U.S. Securities and Exchange Commission
Washington, D.C. 20549

Commission File Number: 000-25597

Umpqua Holdings Corporation
(Exact Name of Registrant as Specified in Its Charter)

200 SW Market Street, Suite 1900
Portland, Oregon 97201
(address of Principal Executive Offices)(Zip Code)

(503) 546-2491
(Registrant's Telephone Number, Including Area Code)

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 October 31, 2002:               20,139,743

UMPQUA HOLDINGS CORPORATION
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS
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UMPQUA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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 result s 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) 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:

(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 September 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 nine-month periods ended September 30, 2002 and 2001 (in thousands).

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(3) ACQUISITION OF CENTENNIAL BANCORP

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 24.4 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 approximately 66 percent of Centennial Bancorp's outstanding shares at an exchange ratio of 0.5343 Umpqua Holdings shares for each share of Centennial Bancorp. The remaining 34 percent of outstanding Centennial Bancorp shares will be acquired for an aggregate of approximately $78 million in cash. If the elections with respect to the form of consideration filed by Centennial shareholders differs from the 66% stock, 34% cash ratio, the mix of stock and cash used to effect t he acquisition could change at the Company's option.

The boards of directors and shareholders of both companies have approved the definitive agreement and we have received regulatory approvals.

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.

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(4) RECENTLY ADOPTED ACCOUNTING STANDARDS

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 with indefinite lives during the quarter ended June 30, 2002 and determined that there was no impairment. The following tables summarize selected intangible asset information:

The following table shows the pro forma effects of SFAS No. 142 applied to the prior comparative period (in thousands except per share amounts):

In September 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial Institutions. This Statement removes acquisitions of financial institutions from the scope of both SFAS No 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, and FASB Interpretation No. 9, Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a Similar Institution Is Acquired in a Business Combination Accounted for by the Purchase Method, and requires that those transactions be accounted for in accordance with SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.  As a result, the requirement in SFAS No. 72 to recognize (and subsequently amortize) any excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset no longer applies to acquisitions within the scope of this Statement.

In addition, this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets.  Consequently, those intangible assets are subject to the same undiscounted cash flow recoverability test and impairment loss recognition and measurement provisions that SFAS No. 144 requires for other long-lived assets that are held and used.

This statement is effective for acquisitions under the purchases method for which the date of acquisition is on or after October 1, 2002.  The provisions in this statement related to accounting for the impairment or disposal of certain long-term customer-relationship intangible assets are effective on October 1, 2002.  Transition provisions for previously recognized unidentifiable intangible assets are effective on October 1, 2002, with earlier application permitted.  The Company believes there will be no current impact of adopting the provisions of this statement on its financial statements.

The following discussion contains a review of Umpqua Holdings Corporation's (the Company) financial condition at September 30, 2002 and the operating results for the three and nine 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.

Forward Looking Statements and Risk Factors

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 satisfaction of all conditions to closing, the election made by shareholders of Centennial Bancorp, 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.

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 credit 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 financial statements.

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The allowance for credit 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 initially 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 and in subsequent periods. 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. Details of the mortgage servicing rights asset were as follow s:

At September 30, 2002 the Company had approximately $24.0 million in goodwill as a result of business combinations. The Company adopted Statement of Financial Accounting Standards 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.

The Company earned $6.01 million for the quarter ended September 30, 2002, up 83.4% over the same period in 2001 and up 13.8% over the quarter ended June 30, 2002. Diluted earnings per share for the third quarter of 2002 were $0.29 compared with $0.17 for the same period in 2001 and $0.26 for the second quarter of 2002. The return on average equity was 15.97% for the third quarter of 2002, compared with 10.80% for the same period in 2001 and 14.82% for the second quarter of 2002.

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For the nine months ended September 30, 2002 the Company earned $15.3 million, up 66.9% over the $9.1 million reported for the same period in the prior year. Diluted earnings per share were $0.75 and $0.48 for the nine-month periods ending September 30, 2002 and 2001, respectively. Return on average equity for the nine months ended September 30, 2002 was 14.20%, compared with 13.24% for the same period in 2001.

Total assets increased to $1.6 billion at September 30, 2002, up $158 million since December 31, 2001 and $97 million since June 30, 2002.

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 $18.7 million for the quarter ended September 30, 2002 compared with $14.6 million for the same period in 2001 (Tables 1 and 2). The increase of approximately $4 million was primarily attributable to an increase in the volume of earning assets. Average earning assets increased $252.6 million or 21.9% compared with the same period in the prior year. Loans, the largest component of earning assets, increased $225.6 million on average compared with the prior year period. Average taxable securities also increased $43.4 million during the current quarter compared with the same period in the prior year. Offsetting these increases was a slight decrease in average temporary investments. Overall, the yield on earning assets decreased to 6.89% for the quarter compared with 7.89% for the same period in the prior year. This decline was primarily attributable to the 1.21% decrease in the yield on loans. This decline was due to variable loan repricings as well as new loan production occurring at lower rates in the third quarter of 2002 compared with the third quarter of 2001. Average prime rate for the third quarter of 2002 was 4.75% compared with 6.60% for the third quarter of 2001. Average noninterest earning assets were $21.8 million higher in the third quarter of 2002 compared with the third 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 $174.5 million compared with the prior year period. Of this increase, $127.7 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 third quarter of 2002 was 2.12% compared with 3.67% for the third quarter of 2001, a 1.55% 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 $65.4 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 0.55% to 4.77% for the quarter ended September 30, 2002 compared with the same period in the prior year. The net interest margin for the quarter ended September 30, 2002 was 5.27%, an increase of 0.24% from the same period in the prior year.

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Net interest income on a taxable equivalent basis was $54.5 million for the first nine months of 2002 compared with $41.4 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 nine months of 2002 were $1.3 billion compared with $1.1 billion for the same period in 2001. While the average volume of earning assets increased, the average yield decreased from 8.22% in 2001 to 7.22% 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 $854.9 million for the first nine months of 2001 to $1 billion for the same period in 2002. Similar to earning assets, the cost of interest bearing liabilities decreased from 4.05% in 2001 to 2.21% in 2002. The decrease in the cost of interest bearing liabilities was due to repricings of interest bearing checking and savings accou nts 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 0.85% to 5.01% for the nine months ended September 30, 2002 compared with the same period in the prior year. The net interest margin for the nine months ended September 30, 2002 was 5.51%, an increase of 0.46% from the same period in the prior year.