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| Umpqua Hldgs Cp |(UMPQ-NSDQ) |

|Current Recommendation |Hold |

|Prior Recommendation |Sell |

|Date of Last Change |03/30/2004 |

| | |

|Current Price (02/21/07) |$28.67 |

|Six- Month Target Price | |

OUTLOOK

|Analyst must write |

SUMMARY DATA

|52-Week High |$30.49 |

|52-Week Low |$24.16 |

|One-Year Return (%) |9.89 |

|Beta |0.15 |

|Average Daily Volume (sh) |197,181 |

| | |

|Shares Outstanding (mil) |58 |

|Market Capitalization ($mil) |$1,664 |

|Short Interest Ratio (days) |28.42 |

|Institutional Ownership (%) |13 |

|Insider Ownership (%) |5 |

| | |

|Annual Cash Dividend |$0.72 |

|Dividend Yield (%) |2.51 |

| | |

|5-Yr. Historical Growth Rates | |

| Sales (%) |37.1 |

| Earnings Per Share (%) |13.9 |

| Dividend (%) |38.9 |

| | |

|P/E using TTM EPS |17.4 |

|P/E using 2007 Estimate |15.4 |

|P/E using 2008 Estimate |13.3 |

| | |

|Zacks Rank |3 |

| | |

|Risk Level |Below Avg. |

|Type of Stock |Mid-Value |

|Industry |Banks-West |

|Zacks Rank in Industry |25 of 50 |

KEY POINTS

➢ Analyst must write

OVERVIEW

Analyst must write

INDUSTRY OUTLOOK

INDUSTRY OUTLOOK - NEUTRAL

Our outlook for the regional banks and thrifts remains neutral. Interest rates will continue to move up, but the pace of future increases from the Federal Reserve is a matter of debate as economic indicators remain mixed. Long-term rates are not moving up in tandem, so increases in the short end will likely create more flattening of the curve as well. Though an increasing rate environment as a rule is not the best scenario for bank stocks, this increase from recent historic lows is most likely favorable (though offset by the flatter curve). A slow, measured increase from here would provide the optimal atmosphere for increasing interest margins and spread revenues.

The changing environment implies a changing mix of business for the banks and thrifts. Consumer lending, the bread-and-butter of many regional and local institutions, will face significant headwinds to revenue growth, as the mortgage business has seen record production. Home equity lending may provide some offset, though, as consumers seek to continue drawing value from their residences. Deposit fees are also expected to struggle, as the strong deposit growth of recent periods is likely to slow as depositors seek higher returns in a rising-rate environment. Commercial and industrial lending (C&I) seems to have bottomed, and increasing demand is on the way.

The small- and mid-cap banks will be more challenged to show earnings growth in this environment. C&I improvement will only partially offset slowing consumer demand for many, as mortgage business has been a significant portion of their business during the boom. Most have less exposure to market-sensitive businesses, such as capital markets and asset management, and generally less exposure to C&I lending than the average large-cap bank. Credit quality has generally improved, and reduced provisioning has provided a boost for some, though this will be less of a factor going forward. Even those with improving fundamentals will face investor sentiment issues, as rising rates sometimes coincide with falling bank stock prices. The strongest institutions might see share prices rise from here, along with the weakest (more likely take-out candidates), but the majority will struggle.

INDUSTRY POSITION

Analyst must write

RECENT NEWS

Analyst must write

VALUATION

Analyst must write

RISKS

➢ Analyst must write.

INSIDER TRADING AND OWNERSHIP

Analyst must write.

PROJECTED INCOME STATEMENT & BALANCE SHEET

HISTORICAL ZACKS RECOMMENDATIONS

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DISCLOSURES

The analysts contributing to this report do not hold any shares of UMPQ. Zacks EPS and revenue forecasts are not consensus forecasts. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts’ personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Buy- Zacks expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold- Zacks expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell- Zacks expects the company will under perform the broader U.S. Equity market over the next one to two quarters. The current distribution of Zacks Ratings is as follows on the 1194 companies covered: Buy- 21.9%, Hold- 73.4%, Sell – 4.0%. Data is as of midnight on the business day immediately prior to this publication.

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Month Day, Year

[pic]Equity Research Scott A. Jaggers, CFA

111 North Canal Street, Chicago, IL 60606

ZACKS ESTIMATES

Revenue

(in millions of $)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Mar) |(Jun) |(Sep) |(Dec) |(Dec) |

|2005 |75 A |80 A |87 A |88 A |330 A |

|2006 |93 A |108 A |128 A |131 A |460 A |

|2007 |90 E |93 E |102 E |106 E |391 E |

|2008 | | | | |451 E |

Earnings per Share

(EPS is operating earnings before non recurring items)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Mar) |(Jun) |(Sep) |(Dec) |(Dec) |

|2005 |$0.33 A |$0.36 A |$0.44 A |$0.42 A |$1.55 A |

|2006 |$0.39 A |$0.42 A |$0.42 A |$0.42 A |$1.64 A |

|2007 |$0.44 E |$0.45 E |$0.48 E |$0.50 E |$1.87 E |

|2008 | | | | |$2.15 E |

|Zacks Projected EPS Growth Rate - Next 5 Years % |15 |

|Consensus Projected EPS Growth - Next 5 Years % |14 |

| Top 5 Public Companies in the industry |

| | | | |

|Ticker |Company |Market Share |Zacks |

|  |  | |Rec |

|UB |Unionbancal Cp |16% |Hold |

|ZION |Zions Bancorp |15% |Hold |

|FMT |Fremont Genl |6% |N/A |

|CYN |City National |5% |Hold |

|BOH |Bank Of Hawaii |4% |Hold |

| Umpqua Hldgs Cp |  |

|Income Statement and Balance Sheet |  |

|(Dollars in millions, except EPS data) |  |

|  | | | | | | | | |

| |12/02 |12/03 |12/04 |12/05 |12/06 |12/07E |

|Sales | |129 |181 |239 |330 |460 |391 |

|  |Cost of Goods Sold |22 |24 |31 |60 |83 |71 |

|  |SG&A |70 |97 |131 |147 |205 |174 |

|  |Other operating expenses |0 |0 |2 |2 |3 |3 |

|  |Interest and other |15 |26 |33 |51 |71 |61 |

|Zacks Adjusted Income before NRI |24 |35 |51 |70 |87 |108 |

|Net Income |22 |34 |47 |70 |84 |108 |

|Diluted EPS before NRI |1.11 |1.24 |1.40 |1.55 |1.64 |1.87 |

|Reported EPS |1.03 |1.19 |1.30 |1.55 |1.59 |1.87 |

|  | | | | | | |

|Cash & Marketable Securities |122 |135 |118 |162 |162 |162 |

|Current Assets |1,971 |2,207 |3,563 |4,049 |4,049 |4,049 |

|Current Liabilities |2,169 |2,492 |3,887 |4,400 |4,400 |4,400 |

|Long Term Debt |24 |55 |255 |169 |169 |169 |

|Shareholder's Equity |288 |319 |688 |738 |823 |931 |

Industry Comparables

| |Pr Chg |P/E CurrFY |EPS Gr |Price/ |Price/ |Price/ |

| |YTD | |5Yr Est |Book |Sales |CF |

|UMPQUA HLDGS CP |-2.2 |15.8 |13.5 |1.5 |3.6 |15.6 |

| | | | | | | |

|Industry Mean |1.7 |15.8 |11.9 |2.9 |3.9 |16.8 |

|Industry Median |0.8 |15.4 |11.0 |2.3 |3.0 |15.0 |

|S&P 500 |2.9 |16.1 |8.0 |4.9 |2.8 |15.8 |

| | | | | | | |

|SVB FINL GP |8.0 |16.7 |10.0 |2.7 |3.4 |17.6 |

|CATHAY GENL BCP |4.2 |15.1 |10.0 |2.0 |3.6 |15.0 |

|CENTRAL PAC FIN |3.8 |14.3 |10.0 |1.7 |3.4 |14.5 |

|CVB FINL |-3.5 |15.0 |9.0 |2.7 |3.1 |14.4 |

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