UMPQUA HOLDINGS CORP - 10-K Annual Report

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2000

[_] 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:
--------------------------------------------------------

Umpqua Holdings Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Oregon 93-1261319
- ---------------------------- ----------------------- ------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

445 S.E. Main Street, Roseburg, Oregon 97470
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 541-440-3900
------------

Securities registered pursuant to Section 12(b) Name of exchange
of the Act: on which registered

None None
- ---------------------------------------------- -------------------

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

Common Stock
- --------------------------------------------------------------------------------
(Title of Class)

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 X No
----- -----

Indicate by check mark if disclosure of delinquent filing pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ___ ]

As of March 15, 2001, there were 14,393,383 shares of common stock
outstanding. The aggregate market value of common stock held by non-affiliates
was $9,251,404.50 at March 21, 2001, based on the closing price of such stock on
such date as reported by the NASDAQ National Market System.

Documents Incorporated by Reference:

Portions of the 2000 Annual Report to Shareholders are incorporated by reference
in Part II hereof. Portions of the registrant's definitive proxy statement for
the 2001 annual meeting of shareholders are incorporated by reference in Part
III hereof.

Part I

Item 1. BUSINESS

Introduction
------------

Umpqua Holdings Corporation, an Oregon corporation (the "Company" or
"Umpqua"), is a financial holding company formed in March 1999. At that time,
the Company acquired 100% of the outstanding shares of South Umpqua Bank, an
Oregon state chartered bank formed in 1953. The Company became a financial
holding company in March 2000 under the newly enacted Gramm-Leach-Bliley Act. On
December 1, 2000, the Company completed a "merger of equals" with VRB Bancorp, a
bank holding company that conducted its business solely through Valley of the
Rogue Bank. At the same time, Valley of the Rogue Bank merged with and into
South Umpqua Bank and the continuing bank changed its name to Umpqua Bank.

The Company is headquartered in Roseburg, Oregon, and engages primarily
in the business of commercial and retail banking and the delivery of retail
brokerage services. The Company provides a wide range of banking, asset
management, mortgage banking, and other financial services to corporate,
institutional and individual customers through its wholly-owned banking
subsidiary Umpqua Bank (the "Bank"). The Company engages in the retail brokerage
business through its wholly-owned subsidiary Strand, Atkinson, Williams &
York, Inc. ("Strand Atkinson"). In July 2000, Strand Atkinson acquired Adams,
Hess, Moore & Company, a full service brokerage firm with offices in
Portland, Salem, and Eugene, Oregon. The Company and its subsidiaries are
subject to the regulations of certain federal agencies and undergo periodic
examinations by these regulatory agencies.

Umpqua Bank is one of the most innovative community banks in the United
States, combining a retail product delivery approach with an emphasis on
quality-assured personal service. The Bank is the third largest community bank
in the state of Oregon, currently operating 27 full-service stores (or branches)
in Douglas, Jackson, Josephine, Lane, Marion and Multnomah Counties in Oregon.
At December 31, 2000, the Bank had assets of $785 million and deposits of $681
million.

Since 1995, the Bank has transformed itself from a traditional
community bank into a community-oriented financial services retailer. The Bank
has implemented a variety of retail marketing strategies to increase revenue and
differentiate itself from its competition. To establish itself as a financial
services retailer, the Bank has remodeled a majority of its branches to resemble
retail stores. The Bank is in the process of remodeling the former Valley of the
Rogue Bank branches to resemble Umpqua Bank stores. These new stores incorporate
"serious about service centers" that is the focal point for customer information
and "investment opportunity centers" providing broker-dealer services and
featuring financial and investment information in a multimedia format. The Bank
has introduced smaller, 1,100 square foot "neighborhood stores," which are lower
cost stores located in residential areas. To monitor the quality of its customer
service, the Bank introduced a "return on quality" program for its sales
associates and implemented an in-house "banking college" to train its personnel
in cross-selling and effective customer service.

The Company's retail brokerage subsidiary, Strand Atkinson, is a
registered broker-dealer and investment advisor with offices in Portland, Salem,
Eugene, Roseburg, Medford, Oregon, and Kalama, Washington, and offers a full
range of investment products and services including:

o Stocks
o Fixed Income Securities (municipal, corporate, and government
bonds, CDs, money market instruments)
o Mutual Funds
o Annuities
o Options
o Retirement Planning
o Money Management Services
o Life Insurance, Disability Insurance and Medical Supplement
Policies

Industry Overview
- -----------------

The commercial banking industry continues to undergo increased
competition, consolidation and change. Non-insured financial service companies
such as mutual funds, brokerage firms, insurance companies, mortgage companies
and leasing companies are offering alternative investment opportunities for
customers' funds or lending sources for their needs. Banks have been granted
extended powers to better compete including the limited right to sell insurance
and securities products, but the percentage of financial transactions handled by
commercial banks has dropped steadily. Although the amount of deposits in banks
is remaining steady, such deposits represent less than 20% of household
financial assets compared to over 35% twenty-five years ago. This trend
represents a continuing shift to stocks, bonds, mutual funds and retirement
accounts.

Nonetheless, commercial banks are reducing costs by consolidation and
exploring alternative ways of providing bank products. Although new community
banks continue to be organized, bank mergers substantially outstrip formations.

To more effectively and efficiently deliver its products, banks are
opening in-store branches, installing more automated teller machines ("ATMs")
and investing in technology to permit telephone, personal computer and internet
banking. While all banks are experiencing the effects of the changing
environment, the manner in which banks choose to compete is increasing the gap
between larger super-regional banks, committed to becoming national or regional
"brand names" providing a broad selection of products at low cost and with
advanced technology, and community banks which provide most of the same products
but with a commitment to personal service and with local ties to the customers
and communities they serve.

The Gramm-Leach-Bliley Act of 1999 eliminates many of the restrictions
placed on the activities of certain qualified bank holding companies. Effective
March 11, 2000, our bank holding company qualified as a "financial holding
company" and we are now qualified to expand into a wide variety of financial
services, including additional securities activities, and insurance without the
prior approval of the Federal Reserve Board.

Business Strategy
- -----------------

The Company's objective is to become the leading community-oriented
financial services retailer throughout Oregon. We intend to continue to grow our
assets and increase profitability and shareholder value by differentiating
ourself from our competitors through the following strategy:

Capitalize On Innovative Product Delivery System. Our philosophy has
been to develop an environment for the customer that makes the banking
experience an enjoyable one. With this approach in mind, Umpqua Bank developed a
prototype store that offers "one-stop" shopping and that includes distinct
physical areas or boutiques, such as a "serious about service center," an
"investment opportunity center" and a "computer cafe," which make the Bank's
products and services more tangible and accessible. The Bank's initial prototype
store was opened in 1996 in Roseburg, Oregon, a community with historically low
deposit growth. This new store, nevertheless, captured $12 million in deposits
from competitors by the end of its first year of operation. On the basis of this
initial success, the Bank opened four additional stores featuring the new format
during 1997, two additional stores in 1999, one additional store in 2000, and
plans to open additional stores in the near future. The Company plans on
remodeling former Valley of the Rogue Bank branches over the next two years.

Deliver Superior Quality Service. We have insisted on quality service
as an integral part of our culture, from the Board of Directors to new sales
associates. Umpqua Bank believes it was among the first banks to introduce a
measurable quality service program. Under its "return on quality" program
introduced in 1995, each sales associate's and store's performance is evaluated
monthly based on specific measurable factors such as the "sales effectiveness
ratio" that totals the average number of banking products purchased by each new
customer. The evaluations also encompass factors such as the number of referrals
generated for the sale of investment products, the number of new loans and
deposits generated in each store, reports by incognito "mystery shoppers" and
customer surveys. Based on scores achieved, the "return on quality" program
rewards both individual sales associates and store teams with financial
incentives. Through such programs, the Bank believes it can measure the quality
of service provided to its customers and maintain employee focus on quality
customer service.

ESTABLISH STRONG BRAND AWARENESS. As a financial services retailer, the
Bank has devoted considerable resources to developing the "Umpqua Bank" brand.
This campaign has included the redesign of the corporate logo to emphasize its
geographical origin, and promotion of the "Umpqua Bank" brand in advertising and

merchandise bearing the Umpqua Bank logo, such as coffee beans, mugs,
tee-shirts, hats and umbrellas. The store's unique "look and feel" and
innovative product displays help position the Bank as an innovative, customer
friendly retailer of financial products and services. The Bank believes it can
build consumer preference for its products and services through high quality
service and strong brand awareness.

USE TECHNOLOGY TO EXPAND CUSTOMER BASE. Although Umpqua Bank's strategy
will continue to emphasize superior personal service, the Bank will also
continue to expand user-friendly, technology-based systems to attract customers
that may prefer to interact with their financial institution electronically.
Over the past years, the Bank has introduced technology-based services which
include voice response banking, debit cards, automatic payroll deposit programs,
the "ibank@umpqua" program, automated loan machines, advanced function ATMs and
an internet web site. The Bank believes the availability of both traditional
bank services and the newer electronic banking services enhances its ability to
attract a broad range of customers.

INCREASE MARKET SHARE IN EXISTING MARKETS AND EXPAND INTO NEW MARKETS.
As a result of our innovative retail product orientation, measurable quality
service program and strong brand awareness, we believe that there is significant
potential to increase business with current customers, to attract new customers
in our existing markets and to enter new markets. Since its introduction of
these programs, Umpqua Bank has experienced significant growth in deposits
within Douglas County, increasing its share of commercial bank deposits from
21.1% at June 30, 1995 to 31.6% at June 30, 2000. In July 1996, the Bank opened
its first store in Eugene, Oregon, and as of December 31, 2000, had four
new-format stores in the Eugene market with total deposits of $92.6 million.
Within the last year, the Bank opened new stores in Salem and Portland, Oregon.

The Company accelerated its business strategy of providing financial
services throughout the main Oregon population centers along the I-5 corridor
with the completion of the merger with VRB Bancorp. Valley of the Rogue Bank was
the second largest community bank based in Southern Oregon and operated 13 full
service branches in Jackson County and Josephine County. After the merger,
Umpqua Bank became the third largest community bank in Oregon. From time to
time, the Company has held discussions with other institutions about the
possibility of acquiring these banks. The Company plans on pursuing further
acquisition discussions and opening new stores to expand into other markets.

Marketing and Sales
- -------------------

The Company's goal of increasing its share of financial services in its
market areas is driven by a marketing plan comprising the following key
components:

MEDIA ADVERTISING. Over the years, the Bank has introduced several
comprehensive media advertising campaigns. These campaigns augment the Bank's
goal of strengthening the Umpqua Bank brand image and heightening public
awareness of its innovative product delivery system. These campaigns, entitled
"The Banking Revolution" and "Expect the Unexpected," were designed to showcase
Umpqua Bank's innovative style of banking, as well as its commitment to
providing quality service to its customers. "The Banking Revolution" campaign is
designed to differentiate the Bank from other financial institutions in its
market area, while "Expect the Unexpected" challenged customers to visit the
Bank's stores and experience first-hand its quality service. Both of these
campaigns utilized various forms of media, including television, radio, print,
billboards and direct mail flyers and letters.

RETAIL STORE CONCEPT. As a financial services provider, the Bank
believes that store environment is critical to successfully market and sell its
products and services. Retailers traditionally have displayed merchandise within
their stores to encourage customers to purchase their products. Purchases are
made on the spur of the moment due to the products' availability and
attractiveness. The Bank believes this same concept can be applied to financial
institutions and accordingly displays its financial services and products
through tactile merchandising within its stores. Recent displays have included
enticements for mortgage loans, retirement accounts, investments, and checking
account programs. Unlike many financial institutions whose strategy is to
discourage customers from visiting their facilities in favor of ATMs or other
forms of electronic banking, the Bank encourages its customers to visit its
stores, where they are greeted by well-trained sales associates, and encouraged
to browse and to make "impulse buys." The Bank introduced its first "prototype"
store in mid-1996, which included such services as a 24-hour banking vestibule
with an automated loan machine, an advanced function ATM and a 24-hour
self-service U.S. Postal service center.

NEIGHBORHOOD STORES. To bring financial services to the customer in a
cost-effective way, Umpqua Bank has created "neighborhood stores." These
facilities are constructed near high volume traffic areas, close to neighborhood
shopping centers. These stand-alone stores are, on average, approximately 1,100
square feet in size and include all the features of the prototype store
described above. To strengthen brand recognition, all neighborhood stores are
identical in appearance. The Bank has three neighborhood stores, all located in
the Eugene/Springfield area.

SALES CULTURE. Although a successful marketing program will attract
customers to visit its stores, a sales environment and a well-trained sales team
are critical to selling the Bank's products and services. The Bank believes that
its sales culture has become well established throughout the organization due to
its unique facility design and its commitment to ongoing training of sales
associates on all aspects of sales and service. Umpqua Bank trains its sales
associates in its own banking college and pays commissions for the sale of the
Bank's products and services. This sales culture has helped the Bank transform
itself from a traditional community bank to a nationally recognized marketing
company focused on selling financial products and services.

Products and Services
- ---------------------

Umpqua Bank offers a full array of financial products to meet the
banking needs of its market area and targeted customers. To ensure the ongoing
viability of its product offerings, the Bank regularly examines the desirability
and profitability of existing and potential new products. To make it easy for
new prospective customers to bank with Umpqua Bank and access its products, the
bank introduced its "Switch Kit," which allows a customer to open their primary
checking account with Umpqua in less than four minutes. Other avenues through
which customers can access Umpqua's products include its web site, through the
"ibank@umpqua" internet banking program and its 24-hour telephone voice response
system.

DEPOSIT PRODUCTS. Umpqua Bank has a traditional array of deposit
products, including non-interest checking accounts, interest-bearing checking
and savings accounts, money market accounts and certificates of deposit. These
accounts earn interest at rates established by management based on competitive
market factors and management's desire to increase certain types or maturities
of deposit liabilities. The Bank also introduced its line of "Value Packages" in
1996 to increase the number of relationships with customers and increase service
fee income. These packages comprise several products bundled together to provide
added value to the customer and increase the customer's ties to the Bank. The
Bank also offers a seniors program, the "Platinum Account," which offers an
array of banking services and other amenities such as purchase discounts,
vacation trips and seminars, to customers over fifty years old.

RETAIL INVESTMENT SERVICES. Strand Atkinson provides a variety of
investment products and services including equity and debt securities,
annuities, certificates of deposit, mutual funds, retirement plans, life and
health insurance and U.S. Government securities. The firm has four stand-alone
retail brokerage offices with thirty-four licensed broker-dealer professionals.
Additionally, ten Umpqua Bank stores have "Investment Opportunity Centers" which
are periodically staffed by a licensed sales representative. Two Umpqua Bank
stores, in Salem and Roseburg, have Strand Atkinson offices in the store Special
appointments can be arranged for meetings in any store.

COMMERCIAL LOANS. Umpqua Bank offers specialized loans for its business
and commercial customers, including equipment and inventory financing, real
estate construction loans and SBA loans for qualified businesses. Commercial
lending is the primary focus of the Bank's lending activities and a significant
portion of its loan portfolio consists of commercial loans. For regulatory
reporting purposes, a substantial portion of the Bank's commercial loans are
designated as real estate loans, because the loans are secured by mortgages and
trust deeds on real property, even though the loans may be made for purposes of
financing commercial activities, such as accounts receivable, equipment
purchases and leasing.

REAL ESTATE LOANS. Real estate loans are available for construction,
purchase and refinancing of residential owner-occupied and rental properties.
Borrowers can choose from a variety of fixed and adjustable rate options and
terms. Generally, the Bank originates residential real estate loans as an
accommodation to its customers and sells most mortgages into the secondary
market. Real estate loans reflected in the loan portfolio are in large part
loans made to commercial customers that are secured by real property.

CONSUMER LOANS. Umpqua Bank provides loans to individual borrowers for
a variety of purposes, including secured and unsecured personal loans, home
equity and personal lines of credit and motor vehicle loans.

Market Area
- -----------

Umpqua Bank primarily accepts deposits and makes loans along Oregon's
I-5 corridor in Douglas, Jackson, Josephine, Lane, Marion, and Multnomah
Counties of Oregon. As a community bank, Umpqua Bank has certain competitive
advantages in its local focus. The Bank is, however, also more dependent on, and
exposed to changes in, the local economy than competitors who serve a number of
geographic markets.

DOUGLAS COUNTY

Douglas County is the eighth most populous county in Oregon with a
population in 2000 of approximately 100,000. Roseburg is the most populous city
in the county, with a population in 2000 of approximately 26,000. Population
growth, which has been modest since 1990, is largely attributable to a
significant increase in new residents over the age of 65, offset by a decline in
younger residents. Most of the population in the county resides near in the
Interstate 5 corridor, the Company's primary market area. According to the
Oregon Employment Department, the county's population is projected to increase
over the next decade, but at a slower rate than that of Oregon as a whole.

Douglas County is known as the "timber capital" of Oregon with
approximately 2.8 million acres of commercial forest land, most of which is
owned and managed by the federal government. The lumber and wood products
industry accounted for approximately 17% of the county's private-sector
employment in 2000, according to the Oregon Employment Department. Timber
harvests on public lands have declined significantly over the past several
years, as various court and administrative challenges and limits reduced the
amount of timber available for harvest. Decreased economic activity in Asia has
further dampened log exports and related logging activity. Employment in the
timber and forest products industry has declined accordingly, as it has in
related industries and governmental agencies, such as transportation companies
serving the forest products industry, the Bureau of Land Management and the
National Forest Service. Government employment still accounts for approximately
20% of total employment in the county. Increases in service jobs, particularly
in health care and tourism, have helped to offset timber-related job losses,
with the result that total employment has been essentially flat from the late
1970's to the mid-1990's, compared to a state-wide growth of approximately 29%
for the same period. It is expected that the economy of Douglas County will
continue to be dependent on the timber and forest products industry.

JACKSON AND JOSEPHINE COUNTIES

Umpqua Bank entered the Jackson and Josephine Counties (the "Rogue
Valley") as a result of the merger with VRB Bancorp. Together, the counties have
a population of approximately 250,000. The Rogue Valley experienced an estimated
23% increase in population during the 1990's. The area experienced an influx of
out of state retirees evidenced by an estimated 22% of the population base being
at least 60 years old. The Rogue Valley continues to become increasingly
urbanized and infrastructure growth has been robust, including both residential
and commercial development. The region's dependence on wood products has
declined significantly, with timber manufacturing jobs now accounting for less
than half of all manufacturing hobs in the Rogue Valley. Despite historical job
losses in wood products, the region has seen relatively steady job growth over
the last decade. Since 1990, the region has added over 19,000 jobs, and service
industry sectors such as retail, trade, tourism, higher education and medical
services have experienced strong growth. Non-farm payroll jobs are predicted to
grow 23% from 1996 through 2006, outpacing the 21% expected average for the
state of Oregon. Medford, the fourth largest city in Oregon, serves as the
commercial center for the Rogue Valley.

LANE, MARION AND MULTNOMAH COUNTIES

Lane County, where Umpqua Bank recently opened four new stores, has
experienced modest growth in population in the past several years, from
approximately 283,000 in 1990 to approximately 320,000 in 1999, an increase of
13%. A considerable amount of the growth is believed to be attributable to the
growth in technology-related employment in the Springfield/Eugene area.

Lane, Marion and Multnomah County have a significantly more diverse
economy than Douglas County. Their economies are dependent primarily on service
businesses, trade and government. Manufacturing employment has shifted toward

technology and non-timber-related manufacturing. The University of Oregon,
located in Eugene, is one of the largest employers in Lane County, with
approximately 4,560 employees.

Technology
- ----------

Umpqua Bank is committed to supporting its business with the best
available technology consistent with prudent management of resources. This
commitment applies to the delivery of financial services to its customers, as
well as internal operations such as data processing and accounting. Although the
Bank considers personal contact with customers important to the overall quality
of service, the Bank believes that providing customers access to
technology-driven financial services is crucial to maintaining its competitive
position in the financial services marketplace. As a result, the Bank provides
automated teller machines at each store with access to nationwide ATM networks,
and offers telephone and internet banking, both in the "Computer Cafe" in its
newer stores and through the Bank's internet banking system.

Competition
- -----------

The community banking business is highly competitive. Umpqua Bank
competes with other commercial banks and with other financial institutions,
including savings and loan associations, mutual savings banks, finance
companies, mortgage banking companies, credit unions, and investment companies.
In recent years, competition has increased from institutions not subject to the
same regulatory restrictions as banks and bank holding companies.

The geographic market area served by Umpqua Bank is highly competitive
for both deposits and loans. The Bank competes with traditional banking and
thrift institutions, as well as non-bank financial services providers, such as
credit unions, brokerage firms and mortgage companies. The major commercial bank
competitors are super-regional institutions headquartered outside the state of
Oregon, and their deposits represent a significant majority of total statewide
commercial bank deposits. The major banks have competitive advantages over the
Bank in that they have higher lending limits and are able to offer statewide
facilities and services that the Bank does not offer.

The Bank, however, views non-bank financial services providers, such as
credit unions, brokerage firms, insurance companies and mortgage companies, as
its principal competition. As the industry becomes increasingly dependent on and
oriented toward technology-driven delivery systems, permitting transactions to
be conducted by telephone, computer and the internet, such non-bank institutions
are able to attract funds and provide lending and other financial services even
without offices located in the Bank's primary service area. Some insurance
companies and brokerage firms compete for deposits by offering rates that are
higher than may be appropriate for the bank in relation to its asset/liability
objectives, although the Bank offers a wide array of deposit products and
believes it can compete effectively through select rate-driven product
promotions.

The acquisition of Strand Atkinson, a retail brokerage firm with
offices in Portland, Salem, Eugene, Roseburg, and Medford, Oregon, and Kalama,
Washington, expanded the Company's business into the area of brokerage services
including equity and fixed income products, mutual funds, annuities, options,
retirement planning, and money management services. Additionally, Strand
Atkinson offers life insurance, disability insurance and medical supplement
policies. As a result, in addition to competition for banking services, the
Company also competes with full service investment firms for non-bank financial
products and services.

Credit unions present a significant competitive challenge for Umpqua
Bank. As credit unions currently enjoy an exemption from taxes, they are able to
offer higher deposit rates and lower loan rates than the Bank. Credit unions are
also not currently subject to certain regulatory constraints applicable to the
Bank, such as the Community Reinvestment Act, which, among other things,
requires regulated financial institutions to implement procedures to make and
monitor loans throughout the communities it serves. Adhering to such regulatory
requirements raises the costs associated with the Bank's lending activities, and
reduces potential operating profits. Accordingly, the Bank seeks to compete by
focusing on building customer relations, providing superior service and offering
a wide variety of commercial banking products that do not compete directly with
products and services offered by the credit unions, such as commercial real
estate loans, inventory and accounts receivable financing, and SBA loans for
qualified businesses.

Employees
- ---------

As of December 31, 2000, the Company had a total of 375 full-time
equivalent employees. None of the employees are subject to a collective
bargaining agreement. The Company considers its relationship with its employees
to be good.

Government Policies
- -------------------

The operations of the Company's subsidiaries are affected by state and
federal legislative changes and by policies of various regulatory authorities,
including those of the State of Oregon. These policies include, for example,
statutory maximum legal lending rates, domestic monetary policies of the Board
of Governors of the Federal Reserve System, Unites States fiscal policy, and
capital adequacy and liquidity constraints imposed by national and state
regulatory agencies.

Supervision and Regulation
- --------------------------

GENERAL. The Company and its subsidiaries are extensively regulated
under federal and state law. These laws and regulations are generally intended
to protect depositors and customers, not shareholders. To the extent that the
following information describes statutory or regulatory provisions, it is
qualified in its entirety by reference to the particular statutory or regulatory
provisions. Any change in applicable laws or regulations may have a material
effect on the business and prospects of the Company. The operations of the
Company may be affected by legislative changes and by the policies of various
regulatory authorities. The Company cannot accurately predict the nature or the
extent of the effects on its business and earnings that fiscal or monetary
policies, or new federal or state legislation may have in the future.

HOLDING COMPANY REGULATION. The Company is a registered financial
holding company under the Gramm-Leach-Bliley Act of 1999 (the "Act"), and is
subject to the supervision of, and regulation by, the Board of Governors of the
Federal Reserve System (the "Federal Reserve"). As a financial holding company,
the Company is examined by and files reports with the Federal Reserve.

Financial holding companies are bank holding companies that satisfy
certain criteria and are permitted to engage in activities that traditional bank
holding companies are not. The qualifications and permitted activities of
financial holdings companies are described below under "Changing Regulatory
Structure of the Financial Service Industry."

FEDERAL AND STATE BANK REGULATION. The Bank, as a state chartered bank
with deposits insured by the Federal Deposit Insurance Corporation ("FDIC"), is
subject to the supervision and regulation of the Oregon Department of Consumer
and Business Services, and of the FDIC. These agencies may prohibit the Bank
from engaging in what they believe constitute unsafe or unsound banking
practices. In practice, the primary state regulator makes regular examinations
of the Bank or participates in joint examinations with federal regulator. Areas
subject to review by federal authorities include the allowance for credit
losses, investments, loans, mergers, payments of dividends, establishment of
stores and other aspects of operations.

The Community Reinvestment Act ("CRA") requires that, in connection
with examinations of financial institutions within its jurisdiction, the FDIC
evaluate the record of the financial institutions in meeting the credit needs of
their local communities, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those institutions. These
factors are also considered in evaluating mergers, acquisitions and applications
to open a branch or new facility. The Bank's current CRA rating is
"Satisfactory."

Banks are also subject to certain restrictions imposed by the Federal
Reserve Act on extensions of credit to executive officers, directors, principal
shareholders or any related interest of such persons. Extensions of credit (i)
must be made on substantially the same terms, including interest rates and
collateral as, and follow credit underwriting procedures that are not less
stringent than, those prevailing at the time for comparable transactions with
persons not affiliated with the Bank, and (ii) must not involve more than the
normal risk of repayment or present other unfavorable features. Banks are also
subject to certain lending limits and restrictions on overdrafts to such
persons. A violation of these restrictions may result in the assessment of
substantial civil monetary penalties on the affected bank or any officer,

director, employee, agent or other person participating in the conduct of the
affairs of that bank, the imposition of a cease and desist order, and other
regulatory sanctions.

The Federal Reserve and the FDIC have adopted non-capital safety and
soundness standards for institutions under their authority. These standards
cover internal controls, information and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees and benefits, and standards for asset quality, earnings and
stock valuation. An institution which fails to meet these standards must develop
a plan acceptable to the agency, specifying the steps that the institution will
take to meet the standards. Failure to submit or implement such a plan may
subject the institution to regulatory sanctions. Management believes that the
Bank is in substantial compliance with these standards.

DEPOSIT INSURANCE. The deposits of the Bank are currently insured to a
maximum of $100,000 per depositor through the Bank Insurance Fund ("BIF"),
administered by the FDIC. The Bank is required to pay semi-annual deposit
insurance premium assessments to the FDIC. Assessments are based on how much
risk a bank is deemed to present to the BIF. Banks with higher levels of capital
and a low degree of supervisory concern are assessed lower premiums than banks
with lower levels of capital or involving a higher degree of supervisory
concern. The Bank qualifies for the lowest premium level, and currently pays
only the statutory minimum rate.

DIVIDENDS. Under the Oregon Bank Act, the Bank is subject to
restrictions on the payment of cash dividends to its parent company. A bank may
not pay cash dividends if that payment would reduce the amount of its capital
below that necessary to meet minimum applicable regulatory capital requirements.
In addition, the amount of the dividend may not be greater than its net
unreserved retained earnings, after first deducting (i) to the extent not
already charged against earnings or reflected in a reserve, all bad debts, which
are debts on which interest is unpaid and past due at least six months; (ii) all
other assets charged off as required by the Oregon Director or state or federal
examiner; and (iii) all accrued expenses, interest and taxes..

In addition, the appropriate regulatory authorities are authorized to
prohibit banks and bank holding companies from paying dividends that would
constitute an unsafe or unsound banking practice. The Company is not currently
subject to any regulatory restrictions on dividends other than those noted
above.

CAPITAL ADEQUACY. The federal and state bank regulatory agencies use
capital adequacy guidelines in their examination and regulation of financial
holding companies and banks. If the capital falls below the minimum levels
established by these guidelines, a holding company or a bank may be denied
approval to acquire or establish additional banks or non-bank businesses or to
open new facilities.

The FDIC and Federal Reserve have adopted risk-based capital guidelines
for banks and bank holding companies. The risk-based capital guidelines are
designed to make regulatory capital requirements more sensitive to differences
in risk profile among banks and bank holding companies, to account for
off-balance sheet exposure and to minimize disincentives for holding liquid
assets. Assets and off-balance sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and off-balance
sheet items. The capital adequacy guidelines limit the degree to which a bank or
bank holding company may leverage its equity capital.

EFFECTS OF GOVERNMENT MONETARY POLICY. The earnings and growth of the
Company are affected not only by general economic conditions, but also by the
fiscal and monetary policies of the federal government, particularly the Federal
Reserve. The Federal Reserve can and does implement national monetary policy for
such purposes as curbing inflation and combating recession, by its open market
operations in U.S. Government securities, control of the discount rate
applicable to borrowings from the Federal Reserve, and establishment of reserve
requirements against certain deposits. These activities influence growth of bank
loans, investments and deposits, and also affect interest rates charged on loans
or paid on deposits. The nature and impact of future changes in monetary
policies and their impact on the Company cannot be predicted with certainty.

BROKER-DEALER AND RELATED REGULATORY SUPERVISION. Strand Atkinson is a
member of the National Association of Securities Dealers and is subject to their
regulatory supervision. Areas subject to this regulatory review include
compliance with trading rules, financial reporting, investment suitability for
respective clients, and compliance with NYSE rules and regulations.

CHANGING REGULATORY STRUCTURE OF THE FINANCIAL SERVICES INDUSTRY.
Federal laws and regulations governing banking and financial services have
undergone significant changes in recent years and are subject to significant

changes in the future. Bills are now pending or expected to be introduced in the
United States Congress that contain proposals for altering the structure,
regulation, and competitive relationships of the nation's financial
institutions. If enacted into law, these bills could increase or decrease the
cost of doing business, limit or expand permissible activities, or affect the
competitive balance among banks, savings associations, and other financial
institutions. Whether or in what form any such legislation may be adopted or the
extent to which the business of the Company might be affected thereby cannot be
predicted.

Of particular significance Congress enacted the Gramm-Leach-Bliley Act
in December 1999. The GLB Act repealed sections of the Banking Act of 1933,
commonly referred to as the Glass-Steagall Act, that prohibited banks from
engaging in securities activities, and prohibited securities firms from engaging
in banking. The GLB Act created a new form of holding company, known as a
financial holding company, that is permitted to acquire subsidiaries that are
variously engaged in banking, securities underwriting and dealing, and insurance
underwriting.

A bank holding company, if it meets specified criteria, may become a
financial holding company by filing a declaration with the Federal Reserve, and
may thereafter provide its customers with a far broader spectrum of products and
services than a traditional bank holding company is permitted to do. A financial
holding company may, through a subsidiary, engage in any activity that is deemed
to be financial in nature and activities that are incidental or complementary to
activities that are financial in nature. These activities include traditional
banking services and activities previously permitted to bank holding companies
under Federal Reserve regulations, but also include underwriting and dealing in
securities, providing investment advisory services, underwriting and selling
insurance, merchant banking (holding a portfolio of commercial businesses,
regardless of the nature of the business, for investment), and arranging or
facilitating financial transactions for third parties.

To qualify as a financial holding company, the bank holding company
must be deemed to be well-capitalized and well-managed, as those terms are used
by the Federal Reserve. In addition, each subsidiary bank of a bank holding
company must also be well-capitalized and well-managed. Further, each subsidiary
bank must be rated at least "satisfactory" under the Community Reinvestment Act.

A bank holding company that does not qualify, or has not chosen, to
become a financial holding company must limit its activities to traditional
banking activities and those non-banking activities the Federal Reserve has
deemed to be permissible because they are closely related to the business of
banking.

The GLB Act also includes provisions to protect consumer privacy by
prohibiting financial services providers, whether or not affiliated with a bank,
from disclosing non-public personal, financial information to unaffiliated
parties without the consent of the customer, and by requiring annual disclosure
of the provider's privacy policy.

Legislation enacted by Congress in 1995 permits interstate banking and
branching, which allows banks to expand nationwide through acquisition,
consolidation or merger. Under this law, an adequately capitalized bank holding
company may acquire banks in any state or merge banks across state lines if
permitted by state law. Further, banks may establish and operate branches in any
state subject to the restrictions of applicable state law. Under Oregon law, an
out-of-state bank or bank holding company may merge with or acquire an Oregon
state chartered bank or bank holding company if the Oregon bank, or in the case
of a bank holding company, the subsidiary bank, has been in existence for a
minimum of three years, and the law of the state in which the acquiring bank in
located permits such merger. Branches may not be acquired or opened separately,
but once an out-of-state bank has acquired branches in Oregon, either through a
merger with or acquisition of substantially all the assets of an Oregon bank,
the acquirer may open additional branches.

Item 2. PROPERTIES

The Company's main office is located in Roseburg, Oregon. Umpqua
conducts its business through Umpqua Bank's 27 full-service financial stores and
Strand Atkinson's 4 stand-alone offices throughout its market area.

Umpqua Bank's stores are located in Roseburg (4), Grants Pass (4),
Eugene (3), Medford (3), Salem, Portland, Sutherlin, Canyonville, Myrtle Creek,
Glendale, Springfield, Merlin, Rogue River, Central Point, Talent, Phoenix, and
Ashland. All of the stores have automated teller machines and 26 of the 27 have
drive-up windows. Umpqua owns all but 7 stores, and leases the land on which 7
others are located. Umpqua has options to extend existing leases on the leased
facilities. Umpqua's twenty-seven stores range in size from approximately 1,100

square feet to slightly more than 15,000 square feet. In one store, excess space
is leased to others. The Company opened a loan service center in February 1999
in Roseburg, Oregon. The property, which is leased, is approximately 4,828
square feet and houses loan processing staff. Strand Atkinson leases its
stand-alone offices, which are located in Portland, Eugene, and Medford, Oregon,
and Kalama, Washington.

Item 3. LEGAL PROCEEDINGS

No material legal proceedings, to which the Company is a party or which
involve any of its properties, were pending as of the date of this report on
Form 10-K.

Item 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITIES HOLDERS

(a) Umpqua held a Special Meeting of Shareholders on November 30, 2000.

(b) Not Applicable.

1. To vote on an Agreement and Plan of Reorganization and accompanying
Plan of Merger providing for the merger of Umpqua Holdings Corporation with VRB
Bancorp and the election of eleven directors to serve following the merger.
Shareholders approved the Merger by the votes indicated:

Number of Votes
---------------
For 6,205,817
Against 60,417
Abstain 7,499
Broker Non-Votes 1,351,884

Shareholders elected the following eleven directors by the votes
indicated:

For Against
------- -------

Raymond P. Davis 6,205,817 60,417
David B. Frohnmayer 6,205,817 60,417
William A. Haden 6,205,817 60,417
Allyn C. Ford 6,205,817 60,417
Ronald O. Doan 6,205,817 60,417
James D. Coleman 6,205,817 60,417
Michael Donovan 6,205,817 60,417
Lynn K. Herbert 6,205,817 60,417
Scott Chambers 6,205,817 60,417
Larry L. Parducci 6,205,817 60,417
John O. Dunkin 6,205,817 60,417

2. Adoption of the Umpqua Holdings Corporation 2000 Stock Option Plan,
which plan provides for the issuance of up to 1,000,000 shares of common stock
upon exercise of incentive stock and nonqualified stock options. Shareholders
adopted the 2000 Stock Option Plan by the votes indicated:

Number of Votes
---------------
For 5,453,326
Against 421,700
Abstain 398,717
Broker Non-Votes 1,351,884

(d) Not Applicable.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Umpqua's Common Stock is traded over-the-counter on the NASDAQ Stock
Market National Market System under the symbol "UMPQ." Prior to the second
quarter of 1998, when the Company completed a public offering and registered its
stock under the Securities Exchange Act of 1934, the Common Stock was traded
over-the-counter through the Bulletin Board Service of the NASDAQ Stock Market
and the Pink Sheet Service of the National Quotation Bureau. The following lists
the high and low trade prices for each period, as adjusted for subsequent stock
dividends and stock splits. Prices do not include retail mark-ups, mark-downs or
commissions:

High Trade Low Trade Cash
Price for Price for Dividends
Period Period Declared
-------- -------- --------
1999
First Quarter $ 11.00 $ 8.75 $ 0.04
Second Quarter $ 10.625 $ 8.25 $ 0.04
Third Quarter $ 10.625 $ 8.00 $ 0.04
Fourth Quarter $ 11.00 $ 8.50 $ 0.04
2000
First Quarter $ 10.00 $ 5.50 $ 0.04
Second Quarter $ 9.00 $ 6.75 $ 0.04
Third Quarter $ 8.625 $ 7.375 $ 0.04
Fourth Quarter $ 8.50 $ 7.50 $ 0.04

As of March 20, 2001, the Common Stock was held of record by approximately 1,016
shareholders, a number that does not include beneficial owners who hold shares
in "street name."

Oregon and federal banking laws and regulations place restrictions on
the payment of dividends by a bank to its shareholders. The Board of Directors'
dividend policy is to review the Company's financial performance, capital
adequacy, regulatory compliance and cash resources on a quarterly basis, and, if
such review is favorable, to declare and pay a cash dividend to shareholders.
Although the Company expects to continue to pay cash dividends, future dividends
are subject to these limitations and to the discretion of the Board of
Directors, and could be reduced or eliminated.

The Company has a dividend reinvestment plan that permits participants
to have shares purchased at the then-current market price in lieu of the receipt
of cash dividends.

Item 6. SELECTED FINANCIAL DATA

UMPQUA HOLDINGS CORPORATION
(dollars in thousands except share data)

Financial Highlights
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Net Income $ 8,871 $ 9,762 $ 9,037 $ 6,478 $ 5,612
Basic Earnings Per Common Share $ 0.62 $ 0.67 $ 0.63 $ 0.53 $ 0.46
Fully Diluted Earnings Per Common Share $ 0.61 $ 0.66 $ 0.62 $ 0.52 $ 0.45
Total Shareholders' Equity $ 78,801 $ 70,326 $ 71,381 $ 51,833 $ 37,210
Total Assets $785,648 $697,469 $629,032 $463,654 $380,945
Total Loans $531,677 $450,028 $366,661 $279,291 $214,269
Total Deposits $681,305 $577,297 $529,319 $394,254 $328,405

Selected Ratios
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Return on Average Assets 1.22% 1.51% 1.54% 1.61% 1.60%
Return on Average Equity 11.94% 13.86% 13.89% 16.67% 16.09%
Net Interest Margin 5.50% 5.66% 5.67% 5.89% 5.98%
Efficiency Ratio 64.28% 55.74% 55.46% 57.46% 54.84%
Loans / Deposits 78.04% 77.95% 69.27% 70.84% 65.25%

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

The response to this item is incorporated by reference to the Company's
2000 Annual Report to Shareholders, pages 1-15.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information called for by this item is incorporated by reference to
the Company's 2000 Annual Report to Shareholders, pages 1-15.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements called for by this item are incorporated by
reference to the Company's 2000 Annual Report to Shareholders, pages 18-42.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

The response to this item is incorporated herein by reference to Form
8-K, filed on April 10, 2000.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The response to this item is incorporated by reference to the Company's
Proxy Statement for the 2001 annual meeting of shareholders scheduled for April
25, 2001, under the captions "Election of Directors" and "Executive Officers."

Item 11. EXECUTIVE COMPENSATION

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The response to this item is incorporated by reference to the Company's
Proxy Statement for the 2001 annual meeting of shareholders scheduled to be held
April 25, 2001, under the caption "Security Ownership of Management and Others."

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements:

The consolidated financial statements are incorporated by
reference to pages 18-42 of the Company's 2000 Annual Report
to Shareholders

(2) Financial Statement Schedules:

All schedules have been omitted because the information is not
required, not applicable, not present in amounts sufficient to
require submission of the schedule, or is included in the
financial statements or notes thereto.

(3) The exhibits filed with this report are listed in the Exhibit
Index on sequential page 17.

(b) On December 18, 2000, the registrant filed a Form 8-K to
report under Item 2 the completion of the previously announced
merger with VRB Bancorp.

The following financial statements were filed as part of this
Form 8-K:

(i) Financial Statements of VRB Bancorp

o Unaudited Balance Sheet as of September 30,
2000

o Unaudited Consolidated Statements of Income
and Comprehensive Income for the nine months
ended September 30, 2000

o Unaudited Consolidated Statements of Changes
in Shareholders' Equity for the nine months
ended September 30, 2000

o Unaudited Consolidated Statements of Cash
Flows for the nine months ended September
30, 2000

o Notes to Financial Statements for the nine
months ended September 30, 2000

o Independent Auditor's Report

(ii) Pro Forma Combined Financial Information

o Unaudited Pro Forma Combined Balance Sheet
as of September 30, 2000

o Unaudited Pro Forma Combined Statement of
Income for the nine months ended September
30, 2000

o Unaudited Pro Forma Condensed Combined
Statement of Income for the year ended
December 31, 1999

o Unaudited Pro Forma Combined Statement of
Income for the year ended December 31, 1998

o Unaudited Pro Forma Combined Statement of
Income for the year ended December 31, 1997

o Notes to Unaudited Pro Forma Combined
Financial Statements

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.

UMPQUA HOLDINGS CORPORATION (Registrant)

By:/s/ Raymond P. Davis Date: March 21, 2001
-------------------------------------------------------
Raymond P. Davis, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

By:/s/ Allyn C. Ford Date: March 21, 2001
-------------------------------------------------------
Allyn C. Ford, Director

By:/s/ Lynn K. Herbert Date: March 21, 2001
-------------------------------------------------------
Lynn K. Herbert, Director

By:/s/ James D. Coleman Date: March 21, 2001
-------------------------------------------------------
James D. Coleman, Director

By:/s/ Ronald O. Doan Date: March 21, 2001
-------------------------------------------------------
Ronald O. Doan, Director

By:/s/ David B. Frohnmayer Date: March 21, 2001
-------------------------------------------------------
David B. Frohnmayer, Director

By:/s/ Larry L. Parducci Date: March 21, 2001
-------------------------------------------------------
Larry L. Parducci, Director

By:/s/ Scott Chambers Date: March 21, 2001
-------------------------------------------------------
Scott Chambers, Director

By:/s/ John O. Dunkin Date: March 21, 2001
-------------------------------------------------------
John O. Dunkin, Director

By:/s/ Michael Donovan Date: March 21, 2001
-------------------------------------------------------
Michael Donovan, Director

By:/s/ William A. Haden Date: March 21, 2001
-------------------------------------------------------
William A. Haden, Director, Executive Vice President,
and President and Chief Executive Officer of Umpqua Bank

By:/s/ Raymond P. Davis Date: March 21, 2001
-------------------------------------------------------
Raymond P. Davis, Director, President and
Chief Executive Officer

By:/s/ Daniel A. Sullivan Date: March 21, 2001
-------------------------------------------------------
Daniel A. Sullivan, Senior Vice President/Chief Financial Officer
Principal Accounting Officer

EXHIBIT INDEX

Exhibit
- ------- -

2 Agreement and Plan of Reorganization and accompanying Plan of Merger
dated August 14, 2000, by and among Umpqua Holdings Corporation, South
Umpqua Bank, VRB Bancorp, and Valley of the Rogue
Bank.................................................................*

3 (i) Articles of Incorporation of Umpqua Holdings Corporation........**

(ii)Bylaws of Umpqua Holdings Corporation...........................**

4.0 Specimen Stock Certificate..........................................**

10.1 Executive Employment and Compensation Agreement dated as of July 10,
2001, and revised as of March 20, 2001, for Ray Davis

10.2 Executive Employment Agreement dated effective as of December 1, 2001,
for William A. Haden

10.3 Executive Employment Agreement dated March 21, 2001, for Daniel A.
Sullivan

10.4 2000 Stock Option Plan as adopted by Umpqua Holdings Corporation as of
December 1, 2000.....................................................*

10.5 Description of South Umpqua State Bank's 1997 Incentive Plan for Senior
Management.........................................................***

10.6 Retail Lease Agreement dated November 1, 1994, relating to lease of
Garden Valley Shopping Center Branch Office in Roseburg, Oregon....***

10.7 Lease Agreement dated November 5, 1996, relating to lease of Gateway
Mall Brach Office in Springfield, Oregon...........................***

10.8 Commercial Building Lease dated August 29, 1996, relating to lease of
40th and Donald Street Branch Office in Eugene, Oregon.............***

10.9 Commercial Lease dated October 23, 1973, and related agreements
relating to lease of Glendale, Oregon, Branch Office...............***

10.10 Strand, Atkinson, Williams & York, Inc. Purchase Agreement dated
May 10, 1999......................................................****

10.11 Ground Lease (including First Amendment) dated 2/12/99 relating to
lease of the Salem, Oregon store..................................****

10.12 Commercial lease agreement dated February 25, 1999 related to lease of
the Northeast Portland store......................................****

10.13 Commercial lease agreement dated November 5, 1998 relating to the
Roseburg, Oregon Loan Center......................................****

10.14 Ground Lease dated June 1, 1988, relating to lease of parking area of
Poplar Drive (Medford) branch office.............................*****

10.15 Lease Agreement dated August 15, 1989, relating to lease of Stewart
Avenue (Medford) branch office...................................*****

10.16 Lease Agreement dated December 27, 1979, and related agreements for the
lease of the Talent branch office................................*****

13.0 Annual Report to Shareholders

21.1 Subsidiaries of the Registrant

23.0 Consent of Independent Auditors

23.1 Consent of KPMG LLP

99.1 Report of KPMG LLP

99.2 Report of Moss Adams LLP******

* Incorporated herein by reference to Appendices to the Joint Proxy
Statement filed by the registrant October 26, 2000.

** Incorporated herein by reference to the registration statement on Form
S-8 filed by the registrant on April 23, 1999.

*** Incorporated herein by reference to the registration statement on Form
10 filed by South Umpqua Bank as predecessor registrant, as declared
effective by the Federal Deposit Insurance Corporation on April 1,
1998.

**** Incorporated herein by reference to Exhibit 10.12 to the annual report
on Form 10-K filed by the registrant on March 31, 2000.

***** Incorporated herein by reference to the registration statement on Form
10 filed on April 26, 1995 (Commission File # 0-25932) by VRB pursuant
to Section 12(g) of the Securities Exchange Act of 1934.

****** Incorporated herein by reference to Exhibit 13 to Form 10-K filed March
29, 2000, by VRB Bancorp.