, 2021~~March 31, 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	June 30, 2021		December 31, 2020		June 30, 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	$	13,210	$	28,144	$	0	$	0	Interest rate lock commitments	$	—	$	4,641	$	853	$	—
Interest rate forward sales commitments	Interest rate forward sales commitments	411		7		1,295		7,257		Interest rate forward sales commitments	11,607		615		153		699
Interest rate swaps	Interest rate swaps	221,567		313,090		4,919		370		Interest rate swaps	40,224		171,827		63,678		8,671
Foreign currency derivatives	Foreign currency derivatives	830		1,269		714		1,155		Foreign currency derivatives	240		340		193		305
Total derivative assets and liabilities	Total derivative assets and liabilities	$	236,018	$	342,510	$	6,928	$	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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


(in thousands)	(in thousands)	Three Months Ended				Six Months Ended				(in thousands)	Three Months Ended
Derivatives not designated as hedging instrument	Derivatives not designated as hedging instrument	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		Derivatives not designated as hedging instrument		March 31, 2022		March 31, 2021
Interest rate lock commitments	Interest rate lock commitments	$	(1,545)	$	1,810	$	(14,934)	$	18,481	Interest rate lock commitments		$	(5,494)	$	(13,389)
Interest rate forward sales commitments	Interest rate forward sales commitments	(10,285)		(9,250)		17,886		(40,302)		Interest rate forward sales commitments		25,251		28,171
Interest rate swaps	Interest rate swaps	(4,481)		(823)		7,269		(15,129)		Interest rate swaps		7,047		11,750
Foreign currency derivatives	Foreign currency derivatives	712		558		1,267		982		Foreign currency derivatives		701		555
Total derivative gains (losses)	Total derivative gains (losses)	$	(15,599)	$	(7,705)	$	11,488	$	(35,968)	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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(in thousands, except per share data)		March 31, 2022		March 31, 2021
Net income (loss)		$	116,143	$	52,926	$	223,880	$	(1,799,021)
Net income										Net income		$	91,157	$	107,737

Weighted average number of common shares outstanding - basic	Weighted average number of common shares outstanding - basic	220,593		220,210		220,481		220,213		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)	429		110		447		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	221,022		220,320		220,928		220,213		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	$	0.53	$	0.24	$	1.02	$	(8.17)	Basic		$	0.42	$	0.49
Diluted	Diluted	$	0.53	$	0.24	$	1.01	$	(8.17)	Diluted		$	0.42	$	0.49

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

The following table represents the weighted average outstanding restricted shares that were not included in the computation of diluted earnings ~~(loss)~~ per share because their effect would be anti-dilutive for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three Months Ended

Six Months Ended

Three Months Ended

(in thousands)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

(in thousands)

March 31, 2022

March 31, 2021

Restricted stock awards

994

1,151

Restricted stock awards

180

149

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 these two segments. Management periodically updates our allocation methods and assumptions within the current segment structure.~~

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 June 30, 2021 Three Months Ended June 30, 2020
(in thousands) Core Banking Mortgage Banking Consolidated Core Banking Mortgage Banking Consolidated
Net interest income $ 226,915 $ 2,848 $ 229,763 $ 208,245 $ 4,258 $ 212,503
(Recapture) provision for credit losses (22,996) 0 (22,996) 87,085 0 87,085
Non-interest income
Residential mortgage banking revenue:
Origination and sale 0 41,367 41,367 0 86,781 86,781
Servicing 0 9,120 9,120 0 8,533 8,533
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time 0 (4,366) (4,366) 0 (5,042) (5,042)
Changes due to valuation inputs or assumptions 0 (1,678) (1,678) 0 (6,395) (6,395)
Gain on sale of debt securities, net 0 0 0 323 0 323
Gain on equity securities, net 4 0 4 240 0 240
Loss on swap derivatives, net (4,481) 0 (4,481) (823) 0 (823)
Non-interest income (excluding above items) 50,933 176 51,109 31,697 166 31,863
Total non-interest income 46,456 44,619 91,075 31,437 84,043 115,480
Non-interest expense
Exit and disposal costs 4,728 0 4,728 548 0 548
Non-interest expense (excluding above items) 146,877 37,795 184,672 141,448 39,914 181,362
Allocated expenses, net (1)
970 (970) 0 (1,963) 1,963 0
Total non-interest expense 152,575 36,825 189,400 140,033 41,877 181,910
Income before income taxes 143,792 10,642 154,434 12,564 46,424 58,988
Provision (benefit) for income taxes 35,630 2,661 38,291 (5,544) 11,606 6,062
Net income $ 108,162 $ 7,981 $ 116,143 $ 18,108 $ 34,818 $ 52,926
(1) Represents the internal charge of centrally provided support services and other corporate overhead to the Mortgage Banking segment, partially offset by allocations from the Mortgage Banking segment to Core Banking for new portfolio loan originations and portfolio servicing costs.




























		Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
(in thousands)		Core Banking		Mortgage Banking		Consolidated		Core Banking		Mortgage Banking		Consolidated
Net interest income		$	227,087	$	1,676	$	228,763	$	217,574	$	3,857	$	221,431
Provision for credit losses		4,804		—		4,804		—		—		—
Non-interest income
	Residential mortgage banking revenue:
	Origination and sale	—		16,844		16,844		—		62,505		62,505
	Servicing	—		9,140		9,140		—		9,087		9,087
	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 valuation inputs or assumptions	—		40,149		40,149		—		(2,014)		(2,014)
	Gain on sale of debt securities, net	2		—		2		4		—		4
	Loss on equity securities, net	(2,661)		—		(2,661)		(706)		—		(706)
	Gain on swap derivatives, net	7,047		—		7,047		11,750		—		11,750
	Change in fair value of certain loans held for investment	(21,049)		—		(21,049)		(510)		—		(510)
	Non-interest income (excluding above items)	35,650		194		35,844		32,913		316		33,229
	Total non-interest income	18,989		60,980		79,969		43,451		65,349		108,800
Non-interest expense
	Merger related expenses	2,278		—		2,278		—		—		—
	Exit and disposal costs	3,033		—		3,033		1,200		—		1,200
	Non-interest expense (excluding above items)	148,423		28,696		177,119		145,161		41,231		186,392
	Allocated expenses, net (1)	3,735		(3,735)		—		(790)		790		—
	Total non-interest expense	157,469		24,961		182,430		145,571		42,021		187,592
Income before income taxes		83,803		37,695		121,498		115,454		27,185		142,639
Provision for income taxes		20,917		9,424		30,341		28,106		6,796		34,902
Net income		$	62,886	$	28,271	$	91,157	$	87,348	$	20,389	$	107,737
(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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Six Months Ended June 30, 2021 Six Months Ended June 30, 2020
(in thousands) Core Banking Mortgage Banking Consolidated Core Banking Mortgage Banking Consolidated
Net interest income $ 444,489 $ 6,705 $ 451,194 $ 424,351 $ 6,687 $ 431,038
(Recapture) provision for credit losses (22,996) 0 (22,996) 205,170 0 205,170
Non-interest income
Residential mortgage banking revenue:
Origination and sale 0 103,872 103,872 0 126,128 126,128
Servicing 0 18,207 18,207 0 17,413 17,413
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time 0 (8,911) (8,911) 0 (10,371) (10,371)
Changes due to valuation inputs or assumptions 0 (3,692) (3,692) 0 (31,753) (31,753)
Gain on sale of debt securities, net 4 0 4 190 0 190
(Loss) gain on equity securities, net (702) 0 (702) 1,054 0 1,054
Gain (loss) on swap derivatives, net 7,269 0 7,269 (15,129) 0 (15,129)
Non-interest income (excluding above items) 83,336 492 83,828 68,285 308 68,593
Total non-interest income 89,907 109,968 199,875 54,400 101,725 156,125
Non-interest expense
Goodwill impairment 0 0 0 1,784,936 0 1,784,936
Exit and disposal costs 5,928 0 5,928 1,072 0 1,072
Non-interest expense (excluding above items) 292,038 79,026 371,064 289,344 69,216 358,560
Allocated expenses, net (1)
180 (180) 0 (5,016) 5,016 0
Total non-interest expense 298,146 78,846 376,992 2,070,336 74,232 2,144,568
Income (loss) before income taxes 259,246 37,827 297,073 (1,796,755) 34,180 (1,762,575)
Provision for income taxes 63,736 9,457 73,193 27,901 8,545 36,446
Net income (loss) $ 195,510 $ 28,370 $ 223,880 $ (1,824,656) $ 25,635 $ (1,799,021)
(1) Represents the internal charge of centrally provided support services and other corporate overhead to the Mortgage Banking segment, partially offset by allocations from the Mortgage Banking segment to Core Banking for new portfolio loan originations and portfolio servicing costs.


		June 30, 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	$	29,720,182	$	564,783	$	30,284,965	$	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	$	429,052	$	429,052	$	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	$	22,143,739	$	0	$	22,143,739	$	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	$	25,820,776	$	332,777	$	26,153,553	$	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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, whether or not recognized or recorded at fair value in the Condensed Consolidated Balance Sheets:


			June 30, 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	$	3,085,811	$	3,085,811	$	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	82,099		82,099		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	3,473,950		3,473,950		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	2,876		3,690		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	429,052		429,052		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	21,863,852		22,174,722		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	15,247		15,247		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	102,699		102,699		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	324,998		324,998		323,470		323,470		Bank owned life insurance	1	328,040		328,040		327,745		327,745
Derivatives	Derivatives	2,3	236,018		236,018		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	$	26,153,553	$	26,160,749	$	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	480,302		480,302		375,384		375,384		Securities sold under agreements to repurchase	2	499,539		499,539		492,247		492,247
Borrowings	Borrowings	2	111,405		112,364		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	287,723		287,723		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	88,155		65,044		88,268		67,425		Junior subordinated debentures, at amortized cost	3	87,984		77,452		88,041		75,199
Derivatives	Derivatives	2	6,928		6,928		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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(in thousands)	(in thousands)	June 30, 2021								(in thousands)	March 31, 2022
Description	Description	Total		Level 1		Level 2		Level 3		Description	Total		Level 1		Level 2		Level 3
Financial assets:	Financial assets:									Financial assets:
Equity and other investment securities	Equity and other investment securities									Equity and other investment securities

Investments in mutual funds and other securities	Investments in mutual funds and other securities	$	69,500	$	52,163	$	17,337	$	0	Investments in mutual funds and other securities	$	66,031	$	48,694	$	17,337	$	—
Equity securities held in rabbi trusts	Equity securities held in rabbi trusts	12,599		12,599		0		0		Equity securities held in rabbi trusts	12,935		12,935		—		—

Investment securities available for sale	Investment securities available for sale									Investment securities available for sale
U.S. Treasury and agencies	U.S. Treasury and agencies	774,368		0		774,368		0		U.S. Treasury and agencies	862,142		85,805		776,337		—
Obligations of states and political subdivisions	Obligations of states and political subdivisions	278,126		0		278,126		0		Obligations of states and political subdivisions	306,864		—		306,864		—
Residential mortgage-backed securities and collateralized mortgage obligations		2,421,456		0		2,421,456		0
Mortgage-backed securities and collateralized mortgage obligations										Mortgage-backed securities and collateralized mortgage obligations	2,469,074		—		2,469,074		—

Loans held for sale, at fair value	Loans held for sale, at fair value	429,052		0		429,052		0		Loans held for sale, at fair value	309,946		—		309,946		—
Loans and leases, at fair value	Loans and leases, at fair value	359,273		0		359,273		0		Loans and leases, at fair value	319,630		—		319,630		—
Residential mortgage servicing rights, at fair value	Residential mortgage servicing rights, at fair value	102,699		0		0		102,699		Residential mortgage servicing rights, at fair value	165,807		—		—		165,807
Derivatives	Derivatives									Derivatives
Interest rate lock commitments		13,210		0		0		13,210

Interest rate forward sales commitments	Interest rate forward sales commitments	411		0		411		0		Interest rate forward sales commitments	11,607		—		11,607		—
Interest rate swaps	Interest rate swaps	221,567		0		221,567		0		Interest rate swaps	40,224		—		40,224		—
Foreign currency derivative		830		0		830		0
Foreign currency derivatives										Foreign currency derivatives	240		—		240		—
Total assets measured at fair value	Total assets measured at fair value	$	4,683,091	$	64,762	$	4,502,420	$	115,909	Total assets measured at fair value	$	4,564,500	$	147,434	$	4,251,259	$	165,807
Financial liabilities:	Financial liabilities:									Financial liabilities:
Junior subordinated debentures, at fair value	Junior subordinated debentures, at fair value	$	287,723	$	0	$	0	$	287,723	Junior subordinated debentures, at fair value	$	305,719	$	—	$	—	$	305,719
Derivatives	Derivatives									Derivatives
Interest rate lock commitments										Interest rate lock commitments	853		—		—		853
Interest rate forward sales commitments	Interest rate forward sales commitments	1,295		0		1,295		0		Interest rate forward sales commitments	153		—		153		—
Interest rate swaps	Interest rate swaps	4,919		0		4,919		0		Interest rate swaps	63,678		—		63,678		—
Foreign currency derivative		714		0		714		0
Foreign currency derivatives										Foreign currency derivatives	193		—		193		—
Total liabilities measured at fair value	Total liabilities measured at fair value	$	294,651	$	0	$	6,928	$	287,723	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 ~~June 30, 2021,~~March 31, 2022, there were ~~$359.3~~$319.6 million in mortgage loans ~~that~~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 ~~June 30, 2021,~~March 31, 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 ~~June 30, 2021:~~March 31, 2022:

Financial Instrument

Fair Value (in thousands)

Valuation Technique

Unobservable Input

Range of Inputs

Weighted Average

Assets:

Residential mortgage servicing rights

~~102,699~~165,807

Discounted cash flow

Constant prepayment rate

~~8.52%~~6.23% - ~~72.22%~~31.72%

~~16.75%~~7.27%

Discount rate

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

~~9.70%~~9.51%

Liabilities:

Interest rate lock commitments

~~13,210~~853

Internal pricing model

Pull-through rate

~~70.32%~~67.72% - 100.00%

~~86.42%~~91.61%

Junior subordinated debentures

~~287,723~~305,719

Discounted cash flow

Credit spread

~~1.94%~~2.81% - ~~4.97%~~3.87%

~~3.81%~~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.

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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. 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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended						Three Months Ended							Three Months Ended						Three Months Ended
		June 30, 2021						June 30, 2020							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		(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	$	100,413	$	14,755	$	281,580	$	94,346	$	23,727	$	195,521	Beginning balance	$	123,615	$	4,641	$	(293,081)	$	92,907	$	28,144	$	(255,217)

Change included in earnings	Change included in earnings	(6,044)		2,356		2,367		(11,437)		2,529		3,083		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	0		0		5,996		0		0		37,450		Change in fair values included in comprehensive income/loss	—		—		(12,703)		—		—		(26,562)
Purchases and issuances	Purchases and issuances	8,330		21,548		0		13,447		48,007		0		Purchases and issuances	7,390		4,651		—		14,065		30,175		—
Sales and settlements	Sales and settlements	0		(25,449)		(2,220)		0		(48,726)		(3,118)		Sales and settlements	—		(5,875)		2,521		—		(40,106)		2,575
Ending balance	Ending balance	$	102,699	$	13,210	$	287,723	$	96,356	$	25,537	$	232,936	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 and liabilities held at end of period		$	(1,678)	$	13,210	$	2,367	$	(6,395)	$	25,537	$	3,083
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	$	5,996	$	0	$	0	$	37,450

		Six Months Ended						Six Months Ended
		June 30, 2021						June 30, 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		(12,603)		(1,102)		4,743		(42,124)		7,223		6,973
Change in fair values included in comprehensive income/loss		0		0		32,558		0		0		(41,412)
Purchases and issuances		22,395		51,723		0		23,470		75,008		0
Sales and settlements		0		(65,555)		(4,795)		0		(63,750)		(7,437)
Ending Balance		$	102,699	$	13,210	$	287,723	$	96,356	$	25,537	$	232,936
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	$	(3,692)	$	13,210	$	4,743	$	(31,753)	$	25,537	$	6,973	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	$	0	$	0	$	32,558	$	0	$	0	$	(41,412)	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)

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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 ~~$6.0 million and $32.6~~$12.7 million for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, are recorded net of tax as an other comprehensive loss of ~~$4.5 million and $24.2 million, respectively.~~$9.4 million. Comparatively, unrealized ~~losses~~loss of ~~$37.5 million and unrealized gains of $41.4~~$26.6 million were recorded net of tax as an other comprehensive loss of ~~$27.8~~$19.7 million, ~~and other comprehensive income of $30.8 million, respectively,~~ for the three ~~and six~~ months ended ~~June 30, 2020.~~March 31, 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. 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.

June 30, 2021
(in thousands) Total Level 1 Level 2 Level 3
Loans and leases $ 3,997 $ 0 $ 0 $ 3,997
Total assets measured at fair value on a nonrecurring basis $ 3,997 $ 0 $ 0 $ 3,997


		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

Total assets measured at fair value on a nonrecurring basis	Total assets measured at fair value on a nonrecurring basis	$	8,231	$	0	$	0	$	8,231	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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(in thousands)	March 31, 2022		March 31, 2021

Loans and leases	Loans and leases	$	16,697	$	16,497	$	35,010	$	38,539	Loans and leases	$	7,791	$	18,313
Goodwill impairment		0		0		0		1,784,936
Total loss from nonrecurring measurements		$	16,697	$	16,497	$	35,010	$	1,823,475

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

~~Goodwill was evaluated for impairment as of March 31, 2020, resulting in an impairment charge of $1.8 billion for the six months ended June 30, 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.

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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.

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 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	$	429,052	$	412,744	$	16,308	$	688,079	$	654,555	$	33,524	Loans held for sale	$	309,946	$	308,904	$	1,042	$	353,105	$	341,008	$	12,097
Loans	Loans	$	359,273	$	349,457	$	9,816	$	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 ~~and six~~ months ended ~~June 30,~~March 31, 2022, the Company recorded net decreases in fair value of $11.1 million. For the three months ended March 31, 2021, the Company recorded a net ~~increase~~decreases in fair value of $10.6 million and decrease of $9.0 million, respectively. For the three and six months ended June 30, 2020, the Company recorded a net increase in fair value of $6.2 million and $14.3 million, respectively.$19.6 million.

Certain residential mortgage loans were initially originated for sale and ~~initially~~ measured at fair value; after origination, the loans were transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of other income. For the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, the Company recorded a net ~~increase~~decreases in fair value of ~~$2.8~~$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 June 30, 2021, the Company has a net deferred tax liability of $2.5 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 June 30, 2021. If recognized, the unrecognized tax benefit would reduce the 2021 annual effective tax rate by 0.58%.

The Company's consolidated effective tax rate as a percentage of pre-tax income (loss) for the six months ended June 30, 2021 was 24.6%, as compared to (2.1)% for the six months ended June 30, 2020. The effective tax rate increased from the prior year primarily due to the impairment of non-deductible goodwill during the six months ended June 30, 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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~~Note 12– Subsequent Event~~

On July 21, 2021, the Company announced that its Board of Directors approved a new share repurchase program which authorizes the Company to repurchase up to $400 million of common stock over the next twelve months from time to time in open market transactions, accelerated share repurchases, or in privately negotiated transactions as permitted under applicable rules and regulations. As of August 4, 2021, the Company has repurchased 1.4 million shares for $26.2 million in open market transactions under this share repurchase plan. In future filings, share repurchases under the program will be disclosed in Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

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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, new products and services, technology initiatives, 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 may 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;

•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;~~

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

•~~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

The Company is an Oregon corporation and the financial holding company of the Bank. The 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.

~~In November 2020,~~On October 12, 2021, we announced that we and Columbia Banking System, Inc., the ~~SEC issued Final Rule 33-10890, Management’s Discussion~~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 ~~Analysis, Selected Financial Data and Supplementary Financial Information, which modernizes and simplifies certain disclosure requirements~~Columbia shareholders will own approximately 38% of ~~Regulation S-K. One update~~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.

Item 303 of Regulation S-K allows registrants to compare the results of the most recently completed quarter to the results of either the immediately preceding quarter or the corresponding quarter of the preceding year. ~~We have~~Umpqua has elected to early adopt this rule change, as management believes that comparing current quarter results to those of the immediately preceding quarter is more useful in identifying current business trends and provides a more meaningful comparison. Additionally, in the first filing after the adoption of this rule change, we are required to disclose a comparison of the results for the current quarter and the corresponding quarter of the preceding fiscal year. Accordingly, we have compared thecompare our results for the three months ended ~~June 30, 2021,~~ March 31, ~~2021,~~2022 and ~~June 30, 2020,~~December 31, 2021, where applicable, throughout this Management's Discussion and Analysis.

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Executive Overview

The following is a discussion of our results for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, as compared to the applicable prior periods.

Financial Performance

•~~Net income~~Earnings per diluted common share was ~~$0.53 for the three months ended June 30, 2021 as compared to $0.49 and $0.24~~$0.42 for the three months ended March 31, ~~2021 and June 30, 2020, respectively. Net income per diluted common share was $1.01 for the six months ended June 30, 2021,~~2022, as compared to ~~a net loss of ($8.17)~~$0.41 for the ~~six~~three months ended ~~June 30, 2020.~~December 31, 2021. The increase for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to the prior quarter, was primarily driven by a ~~recapture of the provision for credit losses of $23.0 million during the quarter~~decrease in non-interest expense due to a decline in merger expenses and ansalaries and employee benefits. The increase was offset slightly by declines in net interest ~~income of $8.3 million primarily due to higher average loan balances~~ and ~~lower interest expense, offset by lower~~ non-interest income related to decreased mortgage banking revenue. The increase in net income for the six months ended June 30, 2021, is due mainly to the goodwill impairment taken in 2020 and the recapture of provision for credit losses compared to provision expense in the same period in the prior year.income.

•Net interest margin, on a tax equivalent basis, was ~~3.20% for the three months ended June 30, 2021, as compared to 3.18% and 3.09%~~3.14% for the three months ended March 31, ~~2021 and June 30, 2020, respectively. Net interest margin, on a tax equivalent basis, was 3.19% for the six months ended June 30, 2021,~~2022, as compared to ~~3.25% for the six months ended June 30, 2020. The increase~~3.15% for the three months ended ~~June 30, 2021 as compared~~December 31, 2021. The decrease was due to ~~the prior quarter was driven by~~ the decline in ~~average rates~~PPP-related fees, offset by upward interest rate movements that had a favorable impact on ~~deposits, specifically time deposits. The decrease in~~ net interest margin for the six months ended June 30, 2021, compared to the same period in the prior year, was driven by lower yields on interest-earning assets due to the interest rate cuts that the Federal Reserve instituted as a response to the COVID-19 pandemic. The decrease was partially offset by a reduction in the cost of interest-bearing liabilities.margin.

•Residential mortgage banking revenue was ~~$44.4 million for the three months ended June 30, 2021, as compared to $65.0 million and $83.9~~$60.8 million for the three months ended March 31, ~~2021 and June 30, 2020, respectively. Residential mortgage banking revenue was $109.5 million for the six months ended June 30, 2021,~~2022, as compared to ~~and $101.4~~$43.2 million ~~for the six months ended June 30, 2020. The decrease~~ for the three months ended ~~June 30, 2021,~~December 31, 2021. The increase for the three months ended March 31, 2022, as compared to the prior ~~quarter,~~period, was driven by ~~a decline in for-sale originations and~~increasing rates impacting the gain on sale margin, caused by rising rates which has resulted in a slow-down in refinancing demand. The increase in residential mortgage banking revenue for the six months ended June 30, 2021, was a resultvaluation of ~~a lower loss on fair value on~~ the MSR asset, ~~during the period,~~ offset by a reduction in revenue from the ~~decline in~~ origination and sale ~~revenue.~~of mortgages of $6.8 million.

•For-sale mortgage closed loan volume decreased by ~~23% and 31%,~~25% for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to the three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively. For-sale mortgage closed loan volume decreased 3% for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020.~~2021. In addition, the gain on sale margin decreased to ~~3.30% for the three months ended June 30, 2021, as compared to 3.82% and 4.75%~~2.59% for the three months ended March 31, ~~2021 and June 30, 2020, respectively. For the six months ended June 30, 2021, the gain on sale margin decreased to 3.60%,~~2022, as compared to ~~4.24%~~2.71% for the ~~six~~three months ended ~~June 30, 2020.~~December 31, 2021.

•Total loans and leases were ~~$22.1~~$23.0 billion as of ~~June 30, 2021,~~March 31, 2022, an increase of ~~$364.4~~$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 ~~$374.0~~$404.1 million, primarily within multifamily lending, and an increase in residential real estate balances of ~~$255.7~~$284.5 million, offset by a decrease of ~~$249.7~~$258.9 million in commercial balances. The decrease in commercial balances mainly relates to the ~~expected~~decrease in PPP ~~loan forgiveness~~loans to $207.7 million during the ~~period.~~period, as the majority of these loans continue to be forgiven by the SBA, as expected.

•Total deposits were ~~$26.2~~$26.7 billion as of ~~June 30, 2021,~~March 31, 2022, an increase of ~~$1.5 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 customers receiving government stimulus payments driving increased average balances per deposit accounts, as well as increased customer saving. The increase in deposits is~~ partially offset by a decline in ~~higher cost~~money market and time deposits.

•Total consolidated assets were ~~$30.3~~$30.6 billion as of ~~June 30, 2021, compared to $29.2 billion at~~March 31, 2022 and December 31, ~~2020. The increase was mainly due to an increase in on-balance sheet liquidity,~~2021. Total consolidated assets remained relatively flat as ~~well as an~~the increase in loans and ~~available for sale securities.~~leases as well as the MSR asset was offset by a decline in investment securities during the quarter.

~~Table of Contents~~

Credit Quality

•Non-performing assets decreased to ~~$50.0~~$43.5 million, or 0.14% of total assets, as of March 31, 2022, compared to $53.1 million, or 0.17% of total assets, as of ~~June 30, 2021, as compared to $69.2 million, or 0.24% of total assets, as of~~ December 31, ~~2020.~~2021. Non-performing loans and leases were ~~$49.8~~$41.6 million, or ~~0.22%~~0.18% of total loans and leases, as of ~~June 30, 2021, as~~March 31, 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 ~~$279.9~~$261.5 million as of ~~June 30, 2021, a decrease of $48.5 million, as compared to~~March 31, 2022, which was relatively consistent with December 31, ~~2020.~~2021. The ~~reserve for unfunded commitments was $14.5 million, as of June 30, 2021, a decrease of $5.7 million, as compared to December 31, 2020. The decrease~~increase in the allowance for credit losses is due to the ~~improvement~~growth of the loan portfolio, as well as changes in the economic forecasts used in the credit ~~models, as well as net charge-offs.~~models.

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•The Company had a ~~recapture of $23.0 million in~~ provision for credit losses ~~for the three and six months ended June 30, 2021. This was compared to no provision for credit losses,~~of $4.8 million for the three months ended March 31, ~~2021 and~~2022. This compared to a recapture of the provision for credit losses of ~~$87.1 million~~$736,000 for the three months ended ~~June 30, 2020. For the six months ended June 30, 2020, there was a~~December 31, 2021. The provision for credit losses ~~of $205.2 million. The decrease compared to~~in the ~~same period in 2020,~~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 June 30, 2021.~~models.

Liquidity

•Total cash and cash equivalents was ~~$3.1~~$2.7 billion as of ~~June 30, 2021, an increase~~March 31, 2022, a decrease of ~~$512.6~~$96.2 million from December 31, ~~2020.~~2021. The ~~increase~~decrease in cash and cash equivalents is ~~consistent with~~due to an increase in loan production, which outpaced deposit generation for the ~~Bank's current liquidity strategy to grow deposit balances to provide flexibility to fund growth in the lending and investment portfolios as economic conditions permit.~~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 focused on continued customer and talent acquisition, 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. We have also launched new products to provide digital offerings for small business clients and consolidated payment options for commercial customers.mid-2022.

•The Company's total risk based capital ratio was ~~15.4%~~14.0% and its Tier 1 common to risk weighted assets ratio was ~~12.4%~~11.4% as of ~~June 30, 2021.~~March 31, 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 quarterly cash dividends of $0.21 per common share to shareholders on February ~~26, 2021 and May 28, 2021.~~

•In July 2021, the Company announced that its Board of Directors approved a new share repurchase program which authorizes the Company to repurchase up to $400 million of common stock over the next twelve months from time to time in open market transactions, accelerated share repurchases, or in privately negotiated transactions as permitted under applicable rules and regulations. The program replaces and supersedes the previously approved share repurchase program which was scheduled to expire on July 31, 2021.25, 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 ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

~~Table of Contents~~

Results of Operations

~~Overview~~

For the three months ended June 30, 2021, net income was $116.1 million or $0.53 per diluted common share, compared to net income of $107.7 million or $0.49 and $52.9 million or $0.24 per diluted common share, respectively, for the three months ended March 31, 2021 and June 30, 2020. For the six months ended June 30, 2021, net income was $223.9 million or $1.01 per diluted common share, which compares to a net loss of $1.8 billion or ($8.17) per diluted common share for the six months ended June 30, 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 an increase in non-interest income and lower non-interest expense. The Core Banking segment ~~was responsible for 93% and 87%~~had net income of ~~our reported net income~~$62.9 million for the three ~~and six~~ months ended ~~June 30,~~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 ~~June 30, 2021 for the Core Banking segment, as compared to the three months ended~~ March 31, 2021, is attributable to the recapture of the provision for credit losses and an increase in net interest income, offset by an increase in non-interest expense related to exit and disposal costs due to store consolidations and back-office lease exits. The increase for the six months ended June 30, 2021 for the Core Banking segment, as compared to the same period in the prior year, was due to the impact of goodwill impairment in 2020 and the recapture of the provision for credit losses as economic forecasts continue to improve.

~~The decrease in net income for the three months ended June 30, 2021~~2022 for the Mortgage Banking segment, compared to the three months ended ~~March~~December 31, 2021, is attributable to lower origination and sale of loans. The closed loan volume declined as a result of rates leveling out, as well as the decreasing volume of houses available to purchase in many of the housing markets in our footprint. The increase in net income for the six months ended June 30, 2021 for the Mortgage Banking segment, compared to the same period of the prior year was primarily due to an increase in non-interest income due to ~~changes~~the increase in the ~~inputs in the fair value~~valuation of the MSR ~~asset.~~asset as rates increased during the quarter. This resulted in a gain of $34.8 million for the three months ended March 31, 2022, compared to a gain of $10.1 million for the three months ended December 31, 2021.

~~Table of Contents~~

The following table presents the return on average assets, average common shareholders' equity and average tangible common shareholders' equity for the three months ended ~~June 30, 2021,~~ March 31, ~~2021~~2022 and ~~June 30, 2020, respectively, as well as the six months ended June 30,~~December 31, 2021, ~~and June 30, 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									Six Months Ended							Three Months Ended
(dollars in thousands)	(dollars in thousands)	June 30, 2021			March 31, 2021			June 30, 2020			June 30, 2021			June 30, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Return on average assets	Return on average assets	1.54		%	1.49		%	0.73		%	1.52		%	(12.49)		%	Return on average assets	1.21		%	1.13		%
Return on average common shareholders' equity	Return on average common shareholders' equity	17.25		%	16.33		%	8.46		%	16.80		%	(106.99)		%	Return on average common shareholders' equity	13.62		%	12.90		%
Return on average tangible common shareholders' equity	Return on average tangible common shareholders' equity	17.33		%	16.43		%	8.53		%	16.89		%	(145.65)		%	Return on average tangible common shareholders' equity	13.66		%	12.94		%
Calculation of average common tangible shareholders' equity:	Calculation of average common tangible shareholders' equity:																Calculation of average common tangible shareholders' equity:
Average common shareholders' equity	Average common shareholders' equity	$	2,700,010		$	2,674,871		$	2,514,754		$	2,687,510		$	3,381,417		Average common shareholders' equity	$	2,715,059		$	2,717,753
Less: average goodwill and other intangible assets, net	Less: average goodwill and other intangible assets, net	(12,615)			(15,598)			(19,253)			(14,098)			(897,551)			Less: average goodwill and other intangible assets, net	(8,407)			(9,491)
Average tangible common shareholders' equity	Average tangible common shareholders' equity	$	2,687,395		$	2,659,273		$	2,495,501		$	2,673,412		$	2,483,866		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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(dollars in thousands)	(dollars in thousands)	June 30, 2021			December 31, 2020			(dollars in thousands)	March 31, 2022			December 31, 2021
Total shareholders' equity	Total shareholders' equity	$	2,766,316		$	2,704,577		Total shareholders' equity	$	2,607,598		$	2,749,270
Subtract:	Subtract:							Subtract:
Goodwill		—			2,715

Other intangible assets, net	Other intangible assets, net	11,100			13,360			Other intangible assets, net	7,815			8,840
Tangible common shareholders' equity	Tangible common shareholders' equity	$	2,755,216		$	2,688,502		Tangible common shareholders' equity	$	2,599,783		$	2,740,430
Total assets	Total assets	$	30,284,965		$	29,235,175		Total assets	$	30,637,126		$	30,640,936
Subtract:	Subtract:							Subtract:
Goodwill		—			2,715

Other intangible assets, net	Other intangible assets, net	11,100			13,360			Other intangible assets, net	7,815			8,840
Tangible assets	Tangible assets	$	30,273,865		$	29,219,100		Tangible assets	$	30,629,311		$	30,632,096
Tangible common equity ratio	Tangible common equity ratio	9.10		%	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.

Net Interest Income

Net interest income for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~$229.8~~$228.8 million, ~~an increase~~a decrease of ~~$8.3 million and $17.3~~$4.6 million compared to the three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively. Net interest income for the six months ended June 30, 2021 was $451.2 million, an increase of $20.2 million compared to the six months ended June 30, 2020.~~2021. The ~~increase~~decrease for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the ~~sequential~~ prior quarter was driven by ~~an increase of $3.7~~$4.3 million decline in PPP fees and related interest income ~~as a result of higher average loan balances, and a decrease of $4.6 million in interest expense~~ due to loan forgiveness that continued through the decline in high-cost time deposits in the quarter compared to the prior period. The increase for the six months ended June 30, 2021, was due to the lower cost of interest-bearing liabilities due to lower retail and brokered time deposits as 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 ~~3.20% for the three months ended June 30, 2021, as compared to 3.18% and 3.09%~~3.14% for the three months ended March 31, ~~2021 and June 30, 2020, respectively. The net interest margin on a fully tax equivalent basis was 3.19% for the six months ended June 30, 2021,~~2022, as compared to ~~3.25%~~3.15% for the ~~six~~three months ended ~~June 30, 2020.~~December 31, 2021. The ~~increase~~decrease in net interest margin for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to the three months ended ~~March~~December 31, 2021, was ~~primarily driven by the decrease in interest expense~~ due to the decline in deposit costs. The decrease in net interest margin for the six months ended June 30, 2021, primarily resulted from a decrease in the average yields on interest-earning assets, partially offset by the decline in the cost of interest-bearing liabilities. The 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 ~~June 30, 2021~~March 31, 2022 decreased by 315 basis points as compared to the three months ended ~~March~~December 31, 2021, primarily attributable to a decline of PPP-related fees accretion in addition to an increase in the average ~~loans~~loan and leases with lower rates. The yield on loans and leases for the six months ended June 30, 2021 decreased by 32 basis points as compared to the same period in 2020, primarily attributable to the decrease in short and long-term interest rates.lease balances. The cost of interest-bearing liabilities ~~decreased 11 basis points,~~remained flat, for the three months ended ~~June 30, 2021,~~March 31, 2022, as compared to the three months ended ~~March~~December 31, 2021, due to the continued run off of higher-cost time deposits. The cost of interest-bearing liabilities decreased by 63 basis points for the six months ended June 30, 2021, 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.2021.

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The following ~~tables present~~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 ~~June 30, 2021,~~ March 31, ~~2021~~2022 and ~~June 30, 2020, as well as the six months ended June 30, 2021 and 2020:~~December 31, 2021:

Three Months Ended
June 30, 2021 March 31, 2021 June 30, 2020
(dollars in thousands) Average Balance Interest Income or Expense Average Yields or Rates 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 $ 468,960 $ 3,725 3.18 % $ 703,557 $ 4,845 2.75 % $ 577,773 $ 5,443 3.77 %
Loans and leases (1)
22,040,794 219,745 3.99 % 21,692,639 216,296 4.02 % 22,428,142 229,731 4.11 %
Taxable securities 3,210,771 15,024 1.87 % 2,945,896 13,710 1.86 % 2,777,154 9,583 1.38 %
Non-taxable securities (2)
247,282 1,864 3.02 % 252,741 1,915 3.03 % 235,934 1,868 3.17 %
Temporary investments and interest-bearing cash 2,835,474 774 0.11 % 2,483,451 624 0.10 % 1,563,753 403 0.10 %
Total interest-earning assets 28,803,281 $ 241,132 3.35 % 28,078,284 $ 237,390 3.41 % 27,582,756 $ 247,028 3.59 %
Other assets 1,352,736 1,314,206 1,484,019
Total assets $ 30,156,017 $ 29,392,490 $ 29,066,775
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits $ 3,385,336 $ 459 0.05 % $ 3,125,398 $ 414 0.05 % $ 2,649,331 $ 1,148 0.17 %
Money market deposits 7,614,474 1,533 0.08 % 7,360,512 1,491 0.08 % 7,275,041 4,037 0.22 %
Savings deposits 2,171,865 154 0.03 % 1,998,927 163 0.03 % 1,628,276 198 0.05 %
Time deposits 2,303,068 4,870 0.85 % 2,681,361 8,610 1.30 % 4,250,947 20,839 1.97 %
Total interest-bearing deposits 15,474,743 7,016 0.18 % 15,166,198 10,678 0.29 % 15,803,595 26,222 0.67 %
Repurchase agreements and federal funds purchased 440,881 68 0.06 % 395,946 76 0.08 % 375,098 194 0.21 %
Borrowings 214,670 866 1.62 % 539,077 1,772 1.33 % 1,163,065 3,839 1.33 %
Junior subordinated debentures 369,812 3,042 3.30 % 343,473 3,052 3.60 % 284,130 3,922 5.55 %
Total interest-bearing liabilities 16,500,106 $ 10,992 0.27 % 16,444,694 $ 15,578 0.38 % 17,625,888 $ 34,177 0.78 %
Non-interest-bearing deposits 10,582,197 9,897,749 8,484,684
Other liabilities 373,704 375,176 441,449
Total liabilities 27,456,007 26,717,619 26,552,021
Common equity 2,700,010 2,674,871 2,514,754
Total liabilities and shareholders' equity $ 30,156,017 $ 29,392,490 $ 29,066,775
NET INTEREST INCOME $ 230,140 $ 221,812 $ 212,851
NET INTEREST SPREAD 3.08 % 3.03 % 2.81 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
3.20 % 3.18 % 3.09 %
(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 $377,000 for the three months ended June 30, 2021, as compared to $381,000 and $348,000 for the three months ended March 31, 2021 and June 30, 2020, respectively.


	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.

~~Table of Contents~~

Six Months Ended
June 30, 2021 June 30, 2020
(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 $ 585,611 $ 8,570 2.93 % $ 492,577 $ 9,707 3.94 %
Loans and leases (1)
21,867,678 436,041 4.01 % 21,815,966 471,460 4.33 %
Taxable securities 3,079,065 28,734 1.87 % 2,768,853 26,866 1.94 %
Non-taxable securities (2)
249,996 3,779 3.02 % 238,505 3,763 3.15 %
Temporary investments and interest bearing cash 2,660,435 1,398 0.11 % 1,325,627 3,734 0.56 %
Total interest-earning assets 28,442,785 $ 478,522 3.38 % 26,641,528 $ 515,530 3.88 %
Other assets 1,333,577 2,314,860
Total assets $ 29,776,362 $ 28,956,388
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits $ 3,256,085 $ 873 0.05 % $ 2,560,935 $ 4,691 0.37 %
Money market deposits 7,488,195 3,024 0.08 % 7,191,796 15,796 0.44 %
Savings deposits 2,085,874 317 0.03 % 1,557,118 439 0.06 %
Time deposits 2,491,169 13,480 1.09 % 4,439,902 45,586 2.06 %
Total interest-bearing deposits 15,321,323 17,694 0.23 % 15,749,751 66,512 0.85 %
Repurchase agreements and federal funds purchased 418,538 144 0.07 % 356,550 589 0.33 %
Borrowings 375,977 2,638 1.41 % 1,035,553 7,885 1.53 %
Junior subordinated debentures 356,715 6,094 3.44 % 322,842 8,825 5.49 %
Total interest-bearing liabilities 16,472,553 $ 26,570 0.33 % 17,464,696 $ 83,811 0.96 %
Non-interest-bearing deposits 10,241,863 7,687,002
Other liabilities 374,436 423,273
Total liabilities 27,088,852 25,574,971
Common equity 2,687,510 3,381,417
Total liabilities and shareholders' equity $ 29,776,362 $ 28,956,388
NET INTEREST INCOME $ 451,952 $ 431,719
NET INTEREST SPREAD 3.05 % 2.92 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
3.19 % 3.25 %
(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 $758,000 for the six months ended June 30, 2021, as compared to $681,000 for the same period in 2020

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The following ~~tables set~~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 ~~June 30, 2021~~March 31, 2022 as compared to three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively, as well as the six months ended June 30, 2021 and June 30, 2020, respectively.~~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						Three Months Ended							Three Months Ended
		June 30, 2021 compared March 31, 2021						June 30, 2021 compared to June 30, 2020							March 31, 2022 compared to December 31, 2021
		Increase (decrease) in interest income and expense due to changes in						Increase (decrease) in interest income and expense due to changes in							Increase (decrease) in interest income and expense due to changes in
(in thousands)	(in thousands)	Volume		Rate		Total		Volume		Rate		Total		(in thousands)	Volume		Rate		Total
INTEREST-EARNING ASSETS:	INTEREST-EARNING ASSETS:													INTEREST-EARNING ASSETS:
Loans held for sale	Loans held for sale	$	(1,771)	$	651	$	(1,120)	$	(937)	$	(781)	$	(1,718)	Loans held for sale	$	(630)	$	(15)	$	(645)
Loans and leases	Loans and leases	4,403		(954)		3,449		(3,806)		(6,180)		(9,986)		Loans and leases	3,760		(10,212)		(6,452)
Taxable securities	Taxable securities	1,246		68		1,314		1,664		3,777		5,441		Taxable securities	(104)		2,247		2,143
Non-taxable securities (1)	Non-taxable securities (1)	(41)		(10)		(51)		87		(91)		(4)		Non-taxable securities (1)	(96)		(9)		(105)
Temporary investments and interest bearing cash	Temporary investments and interest bearing cash	98		52		150		346		25		371		Temporary investments and interest bearing cash	(257)		381		124
Total interest-earning assets (1)	Total interest-earning assets (1)	3,935		(193)		3,742		(2,646)		(3,250)		(5,896)		Total interest-earning assets (1)	2,673		(7,608)		(4,935)
INTEREST-BEARING LIABILITIES:	INTEREST-BEARING LIABILITIES:													INTEREST-BEARING LIABILITIES:
Interest bearing demand deposits	Interest bearing demand deposits	39		6		45		256		(945)		(689)		Interest bearing demand deposits	4		(30)		(26)
Money market deposits	Money market deposits	62		(20)		42		180		(2,684)		(2,504)		Money market deposits	(37)		(3)		(40)
Savings deposits	Savings deposits	14		(23)		(9)		54		(98)		(44)		Savings deposits	3		(4)		(1)
Time deposits	Time deposits	(1,078)		(2,662)		(3,740)		(7,118)		(8,851)		(15,969)		Time deposits	(140)		(234)		(374)
Repurchase agreements	Repurchase agreements	9		(17)		(8)		29		(155)		(126)		Repurchase agreements	—		15		15
Borrowings	Borrowings	(1,228)		322		(906)		(3,670)		697		(2,973)		Borrowings	—		(2)		(2)
Junior subordinated debentures	Junior subordinated debentures	240		(250)		(10)		981		(1,861)		(880)		Junior subordinated debentures	(63)		193		130
Total interest-bearing liabilities	Total interest-bearing liabilities	(1,942)		(2,644)		(4,586)		(9,288)		(13,897)		(23,185)		Total interest-bearing liabilities	(233)		(65)		(298)
Net increase in net interest income (1)		$	5,877	$	2,451	$	8,328	$	6,642	$	10,647	$	17,289
Net increase (decrease) in net interest income (1)														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.	(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.													(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.

~~Table of Contents~~

Six Months Ended
June 30, 2021 compared to June 30, 2020
Increase (decrease) in interest income and expense due to changes in
(in thousands) Volume Rate Total
INTEREST-EARNING ASSETS:
Loans held for sale $ 1,635 $ (2,772) $ (1,137)
Loans and leases 1,160 (36,579) (35,419)
Taxable securities 2,897 (1,029) 1,868
Non-taxable securities (1)
176 (160) 16
Temporary investments and interest bearing cash 2,068 (4,404) (2,336)
Total interest-earning assets (1)
7,936 (44,944) (37,008)
INTEREST-BEARING LIABILITIES:
Interest bearing demand deposits 1,012 (4,830) (3,818)
Money market 625 (13,397) (12,772)
Savings 120 (242) (122)
Time deposits (15,484) (16,622) (32,106)
Repurchase agreements 88 (533) (445)
Borrowings (4,682) (565) (5,247)
Junior subordinated debentures 840 (3,571) (2,731)
Total interest-bearing liabilities (17,481) (39,760) (57,241)
Net increase (decrease) in net interest income (1)
$ 25,417 $ (5,184) $ 20,233
(1) Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.

Provision for Credit Losses

The Company had a ~~$23.0~~$4.8 million ~~recapture of provision for credit losses for the three and six three months ended June 30, 2021. This was compared to no~~ provision for credit losses for the three months ended March 31, ~~2021 and~~2022, as compared to a $736,000 recapture of provision ~~of $87.1 million~~for credit losses for the three months ended ~~June 30, 2020.~~December 31, 2021. The ~~provision for credit losses was $205.2 million for the six months ended June 30, 2020. The change for the three months ended June 30, 2021, as compared to the three months ended~~ March 31, 2022 provision reflects allowance requirements for new loan generation, loan mix changes, and changes between the December 2021 and June 30, 2020, was attributable to the improving economic forecast used in the credit models which allowed for a recapture of previous provision for credit losses. The change in the provision for credit losses for six months ended June 30, 2021 as compared to the same prior year period, is primarily attributed to a stabilization of credit quality metrics andMarch 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 loans.

models. As an annualized percentage of average outstanding loans and leases, the provision (recapture) for credit losses recorded for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~(0.42)%~~0.09% as compared to ~~zero~~(0.01)% for the three months ended ~~March~~December 31, 2021 and 1.56% for the three months ended June 30, 2020. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the six months ended June 30, 2021 was (0.21)%, as compared to 1.89% for the six months ended June 30, 2020.2021.

For the three months ended ~~June 30, 2021,~~March 31, 2022, net charge-offs were ~~$13.6~~$5.5 million, as compared to ~~$17.6~~$7.4 million for the three months ended ~~March~~December 31, 2021 and $16.2 million for the three months ended June 30, 2020. For the six months ended June 30, 2021, net charge-offs were $31.3 million, as compared to $37.9 million for the six months ended June 30, 2020.2021. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended ~~June 30, 2021 was 0.25%~~March 31, 2022 were 0.10%, as compared to ~~0.33%~~0.13% for the three months ended ~~March~~December 31, ~~2021 and 0.29% for the three months ended June 30, 2020. As an annualized percentage~~2021. The majority of ~~average outstanding loans and leases,~~ net charge-offs ~~for~~relate to leases and equipment finance loans, included within the ~~six months ended June 30, 2021 was 0.29%, as compared to 0.35% for the six months ended June 30, 2020.~~commercial loan portfolio.

~~Table of Contents~~

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 ~~$7.6~~$8.2 million as of ~~June 30, 2021~~March 31, 2022 have a related allowance for credit losses of ~~$6.0~~$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.

Table of Contents

Non-Interest Income

Non-interest income for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~$91.1~~$80.0 million, a decrease of ~~$17.7 million and $24.4~~$2.8 million compared to the three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively. Non-interest income for the six months ended June 30, 2021, was $199.9 million, an increase of $43.8 million, for the six months ended June 30, 2020.~~2021. The following table presents the key components of non-interest income for the three months ended ~~June 30, 2021~~March 31, 2022, compared to the three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively, as well as the six months ended June 30, 2021 compared to the six months ended June 30, 2020:~~2021:
Three Months Ended Sequential Quarter Year over Year
(in thousands) June 30, 2021 March 31, 2021 June 30, 2020 Change Amount Change Percent Change Amount Change Percent
Service charges on deposits $ 10,310 $ 9,647 $ 8,757 $ 663 7 % $ 1,553 18 %
Card-based fees 10,274 7,374 5,901 2,900 39 % 4,373 74 %
Brokerage revenue 1,135 3,915 3,805 (2,780) (71) % (2,670) (70) %
Residential mortgage banking revenue, net 44,443 65,033 83,877 (20,590) (32) % (39,434) (47) %
Gain on sale of debt securities, net — 4 323 (4) (100) % (323) (100) %
Gain (loss) on equity securities, net 4 (706) 240 710 (101) % (236) (98) %
Gain on loan and lease sales, net 5,318 1,373 1,074 3,945 287 % 4,244 395 %
Bank owned life insurance income 2,092 2,071 2,116 21 1 % (24) (1) %
Other income 17,499 20,089 9,387 (2,590) (13) % 8,112 86 %
Total non-interest income $ 91,075 $ 108,800 $ 115,480 $ (17,725) (16) % $ (24,405) (21) %

Six Months Ended
(in thousands) June 30, 2021 June 30, 2020 Change Amount Change Percent
Service charges on deposits $ 19,957 $ 20,230 $ (273) (1) %
Card-based fees 17,648 13,318 4,330 33 %
Brokerage revenue 5,050 7,820 (2,770) (35) %
Residential mortgage banking revenue, net 109,476 101,417 8,059 8 %
Gain on sale of debt securities, net 4 190 (186) (98) %
(Loss) gain on equity securities, net (702) 1,054 (1,756) (167) %
Gain on loan and lease sales, net 6,691 2,241 4,450 199 %
Bank owned life insurance income 4,163 4,245 (82) (2) %
Other income 37,588 5,610 31,978 570 %
Total non-interest income $ 199,875 $ 156,125 $ 43,750 28 %

During the period, the Company added the card-based fees line item, which were previously included in service charges on deposits and other income line items. Prior periods have been reclassified to conform to the current presentation. Card-based fees are comprised of debit and credit card income, ATM fees, and merchant services income. Debit and credit card income is primarily comprised of interchange fees earned when our customers' debit and credit cards are processed through card payment networks. The increase in the three and six months ended June 30, 2021, as compared to prior periods, is attributable to increased merchant processing fees, given strengthening economic activity and lower unemployment rates in our footprint, businesses are once again open and experiencing increased customer activity.

~~Table of Contents~~

~~Brokerage revenue decreased for the three and six months dated June 30, 2021 as compared to prior periods, due to the sale of Umpqua Investments, Inc. in April 2021.~~

The gain on loan and lease sales increased for the three and six months ended June 30, 2021, as compared to prior periods, which was driven by an increase in SBA loan sales which increased due to higher government guarantees and incentives for borrowers.


	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 ~~June 30, 2021 decreased by $2.6 million~~March 31, 2022, as compared to the ~~sequential quarter, and increased by $8.1 million, when compared to the same period in the prior year. The decrease as compared to sequential quarter, is~~three months ended December 31, 2021 decreased primarily due to a loss ~~of $4.5 million~~ on the ~~swap derivative~~ fair value on certain loans held for ~~the three months ended June 30, 2021, which is a quarter over quarter change~~investment of $16.2 million on the swap derivative fair value. For the six months ended June 30, 2021, other income increased by $32.0 million, the increase was primarily due to the fluctuation in the gain on the swap derivative fair value of $22.4 million, as the gain on swap derivative fair value was $7.3$21.0 million, as compared to a ~~loss~~gain of $2.7 million, respectively. This decrease was partially offset by a $7.3 million increase in the gain on swap derivative fair value of $15.1 million in the prior period. For the three and six months ended June 30, 2021, other income also includes the $4.5 million gain on sale of Umpqua Investments, Inc. during the period, as well as a $2.3 million M&A advisory fee earned duringderivatives over the period.

Residential mortgage banking revenue, which is the primary source of income for the Mortgage Banking segment, ~~decreased for the three months ended June 30, 2021, as compared to prior periods,~~increased primarily due to a ~~decrease~~gain on the fair value of the MSR as a result of rising rates during the period, offset by lower refinance demand as well as a decline in ~~originations driven by a slow down in refinancing demand. For~~gain on sale margin. The gain on the ~~six months ended June 30, 2021, as compared to the same period of 2020, income for the Mortgage Banking segment increased by $8.1 million. The increase was primarily driven by the change in~~ fair value of the MSR asset ~~due~~was $34.8 million for the three months ended March 31, 2022, compared to ~~changes~~a gain of $10.1 million for the three months ended December 31, 2021. Revenue related to ~~inputs in~~origination and sale of residential mortgages decreased by $6.8 million, as compared to the ~~valuation model including changes in discount rates and prepayment speeds.~~prior period.

For-sale mortgage closed loan volume for the three months ended ~~June 30, 2021,~~March 31, 2022, decreased ~~23% and 31%~~25% as compared to the three months ended ~~March~~December 31, ~~2021 and June 30, 2020, respectively.~~2021. In addition, the gain on sale margin decreased to ~~3.30% for the three months ended June 30, 2021, as compared to 3.82% and 4.75%~~2.59% for the three months ended March 31, ~~2021 and June 30, 2020, respectively.~~2022, as compared to 2.71% for the three months ended December 31, 2021. Direct expense related to the origination of for-sale mortgage loans as a percentage of loan production was ~~2.03% for the three months ended June 30, 2021, as compared to 1.90% and 1.87%~~2.20% for the three months ended March 31, ~~2021 and June 30, 2020, respectively.~~

~~For-sale mortgage closed loan volume decreased 3% for the six months ended June 30, 2021,~~2022, as compared to 2.08% for the ~~six~~three months ended June 30, 2020. For the six months ended June 30, 2021, the gain on sale margin decreased to 3.60%, as compared to 4.24% for the six months ended June 30, 2020. Direct expense related to the origination of for-sale mortgage loans as a percentage of loan production was 1.96% for the six months ended June 30, 2021, which is comparable to the 1.95% for the six months ended June 30, 2020.December 31, 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 decline. ~~Margins observed in the current quarter could narrow somewhat in future periods as mortgage industry capacity constraints ease further and refinance demand wanes.~~ The MSR asset value is also sensitive to interest rates, and generally falls with lower rates and rises with higher rates.

Servicing income was $9.1 million for the three months ended June 30, 2021, as compared to $9.1 million and $8.5 million for the three months ended March 31, 2021 and June 30, 2020, respectively. For the six months ended June 31, 2021 and 2020, servicing income was $18.2 million and $17.4 million, respectively.

5546

Table of Contents

The following table presents our residential mortgage banking revenue for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Origination and sale $ 41,367 $ 62,505 $ 86,781 $ 103,872 $ 126,128
Servicing 9,120 9,087 8,533 18,207 17,413
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time (4,366) (4,545) (5,042) (8,911) (10,371)
Changes in valuation inputs or assumptions (1)
(1,678) (2,014) (6,395) (3,692) (31,753)
Residential mortgage banking revenue, net $ 44,443 $ 65,033 $ 83,877 $ 109,476 $ 101,417
LHFS Production Statistics:
Closed loan volume for-sale $ 1,253,023 $ 1,635,532 $ 1,826,095 $ 2,888,555 $ 2,974,279
Gain on sale margin 3.30 % 3.82 % 4.75 % 3.60 % 4.24 %
December 31, 2021:


	Three Months Ended
(in thousands)	March 31, 2022			December 31, 2021
Origination and sale	$	16,844		$	23,624
Servicing	9,140			9,457
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time	(5,347)			(5,311)
Changes in valuation inputs or assumptions (1)	40,149			15,415
Residential mortgage banking revenue, net	$	60,786		$	43,185

LHFS Production Statistics:
Closed loan volume for-sale	$	649,122		$	871,268
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 ~~June 30, 2021~~March 31, 2022 was ~~$189.4~~$182.4 million, ~~an increase~~a decrease of ~~$1.8~~$17.3 million or ~~1% and $7.5 million or 4%~~9% compared to the three months ended ~~March~~December 31, 2021 and June 30, 2020, respectively. Non-interest expense for the six months ended June 30, 2021 was $377.0 million, a decrease of $1.8 billion or 82%, as compared to the six months ended June 30, 2020. Excluding the goodwill impairment taken in 2020, non-interest expense for the six months ended June 30, 2021, increased $17.4 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 ~~June 30, 2021,~~ March 31, ~~2021~~2022 and ~~June 30, 2020 as well as the six months ended June 30, 2021 and 2020:~~ December 31, 2021.

Three Months Ended Sequential Quarter Year over Year
(in thousands) June 30, 2021 March 31, 2021 June 30, 2020 Change Amount Change Percent Change Amount Change Percent
Salaries and employee benefits $ 121,573 $ 124,134 $ 116,676 $ (2,561) (2) % $ 4,897 4 %
Occupancy and equipment, net 34,657 34,635 36,171 22 — % (1,514) (4) %
Communications 3,004 2,763 2,939 241 9 % 65 2 %
Marketing 2,054 1,372 1,759 682 50 % 295 17 %
Services 13,512 10,750 10,356 2,762 26 % 3,156 30 %
FDIC assessments 1,607 2,599 3,971 (992) (38) % (2,364) (60) %
Intangible amortization 1,130 1,130 1,246 — — % (116) (9) %
Other expenses 11,863 10,209 8,792 1,654 16 % 3,071 35 %
Total non-interest expense $ 189,400 $ 187,592 $ 181,910 $ 1,808 1 % $ 7,490 4 %

~~Table of Contents~~

Six Months Ended
(in thousands) June 30, 2021 June 30, 2020 Change Amount Change Percent
Salaries and employee benefits $ 245,707 $ 226,450 $ 19,257 9 %
Occupancy and equipment, net 69,292 73,172 (3,880) (5) %
Communications 5,767 6,067 (300) (5) %
Marketing 3,426 4,289 (863) (20) %
Services 24,262 21,126 3,136 15 %
FDIC assessments 4,206 6,513 (2,307) (35) %
Intangible amortization 2,260 2,493 (233) (9) %
Other expenses 22,072 19,522 2,550 13 %
Non-interest expense before goodwill impairment 376,992 359,632 17,360 5 %
Goodwill impairment — 1,784,936 (1,784,936) nm
Total non-interest expense $ 376,992 $ 2,144,568 $ (1,767,576) (82) %
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 decreased ~~by $2.6 million~~ for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~March~~December 31, ~~2021. This was~~2021, primarily due to ~~the decrease in for-sale loan origination volume resulting in~~ a decrease in ~~Mortgage Banking compensation of $2.8 million. Salaries and employee benefits increased for~~incentive pay during the three months ended June 30, 2021 when compared to the same period in the prior year, which is due to an increase of $4.3 million in group insurance costs in the current period as compared to the same period of 2020. Salaries and employee benefits increased for the six months ended June 30, 2021, compared to the prior period, due to an increase in incentives and group insurance.quarter.

~~Services~~Merger related expenses, related to the merger with Columbia, decreased due to fewer consulting and legal costs incurred related to the merger for the ~~three months ended June 30, 2021, increased by $2.8 million and $3.2 million as compared~~first quarter of 2022. The merger with Columbia is expected to ~~the three months ended March 31, 2021 and June 30, 2020, respectively. Services also increased by $3.1 million for the six months ended June 30, 2021 compared to the same period~~close in ~~the prior year. The increase compared to these prior periods is due to an increase in consulting and professional fees.~~mid-2022.

Other expenses for the three months ended June 30, 2021, increased by $1.7 million and $3.1 million, as compared to the three months ended March 31, 2021 and June 30, 2020, respectively. Other expenses also increased by $2.6 million for the six months ended June 30, 2021, compared to the same period in the prior year. These increases were due to increased exit and disposal costs as the Company closed store locations and exited back-office leases as part of the Next Gen 2.0 strategy. Exit and disposal costs were $4.7 million, $1.2 million and $548,000, for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Exit and disposal costs were $5.9 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively.

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FINANCIAL CONDITION

Cash and Cash Equivalents

Cash and cash equivalents were ~~$3.1~~$2.7 billion at ~~June 30, 2021,~~March 31, 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 and investment 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 ~~$3.5~~$3.6 billion as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$2.9~~$3.9 billion at December 31, ~~2020.~~2021. The ~~increase~~decrease was due to ~~purchases of $1.0 billion of investment securities, offset by sales and paydowns of $409.0 million, as well as~~ a decrease of ~~$64.5~~$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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		Investment Securities Available for Sale									Investment Securities Available for Sale
		June 30, 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	$	774,368	22	%	$	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	278,126		8	%	279,511		10	%	Obligations of states and political subdivisions	306,864		8	%	330,784		8	%
Residential mortgage-backed securities and collateralized mortgage obligations		2,421,456		70	%	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	$	3,473,950	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
		June 30, 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		$	2,876	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	$	2,876	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 ~~$23.6~~$235.0 million at ~~June 30, 2021.~~March 31, 2022. This consisted primarily of unrealized losses on ~~residential~~ mortgage-backed securities and collateralized mortgage obligations of ~~$21.9~~$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 ~~June 30, 2021.~~

~~Restricted Equity Securities~~

~~Restricted equity securities were $15.2 million at June 30, 2021 and $41.7 million at December~~March 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 ~~June 30, 2021~~March 31, 2022 were ~~$22.1~~$23.0 billion, an increase of ~~$364.4~~$422.6 million as compared to December 31, ~~2020.~~2021. The increase is attributable to ~~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 ~~increased due~~related to ~~organic growth throughout the loan portfolios, offset by PPP~~ loan forgiveness and ~~payoffs,~~payoffs. The loan to deposit ratio as ~~well~~of March 31, 2022 is 86%, as compared to 85% for the ~~transfer of $315.9 million from loans held for sale to loans held for investment. The increase was partially offset by loans sold of $133.3 million and net charge-offs of $31.3 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

June 30, 2021 December 31, 2020
(dollars in thousands)
Amount % Amount %
Commercial real estate
Non-owner occupied term, net $ 3,580,386 16 % $ 3,505,802 16 %
Owner occupied term, net 2,398,326 11 % 2,333,945 11 %
Multifamily, net 3,553,704 16 % 3,349,196 15 %
Construction & development, net 857,866 4 % 828,478 4 %
Residential development, net 193,904 1 % 192,761 1 %
Commercial
Term, net 3,748,269 17 % 4,024,467 18 %
Lines of credit & other, net 908,518 4 % 862,760 4 %
Leases & equipment finance, net 1,437,372 6 % 1,456,630 7 %
Residential
Mortgage, net 4,145,432 19 % 3,871,906 18 %
Home equity loans & lines, net 1,118,278 5 % 1,136,064 5 %
Consumer & other, net 201,684 1 % 217,358 1 %
Total, net of deferred fees and costs $ 22,143,739 100 % $ 21,779,367 100 %

As of June 30, 2021, there were $359.3 million in mortgage loans included in loans held for investment that are carried at fair value, as they were included in loans originated as held for sale that are elected to be fair valued at origination.


	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. The remaining unamortized balance of the PPP-related net loan processing fees will be recognized as a yield adjustment over the remaining term of these loans, although the forgiveness of these loans by the SBA accelerates the recognition of these fees.


(dollars in thousands)	(dollars in thousands)	June 30, 2021		December 31, 2020		(dollars in thousands)	March 31, 2022		December 31, 2021
PPP principal balance	PPP principal balance	$	1,417,022	$	1,777,145	PPP principal balance	$	178,314	$	392,038
PPP deferred fees	PPP deferred fees	(36,810)		(26,934)		PPP deferred fees	(5,524)		(11,598)
Net PPP Balance	Net PPP Balance	$	1,380,212	$	1,750,211	Net PPP Balance	$	172,790	$	380,440

PPP loan count	PPP loan count	14,119		14,788		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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


(dollars in thousands)		June 30, 2021			December 31, 2020
									(dollars in thousands)	March 31, 2022			December 31, 2021
Loans and leases on non-accrual status	Loans and leases on non-accrual status	$	20,673		$	31,076		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	Loans and leases past due 90 days or more and accruing	29,144			36,361			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	Total non-performing loans and leases	49,817			67,437			Total non-performing loans and leases		41,647			51,201
Other real estate owned	Other real estate owned	181			1,810			Other real estate owned		1,868			1,868
Total non-performing assets	Total non-performing assets	$	49,998		$	69,247		Total non-performing assets		$	43,515		$	53,069
Restructured loans (1)	Restructured loans (1)	$	13,072		$	14,991		Restructured loans (1)		$	8,405		$	6,694
Allowance credit losses on loans and leases		$	279,887		$	328,401
Allowance for credit losses on loans and leases								Allowance for credit losses on loans and leases		$	248,564		$	248,412
Reserve for unfunded commitments	Reserve for unfunded commitments	14,539			20,286			Reserve for unfunded commitments		12,918			12,767
Allowance for credit losses	Allowance for credit losses	$	294,426		$	348,687		Allowance for credit losses		$	261,482		$	261,179
Asset quality ratios:	Asset quality ratios:							Asset quality ratios:
Non-performing assets to total assets		0.17		%	0.24		%
Non-performing loans and leases to total loans and leases		0.22		%	0.31		%
Allowance for credit losses on loans and leases to total loans and leases		1.26		%	1.51		%
Allowance for credit losses to total loans and leases		1.33		%	1.60		%
Allowance for credit losses to total non-performing loans and leases		591		%	517		%
									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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, troubled debt restructurings~~2021, loans of ~~$13.1~~$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.~~

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

~~Table of Contents~~

~~A summary of outstanding loan balances with active payment deferral or forbearance as of June 30, 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 8 $ 59,715 1 %
Commercial 22 1,382 — %
Residential 198 105,995 2 %
Consumer & other, net 13 219 — %
Total 241 $ 167,311 1 %

Excluded from the mortgage loans with payment deferrals or forbearance in the above table are $150.6 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 ~~$294.4~~$261.5 million at ~~June 30, 2021, a decrease~~March 31, 2022, an increase of ~~$54.3 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 ~~June 30, 2021,~~ March 31, ~~2021,~~2022 and ~~June 30, 2020, as well as for the six months ended June 30, 2021 and 2020:~~December 31, 2021:

Three Months Ended Six Months Ended
(dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Allowance for credit losses on loans and leases
Balance, beginning of period $ 311,283 $ 328,401 $ 291,420 $ 328,401 $ 157,629
Impact of CECL adoption — — — — 49,999
Adjusted balance, beginning of period 311,283 328,401 291,420 328,401 207,628
(Recapture) provision for credit losses on loans and leases (17,775) 526 81,484 (17,249) 186,986
Charge-offs (17,079) (20,915) (19,453) (37,994) (43,908)
Recoveries 3,458 3,271 3,294 6,729 6,039
Net charge-offs (13,621) (17,644) (16,159) (31,265) (37,869)
Balance, end of period $ 279,887 $ 311,283 $ 356,745 $ 279,887 $ 356,745
Reserve for unfunded commitments
Balance, beginning of period $ 19,760 $ 20,286 $ 20,927 $ 20,286 $ 5,106
Impact of CECL adoption — — — — 3,238
Adjusted balance, beginning of period 19,760 20,286 20,927 20,286 8,344
(Recapture) provision for credit losses on unfunded commitments (5,221) (526) 5,441 (5,747) 18,024
Balance, end of period 14,539 19,760 26,368 14,539 26,368
Total allowance for credit losses $ 294,426 $ 331,043 $ 383,113 $ 294,426 $ 383,113
As a percentage of average loans and leases (annualized):
Net charge-offs 0.25 % 0.33 % 0.29 % 0.29 % 0.35 %
(Recapture) provision for credit losses
(0.42) % — % 1.56 % (0.21) % 1.89 %
Recoveries as a percentage of charge-offs 20.25 % 15.64 % 16.93 % 17.71 % 13.75 %

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 ~~(recapture)~~ provision for credit losses includes the provision (recapture) ~~provision~~ for loan and lease losses ~~(recapture)~~and the provision for unfunded ~~commitments, and~~commitments. The increase in the provision ~~(recapture) for credit losses related to accrued interest on loans. There was a $23.0 million recapture of the provision of credit losses for the three and six months ended June 30, 2021, which~~ is due to organic loan growth as well as updates to the ~~stabilization of credit quality metrics and~~ economic forecasts used in credit models.

Table of Contents

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 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	$	128,951	48	%	$	141,710	47	%	Commercial real estate	$	91,638	51	%	$	99,075	50	%
Commercial	Commercial	121,390		27	%	150,864		29	%	Commercial	121,072		22	%	117,573		24	%
Residential	Residential	25,296		24	%	27,964		23	%	Residential	31,946		26	%	29,068		25	%
Consumer & other	Consumer & other	4,250		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	$	279,887			$	328,401			Allowance for credit losses on loans and leases	$	248,564			$	248,412

The following table shows the change in the allowance for credit losses from ~~March~~December 31, 2021 to ~~June 30, 2021:~~March 31, 2022:


(dollars in thousands)	(dollars in thousands)	March 31, 2021			Q2 2021 net (charge-offs)		Reserve build/(release)		June 30, 2021			% of Loan and Leases Outstanding		(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	Commercial real estate	$	170,143		$	(40)	$	(31,058)	$	139,045		1.31	%	Commercial real estate	$	107,536		$	25	$	(7,185)	$	100,376		0.86	%
Commercial	Commercial	130,639			(13,412)		6,308		123,535			2.03	%	Commercial	119,601			(5,313)		8,404		122,692			2.39	%
Residential	Residential	22,378			209		4,419		27,006			0.51	%	Residential	31,025			6		3,108		34,139			0.57	%
Consumer & Other	Consumer & Other	7,883			(378)		(2,665)		4,840			2.40	%	Consumer & Other	3,017			(262)		1,520		4,275			2.42	%
Total allowance for credit losses	Total allowance for credit losses	$	331,043		$	(13,621)	$	(22,996)	$	294,426				Total allowance for credit losses	$	261,179		$	(5,544)	$	5,847	$	261,482		1.14	%
% of loans and leases outstanding	% of loans and leases outstanding	1.49		%					1.33		%			% 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 ~~second~~first quarter of ~~2021,~~2022, the Bank used Moody's ~~Analytics May consensus~~Analytics' March baseline economic forecast. Key components include a U.S. real GDP average annualized growth of ~~7.4%~~3.5% in ~~2021~~2022, decreasing to 3.1% in 2023, and an average unemployment rate for 2022 of ~~5.5%~~3.6% for 2022, dropping to 3.4% in ~~2021 with~~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 ~~fourth quarter~~end of ~~2021.~~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 ~~June 30, 2021~~March 31, 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 decline, ~~or are worse than economic forecasts predict,~~ 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 ~~June 30, 2021,~~ March 31, ~~2021,~~2022 and ~~June 30, 2020 as well as the six months ended June 30, 2021 and 2020:~~December 31, 2021:


		Three Months Ended						Six Months Ended					Three Months Ended
(in thousands)	(in thousands)	June 30, 2021		March 31, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(in thousands)	March 31, 2022		December 31, 2021
Balance, beginning of period	Balance, beginning of period	$	100,413	$	92,907	$	94,346	$	92,907	$	115,010	Balance, beginning of period	$	123,615	$	105,834
Additions for new MSR capitalized	Additions for new MSR capitalized	8,330		14,065		13,447		22,395		23,470		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	(4,366)		(4,545)		(5,042)		(8,911)		(10,371)		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)	(1,678)		(2,014)		(6,395)		(3,692)		(31,753)		Changes due to valuation inputs or assumptions (1)	40,149		15,415
Balance, end of period	Balance, end of period	$	102,699	$	100,413	$	96,356	$	102,699	$	96,356	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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was as follows:


(dollars in thousands)	(dollars in thousands)	June 30, 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	$	12,897,032		$	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	0.80		%	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 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; however, accelerated~~rates increased during the period and are expected to continue to rise, which has caused prepayment speeds ~~have slowed due~~ to ~~a flattening of long-term interest rates during the quarter.~~slow.

~~The fair value of the MSR asset due~~Due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds, the fair value of the MSR asset increased by ~~$1.7 million and $3.7~~$40.1 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively, due~~March 31, 2022, as compared to ~~changes to inputs in~~an increase of $15.4 million for the ~~valuation model including changes in discount rates and prepayment speeds.~~three months ended December 31, 2021. The fair value of the MSR asset decreased by ~~$4.4~~$5.3 million, ~~and $8.9 million, respectively,~~ due to the passage of time, including the impact of regularly scheduled repayments, paydowns and payoffs during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and December 31, 2021.

Deposits

Total deposits were ~~$26.2~~$26.7 billion at ~~June 30, 2021,~~March 31, 2022, an increase of ~~$1.5 billion,~~$104.9 million, as compared to December 31, ~~2020.~~2021. The increase is mainly attributable to growth in ~~interest bearing and non-interest bearing~~ demand ~~deposits~~ and savings ~~balances,~~deposits, offset by a continued decline in time deposits. The increase in non-maturity deposit account categories is attributable to the impact of economic assistance payments, in addition to increased customer savings rates as customers look to increase their own liquidity in this uncertain environment. 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		June 30, 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	$	10,718,921	41	%	$	9,632,773	39	%	Non-interest bearing demand	$	11,058,251	42	%	$	11,023,724	41	%
Interest bearing demand	Interest bearing demand	3,466,251		13	%	3,051,487		12	%	Interest bearing demand	3,955,329		15	%	3,774,937		14	%
Money market	Money market	7,559,621		29	%	7,173,920		29	%	Money market	7,572,581		28	%	7,611,718		29	%
Savings	Savings	2,221,524		8	%	1,912,752		8	%	Savings	2,429,073		9	%	2,375,723		9	%
Time, greater than $250,000	Time, greater than $250,000	672,209		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	1,515,027		6	%	1,951,706		8	%	Time, $250,000 or less	1,266,034		4	%	1,328,151		5	%
Total deposits	Total deposits	$	26,153,553	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 ~~$358.5~~$140.3 million at ~~June 30, 2021,~~March 31, 2022, compared to ~~$424.1~~$149.9 million at December 31, ~~2020.~~2021.

Borrowings

At ~~June 30, 2021,~~March 31, 2022, the Bank had outstanding ~~$480.3~~$499.5 million of securities sold under agreements to repurchase, an increase of ~~$104.9~~$7.3 million from December 31, ~~2020.~~2021. The Bank had outstanding borrowings consisting of advances from the FHLB of ~~$111.4~~$6.3 million at ~~June 30, 2021, which decreased $660.1 million from~~March 31, 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 1.42% 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 ~~$375.9~~$393.7 million and ~~$343.5~~$381.1 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The increase is mainly due to the ~~$32.6~~$12.7 million change in fair value for the junior subordinated debentures elected to be carried at fair value, which is due to ~~a decrease~~an increase in ~~the discount rates caused by a decrease in the credit spread paired with a decrease in the long end of the SWAP spot curve, which results in a higher fair value, offset by~~ the implied forward curve ~~shifting lower~~ resulting in ~~a decrease~~increased cash flows, partially offset by an increase in ~~estimated future interest cashflows.~~the discount rate caused by an increase in the swap spot curve. As of ~~June 30, 2021,~~March 31, 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.

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 provide flexibility, to grow deposit balances ~~to provide flexibility to~~and fund growth in lending and investment portfolios, as well as to deleverage non-deposit liabilities as economic conditions permit. As a result, the Company believes that it has sufficient cash and access to borrowings to effectively manage through the ~~COVID-19 pandemic~~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 ability to fund future loan growth and ~~the management 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 ~~June 30, 2021~~March 31, 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 ~~$8.8~~$8.9 billion at ~~June 30, 2021,~~March 31, 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 ~~$946.6 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 ~~June 30, 2021.~~March 31, 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 ~~$100.0~~$48.0 million of dividends paid by the Bank to the Company in the ~~six~~three months ended ~~June 30, 2021. In July 2021, the Bank paid the Company a special dividend of $200.0 million to fund the repurchase plan announced by the Company in July 2021.~~March 31, 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 ~~$286.4~~$275.3 million during the ~~six~~three months ended ~~June 30, 2021,~~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 ~~$3.0 billion,~~$683.3 million and the decrease in other assets of ~~$49.3~~$167.9 million, offset by originations of loans held for sale of ~~$2.9 billion~~$649.1 million, and the ~~gain on sale~~change in fair value of ~~loans~~residential mortgage servicing rights carried at fair value of ~~$87.8~~$34.8 million. This compares to net cash ~~used in~~provided by operating activities of ~~$144.9~~$392.0 million during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, with the difference between cash used in operating activities and net ~~loss~~income consisting of ~~goodwill impairment of $1.8 billion,~~ proceeds from the sale of loans held for sale of ~~$3.0~~$1.8 billion, ~~provision for loan and lease losses of $205.2 million,~~ and the net ~~increase~~decrease in other assets of ~~$265.1~~$128.2 million, offset by originations of loans held for sale of ~~$3.0~~$1.6 billion, and gain on sale of loans of ~~$119.6~~$50.2 million.

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Net cash of ~~$655.2~~$434.1 million used in investing activities during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, consisted principally of net change in loans of $470.3 million and purchases of available for sale investment securities of ~~$1.0 billion, and net loan originations of $213.1~~$131.9 million, offset by proceeds from available for sale investment securities of ~~$409.0~~$126.0 million and the proceeds from sales of loans and leases of ~~$140.0~~$44.5 million. This compares to net cash of ~~$1.5 billion~~$495.1 million used in investing activities during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, which primarily consisted of ~~net loan originations of $1.6 billion, due to our participation in the PPP, and~~ purchases of investment securities available for sale of ~~$353.6~~$555.3 million and net change in loans of $267.9 million, offset by proceeds from investment securities available for sale of ~~$401.5~~$227.1 million and the proceeds from sales of loans of $82.5 million.

Net cash of ~~$881.4~~$62.6 million provided by financing activities during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, primarily consisted of ~~$1.5 billion~~$104.9 million net increase in deposits, ~~and the net increase in securities sold under agreements to repurchase of $104.9 million,~~ offset by ~~$660.0 million repayment of borrowings and $92.6~~$45.5 million of dividends paid on common stock. This compares to net cash of ~~$2.5 billion~~$771.1 million provided by financing activities during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, which primarily consisted of ~~$2.4~~$1.3 billion net increase in deposits and ~~proceeds from borrowings~~net increase in securities sold under agreements of ~~$600.0~~repurchase of $45.0 million, offset by ~~$410.0~~$490.0 million repayment of borrowings and ~~$92.5~~$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.~~behavior in the 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.

~~Table of Contents~~

Capital Resources

Shareholders' equity at ~~June 30, 2021~~March 31, 2022 was ~~$2.8 billion.~~$2.6 billion, as compared to $2.7 billion at December 31, 2021. The ~~increase~~decrease in shareholders' equity during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was principally due to ~~net income, offset by~~ the other comprehensive loss, net of tax, of $185.5 million and cash dividends ~~paid.~~paid of $45.7 million, offset by net 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 ~~May 5, 2021,~~February 4, 2022, the Company declared a cash dividend in the amount of $0.21 per common share based on ~~first~~fourth quarter 2021 performance, which was paid on ~~May 28, 2021.~~February 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 ~~June 30, 2021,~~ March 31, ~~2021,~~2022 and ~~June 30, 2020, as well as the six months ended June 30, 2021 and 2020:~~December 31, 2021:


		Three Months Ended									Six Months Ended							Three Months Ended
		June 30, 2021			March 31, 2021			June 30, 2020			June 30, 2021			June 30, 2020				March 31, 2022			December 31, 2021
Dividend declared per common share	Dividend declared per common share	$	0.21		$	0.21		$	—		$	0.42		$	0.21		Dividend declared per common share	$	0.21		$	0.21
Dividend payout ratio	Dividend payout ratio	40		%	43		%	—		%	42		%	(3)		%	Dividend payout ratio	50		%	51		%

Table of June 30, 2021, a total of 9.5 million shares are available for repurchase under the Company's share repurchase plan, which was effectively retired by the Board of Directors in July 2021. During the six months ended June 30, 2021, no shares were repurchased under this plan.Contents

In July 2021, the Company announced that its Board of Directors approved a ~~new~~ share repurchase program which authorizes the Company to repurchase up to $400 million of common stock over the next twelve months from time to time in open market transactions, accelerated share repurchases, or in privately negotiated transactions as permitted under applicable rules and regulations. ~~The program replaces and supersedes~~As of March 31, 2022, a total of $321.8 million remained available to repurchase shares under the ~~previously approved~~new share repurchase ~~program which was scheduled to expire on July~~program. During the three months ended March 31, ~~2021.~~2022, no shares were repurchased under 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

Actual For Capital Adequacy purposes To be Well Capitalized
(dollars in thousands)
Amount Ratio Amount Ratio Amount Ratio
June 30, 2021
Total Capital
(to Risk Weighted Assets)
Consolidated $ 3,431,331 15.41 % $ 1,781,728 8.00 % $ 2,227,160 10.00 %
Umpqua Bank $ 3,212,055 14.42 % $ 1,782,141 8.00 % $ 2,227,676 10.00 %
Tier I Capital
(to Risk Weighted Assets)
Consolidated $ 2,760,930 12.40 % $ 1,336,296 6.00 % $ 1,781,728 8.00 %
Umpqua Bank $ 2,992,652 13.43 % $ 1,336,605 6.00 % $ 1,782,141 8.00 %
Tier I Common
(to Risk Weighted Assets)
Consolidated $ 2,760,930 12.40 % $ 1,002,222 4.50 % $ 1,447,654 6.50 %
Umpqua Bank $ 2,992,652 13.43 % $ 1,002,454 4.50 % $ 1,447,989 6.50 %
Tier I Capital
(to Average Assets)
Consolidated $ 2,760,930 9.16 % $ 1,206,304 4.00 % $ 1,507,881 5.00 %
Umpqua Bank $ 2,992,652 9.92 % $ 1,206,693 4.00 % $ 1,508,366 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	%

In 2020, the federal bank regulatory authorities 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 ~~June 30, 2021~~March 31, 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.

Table of Contents

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 ~~June 30, 2021.~~March 31, 2022.

No change in internal control over financial reporting occurred during the quarter ended ~~June 30, 2021~~March 31, 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.

~~Table of Contents~~

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 ~~June 30, 2021:~~March 31, 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
4/1/21 - 4/30/21 741 $ 18.34 — 9,524,429
5/1/21 - 5/31/21 32 $ 19.28 — 9,524,429
6/1/21 - 6/30/21 184 $ 19.18 — 9,524,429
Total for quarter 957 $ 18.53 —


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 ~~957~~194,792 shares to be issued upon vesting of restricted stock awards to pay withholding taxes. During the three months ended ~~June 30, 2021,~~March 31, 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 share repurchase plan, which was first approved by its Board of Directors and announced in August 2003, was amended on September 29, 2011 to increase the number of common shares available for repurchase under the plan to 15 million shares. As of June 30, 2021, a total of 9.5 million shares remained available for repurchase. As ofOn July 21, 2021, the Company approved a ~~new~~ share repurchase program which authorizes the Company to repurchase up to $400 million of common stock over the next twelve months from time to time in open market transactions, accelerated share repurchases, or in privately negotiated transactions as permitted under applicable rules and regulations. ~~This effectively ended the previous share~~As of March 31, 2022, a total of $321.8 million remained available to repurchase ~~plan.~~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

7059

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

10.2*			~~(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 ~~June 30, 2021,~~March 31, 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~~

7160

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

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

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

7261


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	4338
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6957
Item 4.	Controls and Procedures	6958
Part II. OTHER INFORMATION		6958
Item 1.	Legal Proceedings	6958
Item 1A.	Risk Factors	6958
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6958
Item 3.	Defaults Upon Senior Securities	7059
Item 4.	Mine Safety Disclosures	7059
Item 5.	Other Information	7059
Item 6.	Exhibits	7160

SIGNATURES		7261


	Three Months Ended June 30, 2020
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	99,778	$	146,607	$	34,251	$	10,784	$	291,420
Provision for credit losses for loans and leases	52,890		21,301		6,157		1,136		81,484
Charge-offs	0		(17,549)		(143)		(1,761)		(19,453)
Recoveries	160		2,256		283		595		3,294
Net recoveries (charge-offs)	160		(15,293)		140		(1,166)		(16,159)
Balance, end of period	$	152,828	$	152,615	$	40,548	$	10,754	$	356,745
Reserve for unfunded commitments
Balance, beginning of period	$	15,760	$	2,927	$	1,741	$	499	$	20,927
Provision (recapture) for credit losses on unfunded commitments	5,048		(6)		320		79		5,441
Balance, end of period	20,808		2,921		2,061		578		26,368
Total allowance for credit losses	$	173,636	$	155,536	$	42,609	$	11,332	$	383,113

	Six Months Ended June 30, 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 CECL adoption	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	96,498		70,974		13,342		6,172		186,986
Charge-offs	0		(40,157)		(154)		(3,597)		(43,908)
Recoveries	406		3,969		547		1,117		6,039
Net recoveries (charge-offs)	406		(36,188)		393		(2,480)		(37,869)
Balance, end of period	$	152,828	$	152,615	$	40,548	$	10,754	$	356,745
Reserve for unfunded commitments
Balance, beginning of period	$	534	$	2,539	$	149	$	1,884	$	5,106
Impact of CECL adoption	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	16,244		869		645		266		18,024
Balance, end of period	20,808		2,921		2,061		578		26,368
Total allowance for credit losses	$	173,636	$	155,536	$	42,609	$	11,332	$	383,113


	Three Months Ended						Sequential Quarter				Year over Year
(in thousands)	June 30, 2021		March 31, 2021		June 30, 2020		Change Amount		Change Percent		Change Amount		Change Percent
Service charges on deposits	$	10,310	$	9,647	$	8,757	$	663	7	%	$	1,553	18	%
Card-based fees	10,274		7,374		5,901		2,900		39	%	4,373		74	%
Brokerage revenue	1,135		3,915		3,805		(2,780)		(71)	%	(2,670)		(70)	%
Residential mortgage banking revenue, net	44,443		65,033		83,877		(20,590)		(32)	%	(39,434)		(47)	%
Gain on sale of debt securities, net	—		4		323		(4)		(100)	%	(323)		(100)	%
Gain (loss) on equity securities, net	4		(706)		240		710		(101)	%	(236)		(98)	%
Gain on loan and lease sales, net	5,318		1,373		1,074		3,945		287	%	4,244		395	%


Bank owned life insurance income	2,092		2,071		2,116		21		1	%	(24)		(1)	%
Other income	17,499		20,089		9,387		(2,590)		(13)	%	8,112		86	%
Total non-interest income	$	91,075	$	108,800	$	115,480	$	(17,725)	(16)	%	$	(24,405)	(21)	%


	Loans with Deferrals or Forbearances
(dollars in thousands)	Number of Loans	Loan Balance Outstanding		% of Loan Portfolio
Commercial real estate	8	$	59,715	1	%





Commercial	22	1,382		—	%



Residential	198	105,995		2	%


Consumer & other, net	13	219		—	%
Total	241	$	167,311	1	%