Segment Information

In the first quarter of 2017, the Company realigned its operating segments based on changes in its internal reporting structure to align with the change in the Company's Chief Operating Decision Maker. The Company now reports four primary segments: Commercial Bank, Wealth Management, Retail Bank, and Home Lending with the remainder as Corporate and other. The prior periods have been restated to reflect current presentation of segments.

The Commercial Bank segment includes lending, treasury and cash management services and customer risk management products to small businesses, middle market and larger commercial customers and includes the operations of Financial Pacific Leasing Inc., a commercial leasing company. The Wealth Management segment consists of the operations of Umpqua Investments, which offers a full range of retail brokerage and investment advisory services and products to its clients who consist primarily of individual investors, and Umpqua Private Bank, which serves high net worth individuals with liquid investable assets and provides customized financial solutions and offerings. The Retail Bank segment includes retail lending and deposit services for customers served through the Bank's store network. The Home Lending segment originates, sells and services residential mortgage loans. The Corporate and other segment includes activities that are not directly attributable to one of the four principal lines of business and includes the operations of Pivotus Ventures, Inc. and the parent company, eliminations and the economic impact of certain assets, capital and support functions not specifically identifiable within the other lines of business.

Management monitors the Company's results using an internal performance measurement accounting system, which provides line of business results and key performance measures. A primary objective of this profitability measurement system and related internal financial reporting practices are designed to produce consistent results that reflect the underlying economics of the businesses, and to support strategic objectives and analysis based on how management views the business. Various methodologies employed within this system to measure performance are based on management's judgment or other subjective factors. Consequently, the information presented is not necessarily comparable with similar information for other financial institutions.

This system uses various techniques to assign balance sheet and income statement amounts to the business segments, including internal funds transfer pricing, allocations of income, expense, the provision for credit losses, and capital. The application and development of these management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable segment may be periodically revised retrospectively, if material.

Funds transfer pricing is used in the determination of net interest income reported by assigning a cost for funds used or credit for funds provided to all assets and liabilities within each business segment. In general, assets and liabilities are match-funded based on their maturity or repricing characteristics, adjusted for estimated prepayments if applicable. The value of funds provided or cost of funds used by the business segments is priced at rates that approximate wholesale market rates of the Company for funds with similar duration and re-pricing characteristics. Market rates are generally based on LIBOR or interest rate swap rates, plus consideration of the Company’s incremental credit spread/cost of borrowing. As a result, the business segments are generally insulated from changes in interest rates. This method of funds transfer pricing also serves to transfer interest rate risk to Treasury, which is contained within the Corporate & Other segment. However, the business segments have some latitude to retain certain interest rate exposures related to customer pricing decisions that are within overall Corporate guidelines.

Noninterest income and expenses directly attributable to a business segment are directly recorded within that business unit. To better analyze the total financial performance of each business unit and to consider the total cost to support a segment, management allocates centrally provided support services and other corporate overhead to the business segments based on various methodologies. Examples of these type of expense overhead pools include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing. Expense allocations are based on actual usage where practicably calculated or by management’s estimate of such usage. Example of typical expense allocation drivers include number of employees, loan or deposits average balances or counts, origination or transaction volumes, credit quality related indicators, noninterest expense, or other identified drivers.

The provision for loan and lease losses is based on the methodology consistent with our process to estimate our consolidated allowance. The provision for credit losses incorporates the actual net charge-offs recognized related to loans contained within each business segment. The residual provision for credit losses to arrive at the consolidated provision for credit losses is included in Corporate and Other.

The provision for income taxes is allocated to business segments using a 37% effective tax rate. The residual income tax expense or benefit arising from tax planning strategies or other tax attributes to arrive at the consolidated effective tax rate is retained in Corporate and Other.

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



(in thousands)	Three Months Ended September 30, 2017
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Net interest income	$	110,499	$	5,609	$	72,529	$	10,191	$	21,636		$	220,464
Provision (recapture) for loan and lease losses	9,166		107		1,999		855		(130		)	11,997
Non-interest income	12,703		4,462		16,038		38,855		3,344			75,402
Non-interest expense	53,830		8,723		69,159		37,454		19,188			188,354
Income before income taxes	60,206		1,241		17,409		10,737		5,922			95,515
Provision for income taxes	22,276		459		6,443		3,973		1,031			34,182
Net income	$	37,930	$	782	$	10,966	$	6,764	$	4,891		$	61,333

(in thousands)	Nine Months Ended September 30, 2017
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Net interest income	$	320,561	$	16,251	$	208,482	$	29,461	$	64,512		$	639,267
Provision (recapture) for loan and lease losses	26,059		482		6,667		1,142		(24		)	34,326
Non-interest income	40,163		13,689		46,539		100,372		5,983			206,746
Non-interest expense	160,040		25,570		215,534		110,634		43,311			555,089
Income before income taxes	174,625		3,888		32,820		18,057		27,208			256,598
Provision for income taxes	64,611		1,438		12,144		6,681		7,576			92,450
Net income	$	110,014	$	2,450	$	20,676	$	11,376	$	19,632		$	164,148



(in thousands)	Three Months Ended September 30, 2016
	Commercial Bank		Wealth Management		Retail Bank		Home Lending			Corporate & Other		Consolidated
Net interest income	$	105,827	$	5,442	$	63,568	$	11,177		$	23,878	$	209,892
Provision for loan and lease losses	9,054		234		2,732		829			242		13,091
Non-interest income	9,478		4,800		16,301		48,292			1,839		80,710
Non-interest expense	50,237		8,760		71,169		40,688			10,333		181,187
Income before income taxes	56,014		1,248		5,968		17,952			15,142		96,324
Provision for income taxes	20,725		462		2,208		6,642			4,478		34,515
Net income	$	35,289	$	786	$	3,760	$	11,310		$	10,664	$	61,809

(in thousands)	Nine Months Ended September 30, 2016
	Commercial Bank		Wealth Management		Retail Bank		Home Lending			Corporate & Other		Consolidated
Net interest income	$	313,832	$	16,010	$	187,168	$	30,369		$	89,413	$	636,792
Provision (recapture) for loan and lease losses	21,830		602		6,310		(1,669		)	1,430		28,503
Non-interest income	29,748		14,519		46,932		104,980			5,141		201,320
Non-interest expense	149,737		27,060		220,804		116,596			39,490		553,687
Income before income taxes	172,013		2,867		6,986		20,422			53,634		255,922
Provision for income taxes	63,645		1,061		2,585		7,556			17,410		92,257
Net income	$	108,368	$	1,806	$	4,401	$	12,866		$	36,224	$	163,665



(in thousands)	September 30, 2017
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Total assets	$	13,594,329	$	456,114	$	2,060,076	$	3,436,392	$	6,148,752		$	25,695,663
Total loans and leases	$	13,414,523	$	441,727	$	1,977,641	$	2,855,875	$	(12,004	)	$	18,677,762
Total deposits	$	3,737,068	$	1,023,661	$	12,471,328	$	332,686	$	2,287,167		$	19,851,910



(in thousands)	December 31, 2016
	Commercial Bank		Wealth Management		Retail Bank		Home Lending		Corporate & Other			Consolidated
Total assets	$	12,829,249	$	437,058	$	1,893,433	$	3,243,600	$	6,409,779		$	24,813,119
Total loans and leases	$	12,640,383	$	415,737	$	1,806,554	$	2,685,181	$	(39,192	)	$	17,508,663
Total deposits	$	3,288,837	$	1,011,454	$	12,032,906	$	229,358	$	2,458,430		$	19,020,985