Commission File Number: 000-25597

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.

   X    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, outstanding as of July 31, 2002: 20,108,342

UMPQUA HOLDINGS CORPORATION
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS

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(a) Basis of financial statement preparation

The accompanying condensed consolidated financial statements have been prepared by the Company without audit and in conformity with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain financial information and footnotes have been omitted or condensed. The condensed consolidated financial statements include the accounts of Umpqua Holdings Corporation (the Company), and its wholly-owned subsidiaries Umpqua Bank (the Bank) and Strand, Atkinson, Williams & York, Inc. (Strand, Atkinson). All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all necessary adjustments (which are of a normal and recurring nature) for the fair presentation of the results of the interim periods presented. These financial statements should be read in conjunction with the Company's 2001 annual report to shareholders. The res ults of operations for the 2002 interim periods shown in this report are not necessarily indicative of the results for any future interim period or the entire fiscal year.

(b) Critical accounting policies

The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used, including the adequacy of the allowance for loan and lease losses, impairment of intangible assets, and contingencies and litigation. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the circumstances. These estimates result in judgments regarding the carrying values of assets and liabilities when these values are not readily available from other sources as well as assessing and identifying the accounting treatments of commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies involve the more significant judgments and assumptions used in the preparation of the consolidated f inancial statements.

The allowance for loan and lease losses is established to absorb known and inherent losses attributable to loans outstanding and related off-balance sheet commitments. The adequacy of the allowance is monitored on an ongoing basis and is based on management's evaluation of numerous factors. These factors include the quality of the current loan portfolio, the trend in the loan portfolio's risk ratings, current economic conditions, loan concentrations, loan growth rates, past-due and non-performing trends, evaluation of specific loss estimates for all significant problem loans, historical charge-off and recovery experience and other pertinent information. Approximately 70 percent of the Company's loan portfolio is secured by real estate and a significant depreciation in real estate values in Oregon would cause management to increase the allowance for loan and lease losses.

Retained mortgage servicing rights are measured by allocating the carrying value of the loans between the assets sold and the interest retained, based on the relative fair value at the date of the sale. The fair market values are determined using a discounted cash flow model. Mortgage servicing assets are amortized over the expected life of the loan and are evaluated periodically for impairment. The expected life of the loan can vary from management's estimates due to prepayments by borrowers. Prepayments in excess of management's estimates would negatively impact the recorded value of the mortgage servicing rights. The value of the mortgage servicing rights is also dependent upon the discount rate used in the model. Management reviews this rate on an ongoing basis based on current market rates. A significant increase in the discount rate would negatively impact the value of mortgage servicing rights.

At June 30, 2002 the Company had approximately $23.9 million in goodwill as a result of business combinations. The Company adopted Statement of Financial Accounting Standard No. 142 on January 1, 2002. Ongoing analysis of the fair value of recorded goodwill for impairment will involve a substantial amount of judgment, as will establishing and monitoring estimated lives of other amortizable intangible assets.

The Company is party to various legal proceedings. These matters have a high degree of uncertainty associated with them. There can be no assurance that all matters that may be brought against the Company are known to us at any point in time.

(c) Earnings per share

Basic and diluted earnings per share are based on the weighted average number of common shares outstanding during each period, with diluted including the effect of potentially dilutive common shares. The weighted average number of common shares outstanding for basic and diluted earnings per share computations were as follows:

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(2)     SEGMENT INFORMATION

For purposes of measuring and reporting the financial results, the Company is divided into three business segments; Community Banking, Mortgage Banking and Retail Brokerage Services. The Community Banking segment consists of the operations conducted by the Company's subsidiary Umpqua Bank. The Bank provides a full array of credit and deposit products to meet the banking needs of its market area and targeted customers. At June 30, 2002, the Bank had 45 full service stores. The Mortgage Banking segment originates, sells and services residential mortgage loans. The Retail Brokerage Services segment consists of the operations of the Company's subsidiary Strand, Atkinson, Williams & York, Inc. Strand, Atkinson provides a full range of retail brokerage services to its clients and has sales counters at most of the Bank's stores. The following table presents summary income statements and reconciliation to the Company's consolidated totals for the three and six-month periods ended June 30, 2002 and 2001 (in thousands).

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On July 23, 2002 the Company announced the signing of a definitive agreement for the acquisition of Centennial Bancorp by merger. Upon completion of the transaction, Centennial Bancorp shareholders, with a total of 24.7 million shares of common stock outstanding, may elect to receive either $9.35 per share in cash or 0.5343 Umpqua Holdings shares for each share of Centennial Bancorp. The exchange ratio is subject to adjustment under certain conditions. Umpqua Holdings will issue approximately 8.6 million shares of its own stock to acquire 65 percent of Centennial Bancorp's outstanding shares at a fixed exchange ratio of 0.5343 Umpqua Holdings shares for each share of Centennial Bancorp. The remaining 35 percent of outstanding Centennial Bancorp shares will be acquired for an aggregate of approximately $81.0 million in cash.

The boards of directors of both companies have approved the definitive agreement. Completion of the transaction is expected in the fourth quarter of 2002 and is subject to regulatory and shareholder approval.

In conjunction with the acquisition of Centennial Bancorp, the Company expects to issue approximately $75 million in preferred stock, senior debt securities, or some combination thereof. The proceeds of these securities will be used to fund the cash portion of the acquisition price. Additionally, these securities are expected to qualify as regulatory capital under the Federal Reserve Bank regulations.

The operational integration of the combined institutions is expected to be completed during the first half of 2003. The combined organization will have assets of approximately $2.3 billion, deposits of approximately $2.0 billion, and shareholders' equity of approximately $317 million.

The Company adopted Financial Accounting Standard 142, Goodwill and Other Intangible Assets, on January 1, 2002. In accordance with the standard, Goodwill and other intangibles with indefinite lives are no longer being amortized but instead will be tested for impairment at least annually. Management completed impairment testing for the Company's intangibles during the quarter ended June 30, 2002 and determined that there was no impairment. The following tables summarize selected intangible asset information:

The following discussion contains a review of Umpqua Holdings Corporation's (the Company) financial condition at June 30, 2002 and the operating results for the three and six months then ended. When warranted, comparisons are made to the same periods in 2001 and to December 31, 2001. This discussion should be read in conjunction with the financial statements (unaudited) contained elsewhere in this report.

This discussion and information in the accompanying financial statements contains certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated. These risks and uncertainties include the Company's ability to maintain or expand its market share and net interest margins, or to implement its marketing and growth strategies. Further, actual results may be affected by the Company's ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; and general trends in the banking and the regulatory environment, as they relate to the Company's cost of funds and returns on assets. In addition there are risks inherent in the banking industry relating to the collectability of loans and changes in interest rates. Risks associated with the anticipated acquisition of Centennial Bancorp include the receipt and timing of shareholder and regulatory approvals; the issuance of approximately $75 million in preferred stock, senior debt securities or some combination thereof to fund the cash portion of the acquisition price; the election made by shareholders of Centennial Bancorp; and the maintenance of current deposit levels and the market value of Umpqua Common Stock prior to and following the merger. The reader is advised that this list of risks is not exhaustive and should not be construed as any prediction by the Company as to which risks would cause actual results to differ materially from those indicated by the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

The Company earned $5.28 million for the quarter ended June 30, 2002, up $2.0 million from the comparable quarter of the prior year. Diluted earnings per share improved to $0.26 for the second quarter of 2002, up from $0.17 for the same period in 2001. Return on average assets and return on average equity were 1.48% and 14.82%, respectively, for the quarter compared with 1.10% and 11.27%, respectively, in 2001. The Company's net interest margin for the quarter was 5.63% compared with 5.07% for the second quarter of 2001. The Bank's efficiency ratio continued to improve during the quarter as benefits from integration and consolidation initiatives were realized. The Bank's efficiency ratio was 57.2% for the second quarter of 2002 compared with an efficiency ratio, excluding merger related costs, of 59.8% in the second quarter of 2001.

For the first six months of 2002, the Company earned $9.24 million or $0.46 per diluted share. This compares with $5.86 million and $0.31 per diluted share in the prior year. Return on average assets and average equity were 1.31% and 13.24%, respectively, for the six-month period ended June 30, 2002 compared with 1.01% and 10.28%, respectively, for the same period in the prior year.

Total assets grew to $1.490 billion at June 30, 2002 up from $1.429 billion at December 31, 2001.

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Net interest income

Net interest income is the primary source of the Company's revenue. Net interest income is the difference between interest income generated from earning assets, primarily loans and investment securities, and interest expense paid on customer deposits and debt. Changes in net interest income result from changes in "volume" and "rate". Volume refers to the level of interest earning assets and interest bearing liabilities while rate refers to the underlying yields on assets and costs of liabilities.

Net interest income on a taxable equivalent basis was $18.1 million for the quarter ended June 30, 2002 compared with $13.7 million for the same period in 2001 (Tables 1 and 2). The increase of $4.4 million was primarily attributable to an increase in the volume of earning assets as well as an improvement in the net interest spread. Average earning assets increased $205 million or 19% compared with the same period in the prior year. Loans, the largest component of earning assets, increased $233 million on average compared with the prior year period. Offsetting this increase were decreases in average taxable investment securities and temporary investments. Overall, the yield on earning assets decreased to 7.33% for the quarter compared with 8.25% for the same period in the prior year. This decline was primarily attributable to the 1.24% decrease in the yield on loans. This decline was due to variable loan repricings as well as new loan production occurring at lower rates. Average prime rate for the second quarter of 2002 was 4.75% compared with 7.34% for the second quarter of 2001. Average noninterest earning assets were $42 million higher in the second quarter of 2002 compared with the second quarter of 2001. The increase was primarily attributable to intangibles and other assets related to the acquisition of Linn-Benton Bank. Average interest-bearing liabilities increased $150 million compared with the prior year period. Of this increase, $120 million was in the interest-bearing checking and savings accounts deposit category, generally the least expensive deposit product. The overall cost of interest-bearing liabilities for the second quarter of 2002 was 2.20% compared with 4.08% for the second quarter of 2001, a 1.88% decrease. The decrease was primarily the result of decreases in rates paid on interest bearing checking and time deposits. As time deposits matured during 2001 and 2002 the Company was able to roll them over at lower rates. Average noninterest-bearing funding sources increased $93 million compared with the prior year period. As a result of the preceding changes, the interest spread (the difference between the yield on earning assets and the cost of interest bearing liabilities) increased 0.96 % to 5.13% for the quarter ended June 30, 2002 compa red with the same period in the prior year. The net interest margin for the quarter ended June 30, 2002 was 5.63%, an increase of 0.56% from the same period in the prior year.

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Net interest income on a taxable equivalent basis was $35.8 million for the first six months of 2002 compared with $26.8 million for the same period in 2001 (Tables 3 and 4). The primary reason for the increase was an increase in the volume of earning assets. Average earning assets for the first six months of 2002 were $1.28 billion compared with $1.07 billion for the same period in 2001. While the average volume of earning assets increased, the average yield decreased from 8.40% in 2001 to 7.40% in 2002. This decrease was due to asset repricings during a period of declining interest rates. Average interest bearing liabilities also increased during the period, from $832.5 million for the first six months of 2001 to $993.5 million for the same period in 2002. Similar to earning assets, the cost of interest bearing liabilities decreased from 4.26% in 2001 to 2.26% in 2002. The decrease in the cost of interest bearing liabilities was due to repricings of interest bearing checking a nd savings accounts as well as the rollover of maturing certificates of deposit at lower rates. As a result of the preceding changes, the interest spread (the difference between the yield on earning assets and the cost of interest bearing liabilities) increased 1.01 % to 5.14% for the six months ended June 30, 2002 compared with the same period in the prior year. The net interest margin for the six months ended June 30, 2002 was 5.65%, an increase of 0.59% from the same period in the prior year.

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Provision for Credit Losses

Noninterest Income

Noninterest income for the quarter ended June 30, 2002 was $6.0 million, equal to the amount recorded in the second quarter of 2001. Brokerage commissions and fees, the largest component of noninterest income, increased $298,000 over the prior year. Service charges, the second largest component of noninterest income, decreased slightly to $1.88 million compared with $2.01 million for the same quarter in the prior year. Mortgage banking revenue was $2.22 million for the second quarter of 2002 compared with $1.38 million for the second quarter of 2001. The increase was due to increased mortgage banking activity related to lower interest rates in 2002. The Company originated $263 million in residential mortgages during the second quarter of 2002 compared with $164 million in 2001. Other noninterest income for the second quarter of 2002 was ($423,000) compared with $582,000 for the same period in 2001. The reason for the decline was a $900,000 impairment charge related to an investment in a Worldcom bond. The remaining book value of the bond on the Company's books at June 30, 2002 was $82,000.

For the first six months of 2002 noninterest income was $12.48 million compared with $10.96 million for the same period in 2001. The increase was primarily attributable to mortgage banking revenue which increased $1.85 million compared with the prior year and brokerage commission which increased $542,000. These increases were offset by the previously mentioned $900,000 impairment charge recorded in the second quarter of 2002.

Noninterest Expense

Noninterest expense for the quarter ended June 30, 2002 was $14.89 million compared with $13.82 million for the same period in 2001. Salaries and employee benefits increased $1.02 million to $8.57 million in the second quarter of 2002. The increase was due to increased mortgage banking activity and salaries and benefits associated with the acquisition of Linn-Benton Bank. Premises and equipment expense increased $152,000 compared with the prior year due to expenses associated with new stores and expanded backroom facilities and equipment. Other noninterest expense increased $76,000 to $4.11 million for the second quarter of 2002.

For the first six months of 2002 noninterest expense was $31.33 million compared with $26.96 million for the first six months of 2001. Salaries and benefits increased $2.71 million due to increased mortgage banking activity and salaries and benefits associated with the acquisition of Linn-Benton Bank. Premises and equipment and other noninterest expense also increased due to expenses associated with news stores and expanded backroom support facilities and equipment. Merger expenses for the first six months of 2002 were $1.52 million and were associated with the acquisitions of Independent Financial Network and Linn-Benton Bank. Merger expenses of $968,000 incurred during the first six months of 2001 were related to the acquisition of Valley of the Rogue Bancorp.

Accrued merger expenses at June 30, 2002 were $2.24 million and consisted primarily of accrued severance and related expenses and contract termination costs.

Income taxes

The effective tax rate for the Company was 35.8% during the second quarter of 2002 compared with 35.0 % during the second quarter of 2001.

For the first six months of 2002 The Company's effective tax rate was 36.9% compared with 37.0% for the comparable period in 2001.

Significant changes in the Company's financial position from December 31, 2001 to June 30, 2002 are as follows:

Loans and leases

Allowance for Credit Losses

The allowance for credit losses is maintained at a level considered by management to be adequate to absorb losses inherent in the loan portfolio. Management monitors and evaluates the adequacy of the allowance on an ongoing basis. The following tools are used to manage and evaluate the loan and lease portfolio:

• Internal credit review and risk grading system
• Regulatory examination results
• Monitoring of charge-off, past due and non-performing activity and trends
• Assessment of economic and business conditions in our market areas

On a quarterly basis losses inherent in the portfolio are estimated by reviewing the following key elements of the loan portfolio:

• Portfolio performance measures
• Portfolio mix
• Portfolio growth rates
• Historical loss rates
• Portfolio concentrations
• Current economic conditions in our market areas

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The Company also tests the adequacy of the allowance for credit losses using the following methodologies:

• Loss allocation by internally assigned risk rating
• Loss allocation by portfolio type based on historic loan and lease loss experience
• The allowance as a percentage of total loans and leases

The allowance for credit losses is based upon estimates of losses inherent in the portfolio. The amount of losses actually incurred can vary significantly from these estimates. Assessing the adequacy of the allowance on a quarterly basis allows management to adjust these estimates based upon the most recent information available.

Activity in the allowance for credit losses for the six-month periods ending June 30 was as follows: