United States  
Securities and Exchange Commission 
Washington, D.C. 20549 
 
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended:September 30, 2019March 31, 2020
or

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: 001-34624 
 
Umpqua Holdings Corporation 
(Exact Name of Registrant as Specified in Its Charter)
Oregon93-1261319 
(State or Other Jurisdiction(I.R.S. Employer Identification Number)
of Incorporation or Organization) 
 
One SW Columbia Street, Suite 1200 
Portland, Oregon 97258 
(Address of Principal Executive Offices)(Zip Code) 
 
(503) 727-4100 
(Registrant's Telephone Number, Including Area Code) 

Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASSTRADING SYMBOLNAME OF EXCHANGE
Common StockUMPQThe NASDAQ Global Select Market

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      No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
   Large accelerated filer      Accelerated filer      Non-accelerated filer  
    Smaller reporting company    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    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: 220,216,539220,215,334 shares outstanding as of October 31, 2019
April 30, 2020


Table of Contents
UMPQUA HOLDINGS CORPORATION 
FORM 10-Q 
Table of Contents 
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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Table of Contents
PART I.       FINANCIAL INFORMATION
Item 1.         Financial Statements (unaudited) 

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)
(in thousands, except shares)(in thousands, except shares)September 30, 2019December 31, 2018(in thousands, except shares)March 31, 2020December 31, 2019
ASSETSASSETS  ASSETS  
Cash and due from banks (restricted cash of $85,035 and $37,408)$433,620  $335,419  
Interest bearing cash and temporary investments (restricted cash of $415 and $1,232)757,824  287,218  
Cash and due from banks (restricted cash of $112,462 and $86,507)Cash and due from banks (restricted cash of $112,462 and $86,507)$406,426  $382,598  
Interest bearing cash and temporary investments (restricted cash of $25,371 and $590)Interest bearing cash and temporary investments (restricted cash of $25,371 and $590)1,251,290  980,158  
Total cash and cash equivalentsTotal cash and cash equivalents1,191,444  622,637  Total cash and cash equivalents1,657,716  1,362,756  
Investment securitiesInvestment securities  Investment securities  
Equity and other, at fair valueEquity and other, at fair value64,764  61,841  Equity and other, at fair value80,797  80,165  
Available for sale, at fair valueAvailable for sale, at fair value2,842,076  2,977,108  Available for sale, at fair value2,890,475  2,814,682  
Held to maturity, at amortized costHeld to maturity, at amortized cost3,320  3,606  Held to maturity, at amortized cost3,200  3,260  
Loans held for sale, at fair valueLoans held for sale, at fair value355,022  166,461  Loans held for sale, at fair value481,541  513,431  
Loans and leasesLoans and leases21,520,794  20,422,666  Loans and leases21,251,478  21,195,684  
Allowance for loan and lease losses(156,288) (144,871) 
Allowance for credit losses on loans and leasesAllowance for credit losses on loans and leases(291,420) (157,629) 
Net loans and leasesNet loans and leases21,364,506  20,277,795  Net loans and leases20,960,058  21,038,055  
Restricted equity securitiesRestricted equity securities54,463  40,268  Restricted equity securities58,062  46,463  
Premises and equipment, netPremises and equipment, net203,391  227,423  Premises and equipment, net195,390  201,460  
Operating lease right-of-use assetsOperating lease right-of-use assets108,187  —  Operating lease right-of-use assets115,485  110,718  
GoodwillGoodwill1,787,651  1,787,651  Goodwill2,715  1,787,651  
Other intangible assets, netOther intangible assets, net19,750  23,964  Other intangible assets, net17,099  18,346  
Residential mortgage servicing rights, at fair valueResidential mortgage servicing rights, at fair value151,383  169,025  Residential mortgage servicing rights, at fair value94,346  115,010  
Other real estate owned4,026  10,958  
Bank owned life insuranceBank owned life insurance318,533  313,626  Bank owned life insurance322,717  320,611  
Other assetsOther assets462,339  257,418  Other assets660,781  434,201  
Total assetsTotal assets$28,930,855  $26,939,781  Total assets$27,540,382  $28,846,809  
LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY  LIABILITIES AND SHAREHOLDERS' EQUITY  
DepositsDeposits  Deposits  
Noninterest bearingNoninterest bearing$7,123,180  $6,667,467  Noninterest bearing$7,169,907  $6,913,375  
Interest bearingInterest bearing15,311,554  14,470,019  Interest bearing15,529,468  15,568,129  
Total depositsTotal deposits22,434,734  21,137,486  Total deposits22,699,375  22,481,504  
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase296,717  297,151  Securities sold under agreements to repurchase346,245  311,308  
BorrowingsBorrowings1,106,674  751,788  Borrowings1,196,597  906,635  
Junior subordinated debentures, at fair valueJunior subordinated debentures, at fair value267,798  300,870  Junior subordinated debentures, at fair value195,521  274,812  
Junior subordinated debentures, at amortized costJunior subordinated debentures, at amortized cost88,553  88,724  Junior subordinated debentures, at amortized cost88,439  88,496  
Operating lease liabilitiesOperating lease liabilities116,924  —  Operating lease liabilities123,962  119,429  
Deferred tax liability, netDeferred tax liability, net67,055  25,846  Deferred tax liability, net51,061  52,928  
Other liabilitiesOther liabilities262,884  281,474  Other liabilities331,571  297,782  
Total liabilitiesTotal liabilities24,641,339  22,883,339  Total liabilities25,032,771  24,532,894  
COMMITMENTS AND CONTINGENCIES (NOTE 6)COMMITMENTS AND CONTINGENCIES (NOTE 6)COMMITMENTS AND CONTINGENCIES (NOTE 6)
SHAREHOLDERS' EQUITYSHAREHOLDERS' EQUITY  SHAREHOLDERS' EQUITY  
Common stock, 0 par value, shares authorized: 400,000,000 in 2019 and 2018; issued and outstanding: 220,212,134 in 2019 and 220,255,039 in 20183,511,493  3,512,874  
Retained earnings733,059  602,482  
Accumulated other comprehensive income (loss)44,964  (58,914) 
Common stock, 0 par value, shares authorized: 400,000,000 in 2020 and 2019; issued and outstanding: 220,175,120 in 2020 and 220,229,282 in 2019Common stock, 0 par value, shares authorized: 400,000,000 in 2020 and 2019; issued and outstanding: 220,175,120 in 2020 and 220,229,282 in 20193,507,680  3,514,000  
(Accumulated deficit) retained earnings(Accumulated deficit) retained earnings(1,168,340) 770,366  
Accumulated other comprehensive incomeAccumulated other comprehensive income168,271  29,549  
Total shareholders' equityTotal shareholders' equity4,289,516  4,056,442  Total shareholders' equity2,507,611  4,313,915  
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$28,930,855  $26,939,781  Total liabilities and shareholders' equity$27,540,382  $28,846,809  

See notes to condensed consolidated financial statements
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Table of Contents
UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS 
(UNAUDITED) 
Three Months Ended
(in thousands, except per share amounts)(in thousands, except per share amounts)Three Months EndedNine Months Ended (in thousands, except per share amounts)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
INTEREST INCOMEINTEREST INCOME    INTEREST INCOME  
Interest and fees on loans and leasesInterest and fees on loans and leases$266,111  $246,410  $788,968  $718,021  Interest and fees on loans and leases$245,993  $258,747  
Interest and dividends on investment securities:Interest and dividends on investment securities:    Interest and dividends on investment securities:  
TaxableTaxable12,546  24,435  42,789  48,633  Taxable16,605  19,956  
Exempt from federal income taxExempt from federal income tax1,727  2,048  5,762  6,233  Exempt from federal income tax1,562  2,114  
DividendsDividends599  549  1,690  1,450  Dividends678  517  
Interest on temporary investments and interest bearing depositsInterest on temporary investments and interest bearing deposits4,204  2,800  9,837  6,044  Interest on temporary investments and interest bearing deposits3,331  925  
Total interest incomeTotal interest income285,187  276,242  849,046  780,381  Total interest income268,169  282,259  
INTEREST EXPENSEINTEREST EXPENSE    INTEREST EXPENSE  
Interest on depositsInterest on deposits45,876  25,692  123,561  62,561  Interest on deposits40,290  34,094  
Interest on securities sold under agreement to repurchase and federal funds purchasedInterest on securities sold under agreement to repurchase and federal funds purchased448  103  1,661  321  Interest on securities sold under agreement to repurchase and federal funds purchased395  810  
Interest on borrowingsInterest on borrowings4,238  3,439  12,484  10,278  Interest on borrowings4,046  3,683  
Interest on junior subordinated debenturesInterest on junior subordinated debentures5,652  5,640  17,520  15,972  Interest on junior subordinated debentures4,903  5,987  
Total interest expenseTotal interest expense56,214  34,874  155,226  89,132  Total interest expense49,634  44,574  
Net interest incomeNet interest income228,973  241,368  693,820  691,249  Net interest income218,535  237,685  
PROVISION FOR LOAN AND LEASE LOSSES 23,227  11,711  56,263  38,686  
Net interest income after provision for loan and lease losses205,746  229,657  637,557  652,563  
PROVISION FOR CREDIT LOSSES PROVISION FOR CREDIT LOSSES 118,085  13,684  
Net interest income after provision for credit lossesNet interest income after provision for credit losses100,450  224,001  
NON-INTEREST INCOMENON-INTEREST INCOME    NON-INTEREST INCOME  
Service charges on depositsService charges on deposits16,627  15,574  47,858  46,089  Service charges on deposits15,638  15,278  
Brokerage revenueBrokerage revenue4,060  3,947  11,850  12,302  Brokerage revenue4,015  3,810  
Residential mortgage banking revenue, netResidential mortgage banking revenue, net47,000  31,484  67,760  103,085  Residential mortgage banking revenue, net17,540  11,231  
(Loss) gain on sale of debt securities, net—  —  (7,186) 14  
Loss on sale of debt securities, netLoss on sale of debt securities, net(133) —  
Gain (loss) on equity securities, net257  (462) 83,559  (1,894) 
Gain on equity securities, netGain on equity securities, net814  695  
Gain on loan and lease sales, netGain on loan and lease sales, net1,762  2,772  5,864  5,350  Gain on loan and lease sales, net1,167  769  
BOLI incomeBOLI income2,067  2,051  6,328  6,181  BOLI income2,129  2,168  
Other income16,739  17,022  40,042  51,479  
Other (expense) incomeOther (expense) income(525) 11,789  
Total non-interest incomeTotal non-interest income88,512  72,388  256,075  222,606  Total non-interest income40,645  45,740  
NON-INTEREST EXPENSENON-INTEREST EXPENSE    NON-INTEREST EXPENSE  
Salaries and employee benefitsSalaries and employee benefits106,819  103,575  311,526  323,466  Salaries and employee benefits109,774  100,658  
Occupancy and equipment, netOccupancy and equipment, net35,446  36,530  107,723  112,775  Occupancy and equipment, net37,001  36,245  
CommunicationsCommunications3,617  4,165  11,743  13,045  Communications3,128  4,220  
MarketingMarketing3,804  3,969  10,842  8,857  Marketing2,530  2,726  
ServicesServices15,326  14,794  40,763  46,482  Services10,770  12,210  
FDIC assessmentsFDIC assessments2,587  4,303  8,366  13,475  FDIC assessments2,542  2,942  
Loss (gain) on other real estate owned, net1,188  (128) 3,815  (258) 
Intangible amortizationIntangible amortization1,405  1,541  4,214  4,624  Intangible amortization1,247  1,404  
Goodwill impairmentGoodwill impairment1,784,936  —  
Other expensesOther expenses13,398  10,543  36,605  38,511  Other expenses10,730  11,187  
Total non-interest expenseTotal non-interest expense183,590  179,292  535,597  560,977  Total non-interest expense1,962,658  171,592  
Income before provision for income taxes110,668  122,753  358,035  314,192  
(Loss) income before provision for income taxes(Loss) income before provision for income taxes(1,821,563) 98,149  
Provision for income taxesProvision for income taxes26,166  31,772  87,690  78,240  Provision for income taxes30,384  24,116  
Net income$84,502  $90,981  $270,345  $235,952  
Earnings per common share:    
Net (loss) incomeNet (loss) income$(1,851,947) $74,033  
(Loss) earnings per common share:(Loss) earnings per common share:  
BasicBasic$0.38  $0.41  $1.23  $1.07  Basic($8.41) $0.34  
DilutedDiluted$0.38  $0.41  $1.23  $1.07  Diluted($8.41) $0.34  
Weighted average number of common shares outstanding:Weighted average number of common shares outstanding:    Weighted average number of common shares outstanding:  
BasicBasic220,285  220,224  220,379  220,292  Basic220,216  220,366  
DilutedDiluted220,583  220,620  220,642  220,751  Diluted220,216  220,655  

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Table of Contents
UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED) 
 
(in thousands)Three Months EndedNine Months Ended
 September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Net income$84,502  $90,981  $270,345  $235,952  
Available for sale securities:    
Unrealized gains (losses) arising during the period26,352  (29,262) 100,381  (75,479) 
Income tax (expense) benefit related to unrealized gains (losses)(6,778) 7,471  (25,819) 19,270  
Reclassification adjustment for net realized losses (gains) in earnings—  —  7,186  (14) 
Income tax (benefit) expense related to realized losses (gains)—  —  (1,848)  
Net change in unrealized gains (losses) for available for sale securities19,574  (21,791) 79,900  (56,219) 
Junior subordinated debentures, at fair value:
Unrealized gains (losses) arising during the period8,450  (2,409) 32,254  (5,605) 
Income tax (expense) benefit related to unrealized gains (losses)(2,173) 615  (8,276) 1,431  
Net change in unrealized gains (losses) for junior subordinated debentures, at fair value6,277  (1,794) 23,978  (4,174) 
Other comprehensive income (loss), net of tax25,851  (23,585) 103,878  (60,393) 
Comprehensive income$110,353  $67,396  $374,223  $175,559  
Three Months Ended
 (in thousands)March 31, 2020March 31, 2019
Net (loss) income$(1,851,947) $74,033  
Available for sale securities:  
Unrealized gains arising during the period107,761  33,269  
Income tax expense related to unrealized gains(27,717) (8,557) 
Reclassification adjustment for net realized losses in earnings133  —  
Income tax benefit related to realized losses(34) —  
Net change in unrealized gains for available for sale securities80,143  24,712  
Junior subordinated debentures, at fair value:
Unrealized gains arising during the period78,862  6,564  
Income tax expense related to unrealized gains(20,283) (1,644) 
Net change in unrealized gains for junior subordinated debentures, at fair value58,579  4,920  
Other comprehensive income, net of tax138,722  29,632  
Comprehensive (loss) income$(1,713,225) $103,665  

See notes to condensed consolidated financial statements
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Table of Contents
UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY  
(UNAUDITED)   

(in thousands, except shares)Common StockAccumulated Other Comprehensive Income (Loss) 
 SharesAmountRetained EarningsTotal
Balance at January 1, 2018  220,148,824  $3,517,258  $477,101  $(24,992) $3,969,367  
Net income      78,972     78,972  
Other comprehensive loss, net of tax         (32,672) (32,672) 
Stock-based compensation   1,829        1,829  
Stock repurchased and retired(201,473) (4,340)       (4,340) 
Issuances of common stock under stock plans513,485  759        759  
Cash dividends on common stock ($0.20 per share)      (44,149)    (44,149) 
Junior subordinated debentures, at fair value, cumulative effect adjustment (1)(9,710) 9,710  —  
Balance at March 31, 2018  220,460,836  $3,515,506  $502,214  $(47,954) $3,969,766  
Net income      65,999     65,999  
Other comprehensive loss, net of tax         (4,136) (4,136) 
Stock-based compensation   1,550        1,550  
Stock repurchased and retired(334,854) (8,167)       (8,167) 
Issuances of common stock under stock plans78,709  257        257  
Cash dividends on common stock ($0.20 per share)      (44,182)    (44,182) 
Balance at June 30, 2018  220,204,691  $3,509,146  $524,031  $(52,090) $3,981,087  
Net income      90,981     90,981  
Other comprehensive loss, net of tax         (23,585) (23,585) 
Stock-based compensation   2,140        2,140  
Stock repurchased and retired(17,784) (386)       (386) 
Issuances of common stock under stock plans51,324  49        49  
Cash dividends on common stock ($0.21 per share)      (46,393)    (46,393) 
Balance at September 30, 2018  220,238,231  $3,510,949  $568,619  $(75,675) $4,003,893  
Net income80,311  80,311  
Other comprehensive income, net of tax16,761  16,761  
Stock-based compensation1,994  1,994  
Stock repurchased and retired(3,537) (69) (69) 
Issuances of common stock under stock plans20,345  —  —  
Cash dividends on common stock ($0.21 per share)(46,448) (46,448) 
Balance at December 31, 2018  220,255,039  $3,512,874  $602,482  $(58,914) $4,056,442  

Common StockRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss) 
 (in thousands, except shares)SharesAmountTotal
Balance at January 1, 2019  220,255,039  $3,512,874  $602,482  $(58,914) $4,056,442  
Net income      74,033     74,033  
Other comprehensive income, net of tax         29,632  29,632  
Stock-based compensation   754        754  
Stock repurchased and retired(108,088) (1,918)       (1,918) 
Issuances of common stock under stock plans310,257  21        21  
Cash dividends on common stock ($0.21 per share)      (46,394)    (46,394) 
Cumulative effect adjustment (1)(244) (244) 
Balance at March 31, 2019  220,457,208  $3,511,731  $629,877  $(29,282) $4,112,326  
Net income      111,810     111,810  
Other comprehensive income, net of tax         48,395  48,395  
Stock-based compensation   2,722        2,722  
Stock repurchased and retired(4,113) (62)       (62) 
Issuances of common stock under stock plans45,589  —        —  
Cash dividends on common stock ($0.21 per share)      (46,684)    (46,684) 
Balance at June 30, 2019  220,498,684  $3,514,391  $695,003  $19,113  $4,228,507  
Net income      84,502     84,502  
Other comprehensive income, net of tax         25,851  25,851  
Stock-based compensation   2,350        2,350  
Stock repurchased and retired(300,719) (5,248)       (5,248) 
Issuances of common stock under stock plans14,169  —        —  
Cash dividends on common stock ($0.21 per share)      (46,446)    (46,446) 
Balance at September 30, 2019  220,212,134  $3,511,493  $733,059  $44,964  $4,289,516  
Net income83,750  83,750  
Other comprehensive loss, net of tax(15,415) (15,415) 
Stock-based compensation2,547  2,547  
Stock repurchased and retired(2,483) (40) (40) 
Issuances of common stock under stock plans19,631  —  —  
Cash dividends on common stock ($0.21 per share)(46,443) (46,443) 
Balance at December 31, 2019  220,229,282  $3,514,000  $770,366  $29,549  $4,313,915  













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Table of Contents

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Continued)
(UNAUDITED) 

Common StockRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income (Loss) 
(in thousands, except shares)(in thousands, except shares)Common StockAccumulated Other Comprehensive Income (Loss)  (in thousands, except shares)SharesAmountAccumulated Other Comprehensive Income (Loss)Total
SharesAmountRetained EarningsTotal
Balance at January 1, 2019220,255,039  $3,512,874  $602,482  $(58,914) $4,056,442  
Net income  74,033   74,033  
Balance at January 1, 2020Balance at January 1, 2020220,229,282  $3,514,000  $770,366  $29,549  $4,313,915  
Net lossNet loss  (1,851,947)  (1,851,947) 
Other comprehensive income, net of taxOther comprehensive income, net of tax   29,632  29,632  Other comprehensive income, net of tax   138,722  138,722  
Stock-based compensationStock-based compensation 754    754  Stock-based compensation 2,253    2,253  
Stock repurchased and retiredStock repurchased and retired(108,088) (1,918)   (1,918) Stock repurchased and retired(486,757) (8,573)   (8,573) 
Issuances of common stock under stock plansIssuances of common stock under stock plans310,257  21    21  Issuances of common stock under stock plans432,595  —    —  
Cash dividends on common stock ($0.21 per share)Cash dividends on common stock ($0.21 per share)  (46,394)  (46,394) Cash dividends on common stock ($0.21 per share)  (46,578)  (46,578) 
Leases, cumulative effect adjustment (2)(244) (244) 
Balance at March 31, 2019  220,457,208  $3,511,731  $629,877  $(29,282) $4,112,326  
Net income  111,810   111,810  
Other comprehensive income, net of tax   48,395  48,395  
Stock-based compensation 2,722    2,722  
Stock repurchased and retired(4,113) (62)   (62) 
Issuances of common stock under stock plans45,589  —    —  
Cash dividends on common stock ($0.21 per share)  (46,684)  (46,684) 
Balance at June 30, 2019220,498,684  $3,514,391  $695,003  $19,113  $4,228,507  
Net income  84,502   84,502  
Other comprehensive income, net of tax   25,851  25,851  
Stock-based compensation 2,350    2,350  
Stock repurchased and retired(300,719) (5,248)   (5,248) 
Issuances of common stock under stock plans14,169  —    —  
Cash dividends on common stock ($0.21 per share)  (46,446)  (46,446) 
Balance at September 30, 2019220,212,134  $3,511,493  $733,059  $44,964  $4,289,516  
Cumulative effect adjustment (2)Cumulative effect adjustment (2) $(40,181) (40,181) 
Balance at March 31, 2020 Balance at March 31, 2020  220,175,120  $3,507,680  $(1,168,340) $168,271  $2,507,611  

(1) The cumulative effect adjustment from retained earnings to accumulated other comprehensive income (loss) relates to the implementation of new accounting guidance for the junior subordinated debentures that the Company previously elected to fair valueleases on a recurring basis.January 1, 2019.

(2) The cumulative effect adjustment relates to the implementation of new accounting guidance for leases.the allowance for credit losses. Refer to Note 1 for discussion of the new accounting guidance.


See notes to condensed consolidated financial statements


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UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 

Three Months Ended
(in thousands)(in thousands)Nine Months Ended (in thousands)March 31, 2020March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:CASH FLOWS FROM OPERATING ACTIVITIES:  
Net (loss) incomeNet (loss) income$(1,851,947) $74,033  
Adjustments to reconcile net income to net cash used in operating activities:Adjustments to reconcile net income to net cash used in operating activities:  
Goodwill impairmentGoodwill impairment1,784,936  —  
Amortization of investment premiums, netAmortization of investment premiums, net3,040  1,829  
Loss on sale of investment securities, netLoss on sale of investment securities, net133  —  
September 30, 2019September 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$270,345  $235,952  
Adjustments to reconcile net income to net cash provided by operating activities:  
Amortization of investment premiums, net19,592  15,485  
Loss (gain) on sale of investment securities, net7,186  (14) 
Loss (gain) on sale of other real estate owned, net802  (324) 
Valuation adjustment on other real estate owned3,013  66  
Provision for loan and lease losses56,263  38,686  
Provision for credit lossesProvision for credit losses118,085  13,684  
Change in cash surrender value of bank owned life insuranceChange in cash surrender value of bank owned life insurance(6,365) (6,281) Change in cash surrender value of bank owned life insurance(2,163) (2,135) 
Depreciation, amortization and accretionDepreciation, amortization and accretion33,126  40,015  Depreciation, amortization and accretion10,273  11,554  
Gain on sale of premises and equipment(1,568) (2,365) 
Loss (gain) on sale of premises and equipmentLoss (gain) on sale of premises and equipment18  (195) 
Gain on store divestitureGain on store divestiture(1,225) (1,157) Gain on store divestiture—  (1,225) 
Additions to residential mortgage servicing rights carried at fair valueAdditions to residential mortgage servicing rights carried at fair value(16,772) (22,012) Additions to residential mortgage servicing rights carried at fair value(10,023) (3,887) 
Change in fair value of residential mortgage servicing rights carried at fair valueChange in fair value of residential mortgage servicing rights carried at fair value34,414  125  Change in fair value of residential mortgage servicing rights carried at fair value30,687  13,966  
Gain on redemption of junior subordinated debentures at amortized cost—  (1,043) 
Stock-based compensationStock-based compensation5,826  5,519  Stock-based compensation2,253  754  
Net increase in equity and other investments(1,217) (123) 
(Gain) loss on equity securities, net(83,559) 1,894  
Net decrease (increase) in equity and other investmentsNet decrease (increase) in equity and other investments182  (791) 
Gain on equity securities, netGain on equity securities, net(814) (695) 
Gain on sale of loans and leases, netGain on sale of loans and leases, net(65,707) (59,485) Gain on sale of loans and leases, net(38,346) (13,025) 
Change in fair value of loans held for saleChange in fair value of loans held for sale(5,758) 1,103  Change in fair value of loans held for sale(8,094) (2,793) 
Origination of loans held for saleOrigination of loans held for sale(2,029,682) (2,283,639) Origination of loans held for sale(1,148,184) (487,090) 
Proceeds from sales of loans held for saleProceeds from sales of loans held for sale1,906,722  2,306,652  Proceeds from sales of loans held for sale1,235,581  428,298  
Change in other assets and liabilities:Change in other assets and liabilities:  Change in other assets and liabilities:  
Net (increase) decrease in other assets(183,131) 6,167  
Net (decrease) increase in other liabilities(20,180) 43,380  
Net cash (used in) provided by operating activities(77,875) 318,601  
Net increase in other assetsNet increase in other assets(219,221) (57,027) 
Net decrease in other liabilitiesNet decrease in other liabilities(25,117) (28,872) 
Net cash used in operating activitiesNet cash used in operating activities(118,721) (53,617) 
CASH FLOWS FROM INVESTING ACTIVITIES:CASH FLOWS FROM INVESTING ACTIVITIES:  CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of investment securities available for salePurchases of investment securities available for sale(563,606) (283,948) Purchases of investment securities available for sale(140,407) (5,953) 
Proceeds from investment securities available for saleProceeds from investment securities available for sale778,259  341,680  Proceeds from investment securities available for sale168,851  119,381  
Proceeds from investment securities held to maturityProceeds from investment securities held to maturity432  385  Proceeds from investment securities held to maturity118  174  
Proceeds from sale of equity securities81,853  —  
Purchases of restricted equity securitiesPurchases of restricted equity securities(220,200) (45,601) Purchases of restricted equity securities(19,999) (205,400) 
Redemption of restricted equity securitiesRedemption of restricted equity securities206,005  48,840  Redemption of restricted equity securities8,400  198,202  
Net change in loans and leasesNet change in loans and leases(1,235,214) (991,726) Net change in loans and leases(109,523) (23,252) 
Proceeds from sales of loans and leasesProceeds from sales of loans and leases88,776  119,783  Proceeds from sales of loans and leases22,038  15,848  
Change in premises and equipmentChange in premises and equipment(8,230) (5,686) Change in premises and equipment(3,943) (2,365) 
Proceeds from bank owned life insurance death benefitsProceeds from bank owned life insurance death benefits1,869  1,481  Proceeds from bank owned life insurance death benefits57  1,550  
Proceeds from sales of other real estate owned5,835  2,805  
Net cash paid in store divestitureNet cash paid in store divestiture(44,646) (35,219) Net cash paid in store divestiture—  (44,646) 
Net cash used in investing activities$(908,867) $(847,206) 
Net cash (used in) provided by investing activitiesNet cash (used in) provided by investing activities$(74,408) $53,539  
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UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
Three Months Ended
(in thousands)(in thousands)Nine Months Ended (in thousands)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018
CASH FLOWS FROM FINANCING ACTIVITIES:CASH FLOWS FROM FINANCING ACTIVITIES:      CASH FLOWS FROM FINANCING ACTIVITIES:      
Net increase in deposit liabilitiesNet increase in deposit liabilities$1,347,046  $981,648  Net increase in deposit liabilities$217,973  $155,937  
Net decrease in securities sold under agreements to repurchase(434) (7,324) 
Net increase (decrease) in securities sold under agreements to repurchaseNet increase (decrease) in securities sold under agreements to repurchase34,937  (8,207) 
Proceeds from borrowings Proceeds from borrowings810,670  50,000   Proceeds from borrowings600,000  230,670  
Repayment of borrowingsRepayment of borrowings(455,670) (100,652) Repayment of borrowings(310,000) (50,000) 
Repayment of junior subordinated debentures at amortized cost—  (10,598) 
Dividends paid on common stockDividends paid on common stock(138,856) (127,662) Dividends paid on common stock(46,248) (46,254) 
Proceeds from stock options exercisedProceeds from stock options exercised21  1,065  Proceeds from stock options exercised—  21  
Repurchase and retirement of common stockRepurchase and retirement of common stock(7,228) (12,893) Repurchase and retirement of common stock(8,573) (1,918) 
Net cash provided by financing activitiesNet cash provided by financing activities1,555,549  773,584  Net cash provided by financing activities488,089  280,249  
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents568,807  244,979  Net increase in cash and cash equivalents294,960  280,171  
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period622,637  634,280  Cash and cash equivalents, beginning of period1,362,756  622,637  
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$1,191,444  $879,259  Cash and cash equivalents, end of period$1,657,716  $902,808  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:      SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:      
Cash paid during the period for:Cash paid during the period for:      Cash paid during the period for:      
InterestInterest$155,232  $83,255  Interest$53,213  $44,026  
Income taxesIncome taxes$107,933  $49,475  Income taxes$38,732  $34,383  
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Changes in unrealized gains and losses on investment securities available for sale, net of taxesChanges in unrealized gains and losses on investment securities available for sale, net of taxes$79,900  $(56,219) Changes in unrealized gains and losses on investment securities available for sale, net of taxes$80,143  $24,712  
Changes in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxesChanges in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxes$23,978  $(4,174) Changes in unrealized gains and losses on junior subordinated debentures carried at fair value, net of taxes$58,579  $4,920  
Junior subordinated debentures, at fair value, cumulative effect adjustment$—  $9,710  
Cumulative effect adjustment to retained earningsCumulative effect adjustment to retained earnings$40,181  $244  
Cash dividend declared on common stock and payable after period-endCash dividend declared on common stock and payable after period-end$46,245  $46,253  Cash dividend declared on common stock and payable after period-end$46,237  $46,297  
Transfer of loans to loans held for saleTransfer of loans to loans held for sale$10,234  $—  
Change in GNMA mortgage loans recognized due to repurchase optionChange in GNMA mortgage loans recognized due to repurchase option$(3,690) $(4,407) Change in GNMA mortgage loans recognized due to repurchase option$992  $(8,760) 
Transfer of loans to other real estate owned$2,718  $2,587  


See notes to condensed consolidated financial statements
 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Summary of Significant Accounting Policies 
 
The accounting and financial reporting policies of Umpqua Holdings Corporation conform to accounting principles generally accepted in the United States of America. The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All inter-company balances and transactions have been eliminated. The condensed consolidated financial statements have not been audited. A more detailed description of our accounting policies is included in the 2018 Annual Report filed on Form 10-K. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 2018 Annual Report filed on Form 10-K.America ("GAAP"). All references in this report to "Umpqua," "we," "our," "us," the "Company" or similar references mean Umpqua Holdings Corporation and include our consolidated subsidiaries where the context so requires. References to "Bank" refer to our subsidiary Umpqua Bank, an Oregon state-chartered commercial bank, and references to "Umpqua Investments" refer to our subsidiary Umpqua Investments, Inc., a registered broker-dealer and investment adviser. The Bank also has a wholly-owned subsidiary, Financial Pacific Leasing Inc. ("FinPac"), a commercial equipment leasing company. The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All inter-company balances and transactions have been eliminated. The condensed consolidated financial statements have not been audited. A more detailed description of our accounting policies is included in the 2019 Annual Report filed on Form 10-K. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 2019 Annual Report filed on Form 10-K. 
 
In preparing these condensed consolidated financial statements, the Company has evaluated events and transactions subsequent to September 30, 2019March 31, 2020 for potential recognition or disclosure. In management's opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments include normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim period. Certain reclassifications of prior period amounts have been made to conform to current classifications.

Change in application of accounting principle

The Company's management elected to change the date of the annual goodwill impairment analysis to October 31 from the previous date of December 31. The Company determined that the date change allows for additional resources and time to analyze the factors that could affect goodwill prior to financial statement reporting. The Company believes this change to be immaterial and that the change will not produce different impairment results.

Application of new accounting guidance

As of January 1, 2019, Umpqua adoptedIn June 2016, the Financial Accounting Standard Board's ("FASB") issued Accounting StandardStandards Update ("ASU") No. 2016-02, Leases (Topic 842) as well as additional ASUs for enhancement, clarification or transition of the new lease standard (collectively "ASC 842"). ASC 842 requires lessees, among other things, to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance. This update also introduces new disclosure requirements for leasing arrangements. Refer to Note 11 - Leases for further discussion of Umpqua's accounting policies for leases within the scope of ASC 842.

ASC 842 provides for a number of practical expedients in transition. We have elected the package of practical expedients, which permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easement; the latter not being applicable to us. The Company also did not elect the practical expedient to not separate lease and non-lease components on our real estate leases where we are the lessee.

In addition, ASC 842 provides practical expedients for an entity's ongoing accounting. The Company has elected the short-term lease recognition exemption for certain leases. This means, for those leases that have a term of less than 12 months, we will not recognize right-of-use ("ROU") assets or lease liabilities.

Umpqua adopted ASC 842 using the prospective approach without corresponding changes in the comparable prior periods. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. Adoption of the new standard resulted in the recognition of new lease ROU assets of $108.2 million and lease liabilities of $116.9 million on the balance sheet for our operating leases as of September 30, 2019. The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, was recorded as an adjustment to retained earnings. This standard did not materially impact our consolidated net income and had no impact on cash flows.

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In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (A Consensus of the FASB Emerging Issues Task Force). This ASU reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. This ASU aligns the requirements for capitalization of implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The ASU requires an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Costs to develop or obtain internal use software that cannot be capitalized under subtopic 350-40, such as training costs and certain data conversion costs, also cannot be capitalized for a hosting arrangement that is a service contract. The capitalized costs will be amortized over the life of the service contract. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company early adopted the ASU as of January 1, 2019 and will apply the new standard prospectively. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Recent accounting pronouncements 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") or ("ASC 326"). The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for certain financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates but will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for specified periods. The planned adoption date for the Company iswas January 1, 2020. The guidance is to bewas applied on a modified retrospective basis with the cumulative effect of initially applying the amendments recognized in retained earnings at the date of initial application.January 1, 2020. However, certain provisions of the guidance are only required to be applied on a prospective basis.

The ASU doesBank has elected to not prescribeinclude accrued interest when determining the amortized cost basis of an asset. Instead, the amortized cost basis of an asset is the combination of the balance, deferred fees and costs, and premium or discount. In addition, the Bank has elected to continue to present accrued interest as part of Other Assets on the consolidated balance sheets. The Bank has elected to not calculate an allowance for credit losses on accrued interest and the policies related to income recognition on non-accrual loans are outlined below.

Upon adoption of CECL, the Company did not reassess whether loans previously accounted for as purchased credit impaired ("PCI") met the definition of a methodPurchased Credit-Deteriorated ("PCD") loan and therefore accounts for implementation but does require the method chosen to be reasonable and supportable.all such assets as PCD. The Company has elected not to retain the PCI pools previously established. Instead, the loans will use purchasednow be included within the appropriate class of financing receivables which have been established based on shared risk characteristics. Changes to the allowance after adoption are recorded through provision expense.

Based on the Bank's portfolio composition as of January 1, 2020, and internally developed models. The majorityeconomic environment at that time, management recorded an initial estimate of the models produce loan-level probabilityallowance for credit losses ("ACL") under CECL, which includes the allowance for credit losses on loans and leases ("ACLLL") of default$207.6 million and loss given default factors. These factors are thenreserve for unfunded commitments ("RUC") of $8.3 million. The implementation of CECL resulted in a cumulative effect of an accounting change adjustment to retained earnings of $40.2 million.

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The Company analyzed the portfolio segments and classes of financing receivables based on the implementation of CECL. There were no necessary changes in the portfolio segments or classes of financing receivables. The increase in the allowance by portfolio segment is as follows:
December 31, 2019January 1, 2020
(in thousands)Allowance for Loan LossReserve for Unfunded CommitmentsAllowance for Credit Losses on Loans and LeasesReserve for Unfunded Commitments$ Increase (decrease)% Increase (decrease)
Commercial real estate, net$50,847  $534  $55,924  $4,564  $9,107  18 %
Commercial, net73,820  2,539  117,829  2,05243,522  57 %
Residential, net24,714  149  26,813  1,4163,366  14 %
Consumer & other, net8,248  1,884  7,062  312(2,758) (27)%
Total$157,629  $5,106  $207,628  $8,344  $53,237  33 %

Due to the significance of the implementation of CECL on the Company, the following significant accounting policies have been updated from the policies disclosed in prior financial statements.

Allowance for Credit Losses Policy- The Bank has established an Allowance for Credit Loss Committee, which is responsible for, among other things, regularly reviewing the ACL methodology, including allowance levels and ensuring that it is designed and applied in accordance with generally accepted accounting principles. The Bank's Audit and Compliance Committee provides board oversight of the ACL process and reviews and approves the ACL methodology on a quarterly basis. CECL is not prescriptive in the methodology used to determine life of loanthe expected credit loss rates,estimate. Instead, management has flexibility in selecting the methodology. The expected credit losses must be estimated over a financial asset's contractual term, adjusted for prepayments. Two methods will be used to calculate theprepayments utilizing quantitative and qualitative factors. There are also specific considerations for Purchased Credit-Deteriorated, Troubled Debt Restructured ("TDR"), and Collateral Dependent Loans ("CDL").

The estimate of current expected credit loss:losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the discounted cash flow methodcollectability of the reported amounts. Historical loss experience is the starting point for term loansestimating expected credit losses. Adjustments are made to historical loss experience to reflect differences in asset-specific risk characteristics, such as underwriting standards, portfolio mix or asset terms, and differences in economic conditions – both current conditions and reasonable and supportable forecasts. When the non-discounted cash flow methodCompany is not able to make or obtain reasonable and supportable forecasts for linesthe entire life of credit. Along with the quantitative factors produced byfinancial asset, it has estimated expected credit losses for the models, qualitative factors will be taken into consideration when developingremaining life using an approach that reverts to historical credit loss information for the allowance amount.longer-term portion of the asset's life.

The Company has an established cross-functional teamutilizes complex models to obtain reasonable and project management governance process in place to manage implementation of this new guidance. The team continues to work on implementation and is finalizing model build and validation, documenting process flow and internal controls, and conducting parallel runs. In addition, detailed and thorough disclosures are in the process of being developed to explain the complexity and aid the userssupportable forecasts; most of the financial statementsmodels calculate two predictive metrics: the probability of default ("PD") and loss given default ("LGD"). The PD measures the probability that a loan will default within a given time horizon and primarily measures the adequacy of the debtor's cash flow as the primary source of repayment of the loan or lease. The LGD is the expected loss which would be realized presuming a default has occurred and primarily measures the value of the collateral or other secondary source of repayment related to make informed decisions.the collateral.

Management believes this ASU will have significant operational impacts as well as financial impacts on allowance estimates, capital ratios, and volatilityThe combination of profit and loss. Based on our portfolio composition as of September 30, 2019,the current expected credit loss, purchased credit deteriorated, collateral dependent loans, troubled debt restructuring, and the current economic environment, it is estimated the new guidance will result in an increase between 30% - 45% inreserve for unfunded commitments components represent the allowance for credit losses. Management believes that the ACL was adequate as of March 31, 2020. There is, however, no assurance that future loan and lease losses; however,losses will not exceed the Company is stilllevels provided for in the process of testingACL and validating results and thereforecould possibly result in additional charges to the estimate is subject to change. The impact upon adoption will depend on the characteristics of the Company’s portfolios as well as the macroeconomic conditions and forecasts upon adoption, the validation of models and methodologies, and other management judgments.provision for credit losses.

Acquired Loans and Leases- Loans and leases purchased without more-than-insignificant credit deterioration, are recorded at their fair value at the acquisition date. However, loans and leases purchased with more-than-insignificant credit deterioration will be recorded with their applicable allowance for credit loss to determine the amortized cost basis.

Originated Loans and Leases- Loans are stated at the amount of unpaid principal, net of unearned income and any deferred fees or costs. All discounts and premiums are recognized over the contractual life of the loan as yield adjustments. Leases are recorded at the amount of minimum future lease payments receivable and estimated residual value of the leased equipment, net of unearned income and any deferred fees. Initial direct costs related to lease originations are deferred as part of the investment in direct financing leases and amortized over their term using the effective interest method. Unearned lease income is amortized over the term using the effective interest method.

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Income Recognition on Non-Accrual Loans- Loans are classified as non-accrual if the collection of principal and interest is doubtful. Generally, this occurs when a commercial or commercial real estate loan is past due as to maturity or payment of principal or interest by 90 days or more, unless such loans are well-secured and in the process of collection. Loans that are less than 90 days past due may also be classified as non-accrual if repayment in full of principal and/or interest is in doubt.

Generally, when a loan is classified as non-accrual, all uncollected accrued interest is reversed from interest income and the accrual of interest income is terminated. In addition, any cash payments subsequently received are applied as a reduction of principal outstanding. In cases where the future collectability of the principal balance in full is expected, interest income may be recognized on a cash basis. A loan may be restored to accrual status when the borrower's financial condition improves so that full collection of future contractual payments is considered likely. For those loans placed on non-accrual status due to payment delinquency, return to accrual status will generally not occur until the borrower demonstrates repayment ability over a period of not less than six months.

Collateral Dependent Loans and Troubled Debt Restructurings- A loan or lease is considered collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. The Company's classification of CDLs includes: non-homogeneous non-accrual loans and leases, non-homogeneous loans determined by individual credit review, homogeneous non-accrual leases and equipment finance agreements and homogeneous real estate secured loans that have been charged down to net realizable value or the government guarantee balance. Except for homogenous leases and equipment finance agreements, the expected credit losses for CDLs will be measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. The Company may also use the loan's observable market price, if available. If the value of the CDL is determined to be less than the recorded amount of the loan, a charge-off will be taken. To determine the expected credit loss for homogenous leases or equipment finances agreements, the LGD calculated by the CECL model will be utilized. When a homogenous lease or equipment finance agreement becomes 181 days past due, it is fully charged-off.

Loans are reported as restructured loans when, due to borrower financial difficulties, the Bank grants a concession it would not otherwise be willing to offer for a loan. Once a loan has been classified as restructured, it continues in the classification until it has paid in full or it has demonstrated six months payment performance and was determined to have been modified at a market rate. TDRs, including reasonably expected TDRs, are individually recognized and measured for expected credit loss. They are measured for expected credit loss in two ways: when a TDR meets the definition of a CDL, it is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable; otherwise, a discounted cash flow analysis is utilized to measure the expected credit loss for a TDR. The discounted cash flow for TDRs are discounted based on the pre-modification rate and the expected remaining life.

In March 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was passed, which, among other things, allows the Bank to suspend the requirements for certain loan modifications to be categorized as a TDR, including the related impairment for accounting purposes, as such, the Bank is not reporting COVID-19 related modifications as TDRs.

Reserve for Unfunded Commitments- A reserve for unfunded commitments is maintained at a level that, in the opinion of management, is adequate to absorb expected losses associated with the Bank's commitment to lend funds under existing agreements, such as letters or lines of credit. The RUC calculation utilizes the allowance for credit loss on loans and leases rates, probability of default risk ratings, and utilization rates based on the economic expectations over the contractual life of the commitment. The reserve is based on estimates, and ultimate losses may vary from the current estimates. These estimates are evaluated on a regular basis and, as adjustments become necessary, they are reported in earnings in the periods in which they become known. Draws on unfunded commitments that are considered uncollectible at the time funds are advanced are charged to the allowance for credit losses on loans and leases. Provisions for unfunded commitment losses are added to the reserve for unfunded commitments, which is included in the Other Liabilities section of the consolidated balance sheets.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The ASU was issued to improve the effectiveness of disclosures surrounding fair value measurements. The ASU removes numerous disclosures from Topic 820 including: transfers between level 1 and 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation process for level 3 fair value measurements. The ASU also modified and added disclosure requirements in regards to changes in unrealized gains and losses included in other comprehensive income, as well as the range and weighted average of unobservable inputs for level 3 fair value measurements. The Company adopted this ASU as of January 1, 2020, on a retrospective basis except certain provisions of the guidance are only required to be applied on a prospective basis.

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Recent accounting pronouncements 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU was issued to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The last expedient is a one-time election to sell or transfer debt securities classified as held to maturity. The expedients are in effect from March 12, 2020, through December 31, 2022. The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements.

Note 2 – Investment Securities 
 
The following tables present the amortized costs,cost, unrealized gains, unrealized losses and approximate fair values of debt securities at September 30, 2019March 31, 2020 and December 31, 2018:2019: 
March 31, 2020
(in thousands) (in thousands)September 30, 2019 (in thousands) Amortized CostUnrealized GainsUnrealized LossesFair Value
Amortized CostUnrealized GainsUnrealized LossesFair Value
AVAILABLE FOR SALE:            
Available for sale:Available for sale:            
U.S. Treasury and agenciesU.S. Treasury and agencies$576,089  $11,379  $(268) $587,200  U.S. Treasury and agencies$691,066  $59,446  $—  $750,512  
Obligations of states and political subdivisionsObligations of states and political subdivisions258,853  10,212  (35) 269,030  Obligations of states and political subdivisions242,262  10,172  (15) 252,419  
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations1,968,346  22,424  (4,924) 1,985,846  Residential mortgage-backed securities and collateralized mortgage obligations1,824,819  63,032  (307) 1,887,544  
$2,803,288  $44,015  $(5,227) $2,842,076  
HELD TO MATURITY:    
Total available for sale securitiesTotal available for sale securities$2,758,147  $132,650  $(322) $2,890,475  
Held to maturity:Held to maturity:    
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations$3,320  $1,018  $—  $4,338  Residential mortgage-backed securities and collateralized mortgage obligations$3,200  $865  $—  $4,065  
$3,320  $1,018  $—  $4,338  
Total held to maturity securitiesTotal held to maturity securities$3,200  $865  $—  $4,065  


December 31, 2019
(in thousands)
(in thousands)
December 31, 2018
(in thousands)
Amortized CostUnrealized GainsUnrealized LossesFair Value
Amortized CostUnrealized GainsUnrealized LossesFair Value
AVAILABLE FOR SALE:    
Available for sale:Available for sale:    
U.S. Treasury and agenciesU.S. Treasury and agencies$40,002  $—  $(346) $39,656  U.S. Treasury and agencies$642,009  $5,919  $(4,324) $643,604  
Obligations of states and political subdivisionsObligations of states and political subdivisions308,972  2,785  (2,586) 309,171  Obligations of states and political subdivisions251,531  9,600  (37) 261,094  
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations2,696,913  3,590  (72,222) 2,628,281  Residential mortgage-backed securities and collateralized mortgage obligations1,896,708  18,962  (5,686) 1,909,984  
$3,045,887  $6,375  $(75,154) $2,977,108  
HELD TO MATURITY:    
Total available for sale securitiesTotal available for sale securities$2,790,248  $34,481  $(10,047) $2,814,682  
Held to maturity:Held to maturity:    
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations$3,606  $1,038  $—  $4,644  Residential mortgage-backed securities and collateralized mortgage obligations$3,260  $1,003  $—  $4,263  
$3,606  $1,038  $—  $4,644  
Total held to maturity securitiesTotal held to maturity securities$3,260  $1,003  $—  $4,263  

Interest accrued on investment securities totaled $11.9 million and $9.8 million as of March 31, 2020 and December 31, 2019, respectively, and is included in Other Assets.
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Debt securities that were in an unrealized loss position as of September 30, 2019March 31, 2020 and December 31, 20182019 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position.
(in thousands)
September 30, 2019
Less than 12 Months12 Months or LongerTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AVAILABLE FOR SALE:      
U.S. Treasury and agencies$47,566  $226  $19,956  $42  $67,522  $268  
Obligations of states and political subdivisions5,764  21  1,911  14  7,675  35  
Residential mortgage-backed securities and collateralized mortgage obligations104,014  160  522,391  4,764  626,405  4,924  
Total temporarily impaired securities$157,344  $407  $544,258  $4,820  $701,602  $5,227  

March 31, 2020
Less than 12 Months12 Months or LongerTotal
(in thousands)
(in thousands)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Available for sale:Available for sale:      
Obligations of states and political subdivisionsObligations of states and political subdivisions$3,843  $10  $774  $ $4,617  $15  
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations—  —  22,719  307  22,719  307  
TotalTotal$3,843  $10  $23,493  $312  $27,336  $322  

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December 31, 2019
Less than 12 Months12 Months or LongerTotal
  (in thousands)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Available for sale:      
U.S. Treasury and agencies$313,169  $4,324  $—  $—  $313,169  $4,324  
Obligations of states and political subdivisions4,611  30  1,906   6,517  37  
Residential mortgage-backed securities and collateralized mortgage obligations288,866  1,628  402,802  4,058  691,668  5,686  
Total$606,646  $5,982  $404,708  $4,065  $1,011,354  $10,047  

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 (in thousands)
December 31, 2018
Less than 12 Months12 Months or LongerTotal
 Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AVAILABLE FOR SALE:      
U.S. Treasury and agencies$—  $—  $39,656  $346  $39,656  $346  
Obligations of states and political subdivisions59,963  800  38,691  1,786  98,654  2,586  
Residential mortgage-backed securities and collateralized mortgage obligations332,103  5,432  1,992,546  66,790  2,324,649  72,222  
Total temporarily impaired securities$392,066  $6,232  $2,070,893  $68,922  $2,462,959  $75,154  
TheThese unrealized losses on U.S. Treasury and agenciesthe Company's debt securities are due to increases in market interest rates since acquisition of each security and are not due to the underlying credit of the issuers. The unrealized losses on obligations of states and political subdivisions were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities.securities and are not due to the underlying credit of the issuers. Management monitors the published credit ratings of thesethe Company's securities for material rating or outlook changes.Substantially all of the Company's obligations of states and political subdivisions are general obligation issuances. All of the available for sale residential mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at September 30, 2019March 31, 2020 are issued or guaranteed by government sponsored enterprises. The unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that these securities will be settled at a price at least equal to the amortized cost of each investment.

Because the unrealized lossdecline in fair value of the Company's securities is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities and it is not more likely than not that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until maturity, these investments aredo not considered other-than-temporarily impaired. 

In June 2019, the Company completed a strategic restructuring of a portion of the availablehave an allowance for sale debt securities portfolio. This restructuring resulted in the sale of certain securitiescredit loss at a gross loss of $7.3 million. This was a tactical effort to reduce interest rate sensitivity for a potentially decreasing interest rate environment and improve the cash liquidity position of the Company. The sales were primarily residential mortgage-backed securities and collateralized mortgage obligations and the purchases were non-callable agency bonds. The transaction resulted in an increased duration of the overall investment securities portfolio and a reduction in the portion of investments subject to prepayment.March 31, 2020.

The following table presents the contractual maturities of debt securities at September 30, 2019:March 31, 2020:  
 (in thousands)
Available For SaleHeld To Maturity
 Amortized CostFair ValueAmortized CostFair Value
Due within one year$24,236  $24,228  $—  $—  
Due after one year through five years52,813  53,341  —  —  
Due after five years through ten years796,964  811,297  16  16  
Due after ten years1,929,275  1,953,210  3,304  4,322  
 $2,803,288  $2,842,076  $3,320  $4,338  


Available For SaleHeld To Maturity
  (in thousands) 
Amortized CostFair ValueAmortized CostFair Value
Due within one year$25,308  $25,479  $—  $—  
Due after one year through five years53,243  54,215    
Due after five years through ten years851,403  908,128  11  12  
Due after ten years1,828,193  1,902,653  3,186  4,050  
Total securities$2,758,147  $2,890,475  $3,200  $4,065  
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The following table presents the gross realized gains and losses on the sale of debt securities available for sale for the nine months ended September 30, 2019 and 2018. There were 0 realized gains or losses on the sale of debt securities available for sale for the three months ended September 30, 2019 and 2018.
 (in thousands)
Nine Months Ended
September 30, 2019September 30, 2018
Gain  Loss  Gain  Loss  
Obligations of states and political subdivisions$16  $—  $—  $—  
Residential mortgage-backed securities and collateralized mortgage obligations143  (7,345) 14  —  
$159  $(7,345) $14  $—  

The following table presents the gains and losses on equity securities for the three and nine months ended September 30, 2019 and 2018:

 (in thousands)
Three Months EndedNine Months Ended
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Unrealized gain (loss) recognized on equity securities held at the end of the period$295  $(462) $1,744  $(1,894) 
Net gain (loss) recognized on equity securities sold during the period(38) —  81,815  —  
Total gain (loss) recognized on equity securities$257  $(462) $83,559  $(1,894) 

In June 2019, the Company completed the sale of all shares owned of Class B common stock of Visa Inc. resulting in a one-time gain of $81.9 million.

The following table presents, as of September 30, 2019,March 31, 2020, investment securities which were pledged to secure borrowings, public deposits, and repurchase agreements as permitted or required by law: 
(in thousands)
(in thousands)
Amortized CostFair Value
(in thousands)
Amortized CostFair Value
To state and local governments to secure public depositsTo state and local governments to secure public deposits$922,449  $934,186  To state and local governments to secure public deposits$283,422  $292,225  
Other securities pledged principally to secure repurchase agreementsOther securities pledged principally to secure repurchase agreements490,393  498,739  Other securities pledged principally to secure repurchase agreements552,246  580,377  
Total pledged securitiesTotal pledged securities$1,412,842  $1,432,925  Total pledged securities$835,668  $872,602  


 
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Note 3 – Loans and Leases  
 
The following table presents the major types of loans and leases, net of deferred fees and costs, as of September 30, 2019March 31, 2020 and December 31, 2018:2019: 
(in thousands)(in thousands)September 30, 2019December 31, 2018(in thousands)March 31, 2020December 31, 2019
Commercial real estateCommercial real estate  Commercial real estate  
Non-owner occupied term, netNon-owner occupied term, net$3,495,555  $3,573,065  Non-owner occupied term, net$3,613,420  $3,545,566  
Owner occupied term, netOwner occupied term, net2,566,299  2,480,371  Owner occupied term, net2,472,187  2,496,088  
Multifamily, netMultifamily, net3,479,986  3,304,763  Multifamily, net3,464,217  3,514,774  
Construction & development, netConstruction & development, net771,214  736,254  Construction & development, net667,975  678,740  
Residential development, netResidential development, net191,500  196,890  Residential development, net187,594  189,010  
CommercialCommercialCommercial
Term, netTerm, net2,310,759  2,232,923  Term, net2,317,573  2,232,817  
Lines of credit & other, netLines of credit & other, net1,254,755  1,169,525  Lines of credit & other, net1,208,051  1,212,393  
Leases & equipment finance, netLeases & equipment finance, net1,485,753  1,330,155  Leases & equipment finance, net1,492,762  1,465,489  
ResidentialResidentialResidential
Mortgage, netMortgage, net4,245,674  3,635,073  Mortgage, net4,193,908  4,215,424  
Home equity loans & lines, netHome equity loans & lines, net1,224,578  1,176,477  Home equity loans & lines, net1,249,152  1,237,512  
Consumer & other, netConsumer & other, net494,721  587,170  Consumer & other, net384,639  407,871  
Total loans, net of deferred fees and costs$21,520,794  $20,422,666  
Total loans and leases, net of deferred fees and costsTotal loans and leases, net of deferred fees and costs$21,251,478  $21,195,684  
 
The loan balances are net of deferred fees and costs of $73.6$72.7 million and $70.4$71.9 million as of September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Net loans also include discounts on acquired loans of $37.0$27.9 million and $50.0$30.2 million as of September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. As of September 30, 2019,March 31, 2020, loans totaling $13.4$13.6 billion were pledged to secure borrowings and available lines of credit.

The outstanding contractual unpaid principal balance of purchased impairedInterest accrued on loans excluding acquisition accounting adjustments, was $146.3and leases totaled $57.6 million and $183.7$58.5 million at September 30, 2019as of March 31, 2020 and December 31, 2018, respectively. The carrying balance of purchased impaired loans was $104.8 million2019, respectively, and $134.5 million at September 30, 2019 and December 31, 2018, respectively.is included in Other Assets.

The following table presents the changes in the accretable yield for purchased impaired loans for the three and nine months ended September 30, 2019 and 2018:
(in thousands)Three Months EndedNine Months Ended
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Balance, beginning of period$46,019  $62,966  $56,564  $74,268  
Accretion to interest income(6,982) (3,793) (17,300) (19,694) 
Disposals(3,350) (1,147) (7,923) (9,001) 
Reclassifications from non-accretable difference4,357  169  8,703  12,622  
Balance, end of period$40,044  $58,195  $40,044  $58,195  

Umpqua,Bank, through its commercial equipment leasing subsidiary, FinPac, is a direct provider of commercial equipment leasing and financing throughout the United States, originating business through three distinct channels: small and mid-ticket third partythird-party originators, vendor finance, and Umpqua Bank Equipment Leasing & Finance. Direct finance leases are included within the lease and equipment finance segment within the loans and leases, net line item. All of these leases typically have terms of three to 5five years and are considered to be direct financing leases. Interest income recognized on these leases was $8.1$6.7 million and $24.6$8.4 million for the three and nine months ended September 30,March 31, 2020 and 2019, respectively.

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Residual values on leases are established at the time equipment is leased based on an estimate of the value of the leased equipment when the Company expects to dispose of the equipment, typically at the termination of the lease. An annual evaluation is also performed each fiscal year by an independent valuation specialist and equipment residuals are confirmed or adjusted in conjunction with such evaluation.

The following table presents the net investment in direct financing leases as of September 30, 2019 and December 31, 2018
(in thousands)September 30, 2019December 31, 2018
Minimum lease payments receivable  $463,834  $450,258  
Estimated guaranteed and unguaranteed residual values  85,360  79,455  
Initial direct costs - net of accumulated amortization  9,806  10,950  
Unearned income  (73,083) (79,777) 
Net investment in direct financing leases  $485,917  $460,886  

The following table presents the scheduled minimum lease payments receivable as of September 30, 2019:
(in thousands)
YearAmount  
2019$41,122  
2020148,284  
2021117,687  
202274,456  
202338,675  
Thereafter43,610  
$463,834  

Loans and leases sold 
 
In the course of managing the loan and lease portfolio, at certain times, management may decide to sell loans and leases. The following table summarizes the carrying value of loans and leases sold by major loan type during the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019: 
Three Months Ended
(in thousands)(in thousands)Three Months EndedNine Months Ended (in thousands)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Commercial real estateCommercial real estate    Commercial real estate  
Non-owner occupied term, netNon-owner occupied term, net$16,467  $3,215  $24,229  $8,369  Non-owner occupied term, net$3,385  $4,819  
Owner occupied term, netOwner occupied term, net2,780  12,751  15,751  26,843  Owner occupied term, net5,766  4,710  
Multifamily, net—  4,432  —  4,432  
CommercialCommercial    Commercial  
Term, netTerm, net7,670  13,331  23,633  33,120  Term, net11,677  5,441  
Lines of credit & other, net1,619  —  1,619  —  
Leases & equipment finance, netLeases & equipment finance, net—  —  17,571  —  Leases & equipment finance, net43  —  
ResidentialResidential    Residential  
Mortgage, netMortgage, net—  41,669  109  41,669  Mortgage, net—  109  
Total$28,536  $75,398  $82,912  $114,433  
Total loans and leases sold, netTotal loans and leases sold, net$20,871  $15,079  


Note 4– Allowance for Credit Losses

Allowance for Credit Losses Methodology

The Allowance for Credit Losses is an important element in the Bank's financial statements. In accordance with ASC 326, the ACL represents management's estimate of lifetime credit losses for assets within its scope, specifically loans and leases and unfunded commitments. ASC 326 is not prescriptive in the methodology used to determine the expected credit loss estimate. Therefore, management has flexibility in selecting the methodology. The expected credit losses must be estimated over a financial asset's contractual term, adjusted for prepayments utilizing quantitative and qualitative factors. There are also specific considerations for purchased credit-deteriorated, troubled debt restructured, and collateral dependent loans.

To calculate the ACL, management uses models to estimate the PD and LGD for loans utilizing inputs that include forecasted future economic conditions and that are dependent upon specific macroeconomic variables relevant to each of the Bank's loan and lease portfolios. Moody's, a third party, provided the historical and forward-looking macroeconomic data used in the development of the models used to calculate the ACL.

For ACL calculation purposes, the Bank considered the financial and economic environment at the time of assessment and economic scenarios that differed in the levels of severity and sensitivity to the ACL results. At each measurement date, the Bank selects the scenario that reflects its view of future economic conditions and is determined to be the most probable outcome.

All forecasts are updated monthly for each variable where applicable and incorporated as relevant into the ACL calculation. Actual credit loss results will differ from the estimate of credit losses, either in a strong economy or a recession, as our portfolio will change through time due to growth, risk mitigation actions and other factors. In addition, the scenarios used will differ and change through time as economic conditions change. Economic scenarios might not capture deterioration in the economy timely enough for the Bank to be able to adequately impact the ACL.

Select macroeconomic variables are projected over the forecast period, and they could have a material impact in determining the ACL. As the length of the forecast period increases, information about the future becomes less readily available and projections are inherently less certain.
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Note 4– Allowance for Loan and Lease Loss and Credit Quality 
The Bank's methodology for assessing the appropriatenessfollowing is a discussion of the Allowancechanges in the factors that influenced management's current estimate of expected credit losses. The changes in the ACL estimate for Loanall portfolio segments, during the three months ended March 31, 2020, were primarily related to changes in the economic assumptions. Because of the rapidly changing economic environment due to the COVID-19 pandemic, the Bank opted to use Moody's proprietary baseline economic forecast which included the latest macroeconomic developments throughout March 2020. The World Health Organization officially declared COVID-19 a pandemic, the Federal Reserve reacted with the implementation of its policy tools, a national state of emergency was declared in the U.S. and Lease Loss ("ALLL") consists of three key elements: 1)congress passed the formula allowance; 2)CARES Act in a response to minimize the specific allowance; and 3)effects from the unallocated allowance. By incorporatingpandemic. Moody's incorporated these developments in its late March 2020 macroeconomic outlook. Based on these factors, into a single allowance requirement analysis, we believe all risk-based activities within the loan and lease portfolios are simultaneously considered. Bank believed the Moody's macroeconomic forecast was appropriate to use to calculate the ACL.

Formula Allowance 
When loansIn the baseline scenario selected, the probability that the economy will perform better than this baseline is equal to the probability that it will perform worse and leases are originated or acquired, they are assigned a risk rating that is reassessed periodically duringincluded the term of the loan or lease through the credit review process.  The Bank's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating categories are a primary factor in determining an appropriate amount for the formula allowance. 
The formula allowance is calculated by applying risk factors that represent our estimate of incurred losses to various segments of pools of outstanding loans and leases. Risk factors are assigned to each portfolio segment based on management's evaluation of the losses inherent within each segment. Segments with greater risk of loss will therefore be assigned a higher risk factor. 
following:
Base risk The portfolio is segmented into loan categories, and these categories are assignedthe U.S. economy undergoes a Base risk factor based on an evaluationrecession due to the COVID-19 pandemic from the first quarter of 2020 to the loss inherent within each segment. second quarter of 2020;
real GDP peak-to-trough is approximately negative 6%, on a cumulative basis;
Extra risk – Additional risk factors provide forU.S. unemployment rate peaks near 9% in the second quarter of 2020;
partial economic recovery in the third quarter of 2020, then slow growth thereafter and an additional allocationacceleration later in 2021;
return to full employment is achieved by 2023;
an assumption that the direct stimulus payments to eligible taxpayers will be transitioned effectively to individuals and there will be a boost in unemployment insurance from the $2.2 trillion fiscal stimulus;
banks, airlines and hospitals will be beneficiaries of ALLL based on the loan and lease risk rating system and loan delinquency, and reflect the increased level of inherent losses associated with more adversely classified loans and leases. economic stimulus legislation.

Risk factors may be changed periodically based on management's evaluationThe Bank uses an additional scenario that differs in terms of severity within the variables, both favorable and unfavorable to assess sensitivity in the ACL results and to inform qualitative adjustments. Typically, the Bank would have selected a scenario that was more unfavorable in comparison to the scenario used for the ACL calculation. However, because of the recent COVID-19 pandemic, the timing of scenarios and management judgment, the Bank selected Moody's COVID-19 severe pandemic scenario.

In the COVID-19 severe pandemic scenario, which was less severe, the U.S. economy undergoes a recession due to the COVID-19 crisis from first quarter of 2020 to third quarter of 2020 and includes the following factors: loss experience; changes
real GDP peak-to-trough is approximately negative 2%, on a cumulative basis;
U.S. unemployment rate peaks near 5% in the fourth quarter of 2020;
a slow economic growth begins in fourth quarter of 2020;
return to full employment is achieved by 2022.

However, in contrast to the scenario selected to calculate the ACL, the sensitivity scenario also incorporated severely impacted home values, decreasing in first quarter of 2020 and staying flat throughout 2020 year-end then increasing in 2021. Under the baseline scenario, home values are not materially impacted. The sensitivity scenario assumes no effects from the fiscal stimulus, as the specifics of the proposed legislation were not publicly available at a notable level at the time of non-performing loans and leases; regulatory exam results; changespublication. The results using the COVID-19 severe pandemic scenario for sensitivity analysis were reviewed by management, but management believes the baseline scenario better reflected the economic uncertainty caused by the pandemic for use in the ACL calculation.

The ACL is measured on a collective (pool) basis when similar characteristics exist. The Company has selected models at the portfolio level of adversely classified loansusing a risk-based approach, with larger, more complex portfolios having more complex models. The macroeconomic variables that are inputs to the below models are reasonable and leases; improvement or deterioration in economic conditions; and any other factors deemed relevant. Additionally, FinPac considers additional quantitative and qualitative factors:  migration analysis; a static pool analysis of historic recoveries; and forecasting uncertainties. A migration analysis is a technique used to estimatesupportable over the likelihood that an account will progress through the various delinquency states and ultimately be charged off.
Specific Allowance 
Regular credit reviewslife of the portfolio identify loans in that are considered potentially impaired. Potentially impairedthey reasonably project the key economic variables in the near term and then converge to a long run equilibrium trend. These models produce reasonable and supportable estimates of loss over the life of the loans as the projected credit losses will also converge to a steady state in line with the variables applied. The Company measures the ACL using the following methods:

Commercial Real Estate ("CRE"): Non-owner occupied commercial real estate, multifamily, and construction loans are referredanalyzed using a model that uses four primary property variables: Net Operating Income ("NOI"), Property Value, Property Type, and Location. For PD estimation, the model simulates potential future paths of NOI given commercial real estate market factors determined from macroeconomic forecasts. Using the resulting expected debt service coverage ratios, together with predicted loan-to-values and other variables, the model estimates PD from the range of conditional possibilities. In addition, the model estimates maturity PD capturing refinance default risk to the ALLL Committee which reviews and approves designated loans as impaired. A loan is considered impaired when, based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identifyproduce a loan as impaired, we measure the impairment using discounted cash flows or estimated note sale price, except when the sole remaining source of the repaymenttotal PD for the loan is theloan. The model estimates LGD, inclusive of principal loss and liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of discounted cash flows. If we determine that the value of the impaired loan is less than the recorded investmentexpenses, empirically using predicted loan-to-value as well as certain market and other factors. The LGD calculation also includes a separate maturity risk component. The primary economic drivers in the loan, we either recognize an impairment reserve as a specific allowance to be provided for in the allowance for loanmodel are GDP Growth, U.S. unemployment rate, and lease losses or charge-off the impaired balance on collateral-dependent loans if it is determined that such amount represents a confirmed loss.  Loans determined to be impaired are excluded from the formula allowance so as not to double-count the loss exposure.
10-Year Treasury yield. The combination of the formula allowance componentmodel produces PD and the specific allowance component represents the allocated allowance for loan and lease losses. There was 0 unallocated allowance as of September 30, 2019 and December 31, 2018.
The reserve for unfunded commitments ("RUC") is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ALLL and RUC are monitoredLGD on a regularquarter-by-quarter basis and are based on management's evaluationfor the life 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.
There have been no significant changes to the Bank's ALLL methodology or policies in the periods presented. 
loan.
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Activity
The owner-occupied commercial real-estate portfolio utilizes a top down macroeconomic model using linear regression. This model produces portfolio level quarterly net charge-off rates for 10 years. The primary economic drivers for this model are the 7-year A vs Aa corporate bond spread and S&P 500 corporate after-tax profits.

Commercial: Non-homogeneous commercial loans and leases and residential development loans are analyzed in a multi-step process. An initial PD is estimated using a model driven by an obligor's selected financial statement ratios, together with industry and cycle-adjusting information. An initial LGD is derived separately based on collateral type using collateral value and a haircut to reflect the loss in liquidation. Another model then applies an auto-regression technique to the initial PD and LGD metrics to estimate the PD and LGD curves according to the macroeconomic scenario over a one-year reasonable and supportable forecast. The primary economic drivers in the Allowancemodel are the S&P 500 Stock Price Index, S&P 500 Market Volatility Index, U.S. unemployment rate, as well as appropriate yield curves and credit spreads. This model utilizes output reversion methodology, which reverts on a straight-line basis over two years to long-term PD estimated using financial statement ratios of each obligor.

The model for Loanthe homogeneous lease and Lease Losses equipment finance agreement portfolio uses lease and equipment finance information, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD values. The PD calculation is based on survival analysis while LGD is calculated using a two-step regression. The model calculates LGD using an estimate of the probability that a defaulted lease or equipment finance agreement will have a loss, and an estimate of the loss amount. The primary economic drivers for the model are GDP, U.S. unemployment rate, and a home price growth index. The model produces PD and LGD curves at the lease level for each month in the forecast horizon.

Residential: The models for residential real estate and Home Equity Lines of Credit ("HELOC") utilize loan level variables, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD. The U.S. unemployment rate and home price growth rate indexes are primary economic drivers in both the residential real estate and HELOC models. In addition, the prime rate is also a primary driver in the HELOC model. The modelsfocus on establishing an empirical relationship between default probabilities and a set of loan-level, borrower, and macroeconomic credit risk drivers. The LGD calculation for residential real estate is based on an estimate of the probability that a defaulted loan will have a loss, and then an estimate of the loss amount. HELOCs utilize the same model using residential real estate LGD values to assign loans to cohorts based on FICO scores and loan age. The model produces PD and LGD curves at the loan level for each quarter in the forecast horizon.

Consumer: Historical net charge-off information as well as economic forecast assumptions are used to project loss rates for the Consumer segment.

All loans and leases that have not been modeled receive a loss rate via an extrapolated rate methodology. The loans and leases receiving an extrapolated rate are typically newly originated loans and leases or loans and leases without the granularity of data necessary to be modeled. Based on the vintage year, credit classification, and reporting category of the modeled loans and leases, a loss factor is calculated and applied to the non-modeled loans and leases.

Along with the quantitative factors produced by the above models, management also considers prepayment speeds and qualitative factors when determining the ACL. The Company uses a prepayment model that forecasts the constant prepayment rates based on institution specific data. Below are the nine qualitative factors considered where applicable:

Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.
Changes in national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.
Changes in the nature and volume of the portfolio and in the terms of loans and leases.
Changes in the experience, ability, and depth of lending management and other relevant staff.
Changes in the volume and severity of past due loans and leases, the volume of non-accrual loans and leases, and the volume and severity of adversely classified or graded loans and leases.
Changes in the quality of the Bank's credit review system.
Changes in the value of the underlying collateral for collateral-dependent loans and leases.
The existence and effect of any concentrations of credit, and changes in the level of such concentrations.
The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Bank's existing portfolio.

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Table of Contents
The Company evaluated each qualitative factor as of March 31, 2020, and concluded that a material adjustment to the amounts indicated by the models was not necessary, as the models appropriately reflected the significant changes in credit conditions.

Loss factors from the models, prepayment speeds, and qualitative factors are input into the Company's CECL accounting application which aggregates the information. The Company then uses two methods to calculate the current expected credit loss: 1) the discounted cash flow ("DCF") method, which is used for all loans except lines of credit and 2) the non-discounted cash flow method which is used for lines of credit due to difficulty of calculating an effective interest rate when lines have yet to be drawn on. The DCF method utilizes the effective interest rate of individual assets to discount the expected credit losses adjusted for prepayments. The difference in the net present value and the amortized cost of the asset will result in the required allowance. The non-discounted cash flow method uses the exposure at default, along with the expected credit losses adjusted for prepayments to calculate the required allowance.

The following tables summarizetable summarizes activity related to the allowance for credit losses on loans and leases by portfolio segment for the three months ended March 31, 2020:
Three Months Ended March 31, 2020
(in thousands)Commercial Real EstateCommercialResidentialConsumer & OtherTotal
Balance, beginning of period$50,847  $73,820  $24,714  $8,248  $157,629  
Impact of adoption of CECL5,077  44,009  2,099  (1,186) 49,999  
Provision for credit losses for loans and leases43,608  49,673  7,185  5,036  105,502  
Charge-offs—  (22,608) (11) (1,836) (24,455) 
Recoveries246  1,713  264  522  2,745  
Net (charge-offs) recoveries246  (20,895) 253  (1,314) (21,710) 
Balance, end of period$99,778  $146,607  $34,251  $10,784  $291,420  

The following table summarizes activity related to the allowance for loan and lease losses by loan and lease portfolio segment for the three and nine months ended September 30, 2019 and 2018: March 31, 2019:
Three Months Ended March 31, 2019
(in thousands)(in thousands)Three Months Ended September 30, 2019(in thousands)Commercial Real EstateCommercialResidentialConsumer & OtherTotal
Commercial Real EstateCommercialResidentialConsumer & Other
Total 
Balance, beginning of periodBalance, beginning of period$48,997  $68,353  $23,654  $10,065  $151,069  Balance, beginning of period$47,904  $63,957  $22,034  $10,976  $144,871  
Charge-offsCharge-offs(497) (20,457) (305) (1,853) (23,112) Charge-offs(2,151) (13,210) (135) (1,656) (17,152) 
RecoveriesRecoveries177  4,263  94  570  5,104  Recoveries337  2,354  155  623  3,469  
ProvisionProvision2,524  18,797  1,113  793  23,227  Provision1,751  11,269  119  545  13,684  
Balance, end of periodBalance, end of period$51,201  $70,956  $24,556  $9,575  $156,288  Balance, end of period$47,841  $64,370  $22,173  $10,488  $144,872  
(in thousands)Three Months Ended September 30, 2018
Commercial Real EstateCommercialResidentialConsumer & OtherTotal 
Balance, beginning of period$47,285  $65,765  $20,275  $11,231  $144,556  
Charge-offs(415) (13,926) (95) (1,460) (15,896) 
Recoveries413  2,473  237  532  3,655  
(Recapture) provision(942) 11,133  609  911  11,711  
Balance, end of period$46,341  $65,445  $21,026  $11,214  $144,026  

(in thousands)Nine Months Ended September 30, 2019
 Commercial Real EstateCommercialResidentialConsumer & OtherTotal
Balance, beginning of period$47,904  $63,957  $22,034  $10,976  $144,871  
Charge-offs(3,035) (48,364) (507) (5,065) (56,971) 
Recoveries733  9,228  399  1,765  12,125  
Provision5,599  46,135  2,630  1,899  56,263  
Balance, end of period$51,201  $70,956  $24,556  $9,575  $156,288  
(in thousands)Nine Months Ended September 30, 2018
 Commercial Real EstateCommercialResidentialConsumer & OtherTotal
Balance, beginning of period$45,765  $63,305  $19,360  $12,178  $140,608  
Charge-offs(1,088) (40,270) (801) (4,364) (46,523) 
Recoveries919  8,097  538  1,701  11,255  
Provision745  34,313  1,929  1,699  38,686  
Balance, end of period$46,341  $65,445  $21,026  $11,214  $144,026  
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The following tables present the allowance and recorded investment in loans and leases by portfolio segment and balances individually or collectively evaluated for impairment as of September 30, 2019 and 2018: 
 (in thousands)
September 30, 2019
 Commercial Real EstateCommercialResidentialConsumer & OtherTotal 
Allowance for loans and leases:
Collectively evaluated for impairment$49,676  $70,783  $24,255  $9,567  $154,281  
Individually evaluated for impairment188  10  —  —  198  
Loans acquired with deteriorated credit quality1,337  163  301   1,809  
Total$51,201  $70,956  $24,556  $9,575  $156,288  
Loans and leases:    
Collectively evaluated for impairment$10,402,556  $5,043,000  $5,450,319  $494,414  $21,390,289  
Individually evaluated for impairment17,973  7,696  —  —  25,669  
Loans acquired with deteriorated credit quality84,025  571  19,933  307  104,836  
Total$10,504,554  $5,051,267  $5,470,252  $494,721  $21,520,794  
 (in thousands)
September 30, 2018
 Commercial Real EstateCommercialResidentialConsumer & OtherTotal 
Allowance for loans and leases:
Collectively evaluated for impairment$44,353  $65,135  $20,671  $11,173  $141,332  
Individually evaluated for impairment215   —  —  220  
Loans acquired with deteriorated credit quality1,773  305  355  41  2,474  
Total$46,341  $65,445  $21,026  $11,214  $144,026  
Loans and leases:    
Collectively evaluated for impairment$9,934,169  $4,543,599  $4,583,986  $603,752  $19,665,506  
Individually evaluated for impairment25,410  18,133  —  —  43,543  
Loans acquired with deteriorated credit quality113,363  3,280  27,934  407  144,984  
Total$10,072,942  $4,565,012  $4,611,920  $604,159  $19,854,033  

Summary of Reserve for Unfunded Commitments Activity 

The following tables present a summary of activity in the RUC and unfunded commitments for the three and nine months ended September 30, 2019 and 2018: 
(in thousands) Three Months EndedNine Months Ended
 September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Balance, beginning of period$4,857  $4,130  $4,523  $3,963  
Net charge to other expense228  164  562  331  
Balance, end of period$5,085  $4,294  $5,085  $4,294  

 (in thousands)Total
Unfunded loan and lease commitments:
September 30, 2019$5,744,307 
September 30, 2018$5,244,832 
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Asset Quality and Non-Performing Loans and Leases

We manage asset quality and control credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration is charged with monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due loans and leases and larger credits, designed to identify potential charges to the allowance for loan and leasecredit losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions and other factors.

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Non-Accrual Loans and Leases and Table of Contents
Loans and Leases Past Due and Non-Accrual Loans and Leases

Typically, loans in a non-accrual status will not have an allowance for credit loss as they will be written down to their net realizable value or charged-off. However, the net realizable value for homogenous leases and equipment financing is determined by the loss given default calculated by the CECL model and therefore leases and equipment finance on non-accrual will have an allowance for credit loss amount until they become 181 days past due, at which time they are charged-off. The Company recognized no interest income on non-accrual loans and leases during the three months ended March 31, 2020.

The following tables summarize our non-accrual loans and leases andpresent the amortized cost basis of the loans and leases past due, by loan and lease class, as of September 30, 2019March 31, 2020 and December 31, 2018: 2019:
March 31, 2020
(in thousands)(in thousands)September 30, 2019(in thousands)Greater than 30 to 59 Days Past Due60 to 89 Days Past DueGreater than 90 Days and AccruingTotal Past Due
Non-Accrual (1)
CurrentTotal Loans and Leases
Greater than 30 to 59 Days Past Due60 to 89 Days Past Due90+ Days and AccruingTotal Past Due Non-Accrual
Current & Other (1)
Total Loans and Leases
Commercial real estateCommercial real estate       Commercial real estate
Non-owner occupied term, netNon-owner occupied term, net$20  $1,690  $—  $1,710  $9,677  $3,484,168  $3,495,555  Non-owner occupied term, net$4,331  $5,401  $—  $9,732  $4,510  $3,599,178  $3,613,420  
Owner occupied term, netOwner occupied term, net4,131  4,062   8,194  5,609  2,552,496  2,566,299  Owner occupied term, net7,064  4,231  2,177  13,472  6,135  2,452,580  2,472,187  
Multifamily, netMultifamily, net—  —  —  —  —  3,479,986  3,479,986  Multifamily, net—  —  —  —  598  3,463,619  3,464,217  
Construction & development, netConstruction & development, net—  —  —  —  —  771,214  771,214  Construction & development, net—  —  —  —  —  667,975  667,975  
Residential development, netResidential development, net—  —  —  —  —  191,500  191,500  Residential development, net—  —  —  —  —  187,594  187,594  
CommercialCommercial     Commercial
Term, netTerm, net465  1,012  —  1,477  2,763  2,306,519  2,310,759  Term, net316  1,441  213  1,970  2,407  2,313,196  2,317,573  
Lines of credit & other, netLines of credit & other, net1,961  533  226  2,720  1,048  1,250,987  1,254,755  Lines of credit & other, net3,194  648   3,843  12,443  1,191,765  1,208,051  
Leases & equipment finance, netLeases & equipment finance, net7,199  9,906  3,321  20,426  12,539  1,452,788  1,485,753  Leases & equipment finance, net12,668  3,663  2,281  18,612  13,035  1,461,115  1,492,762  
ResidentialResidential     Residential
Mortgage, net (2)
Mortgage, net (2)
—  7,698  35,401  43,099  —  4,202,575  4,245,674  
Mortgage, net (2)
9,472  163  45,647  55,282  —  4,138,626  4,193,908  
Home equity loans & lines, netHome equity loans & lines, net1,317  1,109  1,232  3,658  —  1,220,920  1,224,578  Home equity loans & lines, net3,081  728  1,728  5,537  —  1,243,615  1,249,152  
Consumer & other, netConsumer & other, net2,445  842  791  4,078  —  490,643  494,721  Consumer & other, net2,619  942  466  4,027  —  380,612  384,639  
Total, net of deferred fees and costsTotal, net of deferred fees and costs$17,538  $26,852  $40,972  $85,362  $31,636  $21,403,796  $21,520,794  Total, net of deferred fees and costs$42,745  $17,217  $52,513  $112,475  $39,128  $21,099,875  $21,251,478  

(1) Other includes purchasedLoans and leases on non-accrual had a related allowance for credit impaired loanslosses of $104.8$11.6 million at March 31, 2020, related to an amortized cost basis of leases and equipment finance of $13.0 million.
(2) Includes government guaranteed GNMA mortgage loans that Umpquathe Bank has the right but not the obligation to repurchase that are past due 90 days or more, totaling $5.2$5.3 million at September 30, 2019.March 31, 2020.

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December 31, 2019
(in thousands) (in thousands)December 31, 2018(in thousands)Greater than 30 to 59 Days Past Due60 to 89 Days Past DueGreater than 90 Days and AccruingTotal Past DueNon-Accrual
Current and Other (1)
Total Loans and Leases
Greater than 30 to 59 Days Past Due60 to 89 Days Past Due90+ Days and AccruingTotal Past Due Non-Accrual
Current & Other (1)
Total Loans and Leases
Commercial real estateCommercial real estate       Commercial real estate
Non-owner occupied term, netNon-owner occupied term, net$1,192  $1,042  $—  $2,234  $10,033  $3,560,798  $3,573,065  Non-owner occupied term, net$—  $—  $121  $121  $2,920  $3,542,525  $3,545,566  
Owner occupied term, netOwner occupied term, net3,920  1,372   5,293  8,682  2,466,396  2,480,371  Owner occupied term, net975  470   1,446  4,600  2,490,042  2,496,088  
Multifamily, netMultifamily, net107  —  —  107  4,298  3,300,358  3,304,763  Multifamily, net—  —  —  —  —  3,514,774  3,514,774  
Construction & development, netConstruction & development, net—  —  —  —  —  736,254  736,254  Construction & development, net—  —  —  —  —  678,740  678,740  
Residential development, netResidential development, net—  —  —  —  —  196,890  196,890  Residential development, net—  —  —  —  —  189,010  189,010  
CommercialCommercial    Commercial
Term, netTerm, net992  117  —  1,109  11,772  2,220,042  2,232,923  Term, net136  381  —  517  3,458  2,228,842  2,232,817  
Lines of credit & other, netLines of credit & other, net1,286  143  83  1,512  2,275  1,165,738  1,169,525  Lines of credit & other, net3,548  376  36  3,960  767  1,207,666  1,212,393  
Leases & equipment finance, netLeases & equipment finance, net8,571  8,754  3,016  20,341  13,763  1,296,051  1,330,155  Leases & equipment finance, net10,685  11,176  3,086  24,947  14,499  1,426,043  1,465,489  
ResidentialResidential    Residential
Mortgage, net (2)
Mortgage, net (2)
—  4,900  39,218  44,118  —  3,590,955  3,635,073  
Mortgage, net (2)
—  8,104  36,642  44,746  —  4,170,678  4,215,424  
Home equity loans & lines, netHome equity loans & lines, net987  368  2,492  3,847  —  1,172,630  1,176,477  Home equity loans & lines, net2,173  867  1,804  4,844  —  1,232,668  1,237,512  
Consumer & other, netConsumer & other, net2,711  911  551  4,173  —  582,997  587,170  Consumer & other, net2,043  948  615  3,606  —  404,265  407,871  
Total, net of deferred fees and costsTotal, net of deferred fees and costs$19,766  $17,607  $45,361  $82,734  $50,823  $20,289,109  $20,422,666  Total, net of deferred fees and costs$19,560  $22,322  $42,305  $84,187  $26,244  $21,085,253  $21,195,684  

(1) Other includes purchased credit impaired loans of $134.5$89.5 million.
(2) Includes government guaranteed GNMA mortgage loans that Umpquathe Bank has the right but not the obligation to repurchase that are past due 90 days or more, totaling $8.9$4.3 million at December 31, 2018.2019.

ImpairedCollateral Dependent Loans and Leases

Loans with no related allowance reported generally represent non-accrual loans, which are also considered impaired loans. The Bank recognizesfollowing table summarizes the charge-off on impaired loans in the period it arises for collateral-dependent loans.  Therefore, the non-accrual loans as of September 30, 2019 have already been written down to their estimated net realizable value and are expected to be resolved with no additional material loss, absent further decline in net realizable value.  The valuation allowance on impaired loans primarily represents the impairment reserves on performing restructured loans, and is measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rateamortized cost basis of the original loan agreement to the loan's carrying value. 

The following tables summarize our impairedcollateral dependent loans and leases by loan classthe type of collateral securing the assets as of September 30, 2019 and DecemberMarch 31, 2018: 2020.There have been no significant changes in the level of collateralization from the prior periods.
(in thousands)(in thousands)September 30, 2019(in thousands)Residential Real EstateCommercial Real EstateGeneral Business AssetsOtherTotal
Recorded Investment 
Unpaid Principal BalanceWithout AllowanceWith AllowanceRelated Allowance
Commercial real estateCommercial real estate    Commercial real estate
Non-owner occupied term, netNon-owner occupied term, net$16,088  $9,518  $3,661  $115   Non-owner occupied term, net$—  $4,227  $—  $—  $4,227  
Owner occupied term, netOwner occupied term, net6,174  3,959  835  73   Owner occupied term, net—  5,491  —  —  5,491  
Multifamily, net Multifamily, net—  598  —  —  598  
CommercialCommercial  Commercial
Term, netTerm, net11,791  5,018  12    Term, net763  —  11,680  —  12,443  
Lines of credit & other, net971  858  —  —  
Line of credit & other, net Line of credit & other, net950  82   1,426  2,466  
Leases & equipment finance, netLeases & equipment finance, net1,808  —  1,808    Leases & equipment finance, net—  —  13,035  —  13,035  
ResidentialResidential
Mortgage, net Mortgage, net2,648  —  —  —  2,648  
Home equity loans & lines, net Home equity loans & lines, net94,734  —  —  —  94,734  
Total, net of deferred fees and costs$36,832  $19,353  $6,316  $198  
Total net of deferred fees and costsTotal net of deferred fees and costs$99,095  $10,398  $24,723  $1,426  $135,642  

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(in thousands)December 31, 2018
 Recorded Investment 
 Unpaid Principal BalanceWithout AllowanceWith AllowanceRelated Allowance
Commercial real estate    
Non-owner occupied term, net$14,877  $9,847  $3,715  $90  
Owner occupied term, net8,188  6,178  878  88  
Multifamily, net4,493  4,298  —  —  
Commercial   
Term, net22,770  11,089  3,770   
Lines of credit & other, net7,145  2,065  —  —  
Leases & equipment finance, net417  417  —  —  
Total, net of deferred fees and costs$57,890  $33,894  $8,363  $180  
Off Balance Sheet Credit Disclosure

The following tables summarize our average recorded investmentpresent a summary of activity in the RUC and interest income recognized on impaired loans and leases by loan classunfunded commitments for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019:
(in thousands) 
Three Months Ended
 September 30, 2019September 30, 2018
 Average Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income Recognized
Commercial real estate    
Non-owner occupied term, net$12,901  $34  $13,475  $33  
Owner occupied term, net5,439  10  9,551  10  
Multifamily, net—  —  4,072  —  
Commercial   
Term, net5,258  47  14,244  51  
Lines of credit & other, net891  —  2,608  —  
Leases & equipment finance, net2,017  28  828  —  
Total, net of deferred fees and costs$26,506  $119  $44,778  $94  
Three Months Ended
(in thousands)March 31, 2020March 31, 2019
Balance, beginning of period$5,106  $4,523  
Impact of adoption of CECL3,238  —  
Provision for credit losses on unfunded commitments12,583  131
Balance, end of period$20,927  $4,654  

(in thousands) 
Nine Months Ended
 September 30, 2019September 30, 2018
 Average Recorded InvestmentInterest Income RecognizedAverage Recorded InvestmentInterest Income Recognized
Commercial real estate    
Non-owner occupied term, net$12,833  $98  $14,047  $238  
Owner occupied term, net5,927  28  10,506  30  
Multifamily, net1,731  —  3,970  60  
Commercial    
Term, net9,408  151  17,728  196  
Lines of credit & other, net1,333  —  3,667  —  
Leases & equipment finance, net1,855  57  450  —  
Total, net of deferred fees and costs$33,087  $334  $50,368  $524  
The impaired loans for which these interest income amounts were recognized primarily relate to accruing restructured loans. 
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Credit Quality Indicators 
As previously noted, the Bank's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk.  The Bank differentiates its lending portfolios into homogeneous loans and leases and non-homogeneous loans and leases. Homogeneous loans and leases are not risk rated until they are greater than 30 days past due, and risk rating is based on the past due status of the loan or lease. The 10 risk rating categories can be generally described by the following groupings for loans and leases:
Minimal Risk—A minimal risk loan or lease, risk rated 1, is to a borrower of the highest quality. The borrower has an unquestioned ability to produce consistent profits and service all obligations and can absorb severe market disturbances with little or no difficulty. 
Low Risk—A low risk loan or lease, risk rated 2, is similar in characteristics to a minimal risk loan.  Margins may be smaller or protective elements may be subject to greater fluctuation. The borrower will have a strong demonstrated ability to produce profits, provide ample debt service coverage and to absorb market disturbances. 
(in thousands)Total
Unfunded loan and lease commitments
March 31, 2020$5,705,316 
March 31, 2019$5,510,974 

Modest Risk—A modest risk loan or lease, risk rated 3, is a desirable loan or lease with excellent sources of repayment and no currently identifiable risk associated with collection. The borrower exhibits a very strong capacity to repay the credit in accordance with the repayment agreement. The borrower may be susceptible to economic cycles, but will have reserves to weather these cycles. 

Average Risk—An average risk loan or lease, risk rated 4, is an attractive loan or lease with sound sources of repayment and no material collection or repayment weakness evident. The borrower has an acceptable capacity to pay in accordance with the agreement. The borrower is susceptible to economic cycles and more efficient competition, but should have modest reserves sufficient to survive all but the most severe downturns or major setbacks.
Acceptable Risk—An acceptable risk loan or lease, risk rated 5, is a loan or lease with lower than average, but still acceptable credit risk. These borrowers may have higher leverage, less certain but viable repayment sources, have limited financial reserves and may possess weaknesses that can be adequately mitigated through collateral, structural or credit enhancement. The borrower is susceptible to economic cycles and is less resilient to negative market forces or financial events. Reserves may be insufficient to survive a modest downturn. 

Watch—A watch loan or lease, risk rated 6, is still pass-rated, but represents the lowest level of acceptable risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower rating would be appropriate. The borrower should have a plausible plan, with reasonable certainty of success, to correct the problems in a short period of time.
Special Mention—A special mention loan or lease, risk rated 7, has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institution's credit position at some future date. They contain unfavorable characteristics and are generally undesirable. Loans and leases in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a substandard classification. A special mention loan or lease has potential weaknesses, which if not checked or corrected, weaken the asset or inadequately protect the Bank's position at some future date. For commercial and commercial real estate homogeneous loans and leases to be classified as special mention, risk rated 7, the loan or lease is greater than 30 to 59 days past due from the required payment date at month-end. Residential and consumer and other homogeneous loans are risk rated 7, when the loan is greater than 30 to 89 days past due from the required payment date at month-end. 

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Substandard—A substandard asset, risk rated 8, is inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. Loans and leases are classified as substandard when they have unsatisfactory characteristics causing unacceptable levels of risk. A substandard loan or lease normally has one or more well-defined weaknesses that could jeopardize repayment of the debt. The likely need to liquidate assets to correct the problem, rather than repayment from successful operations is the key distinction between special mention and substandard. Commercial and commercial real estate homogeneous loans and leases are classified as a substandard loan or lease, risk rated 8, when the loan or lease is 60 to 89 days past due from the required payment date at month-end. Residential and consumer and other homogeneous loans are classified as a substandard loan, risk rated 8, when an open-end loan is 90 to 180 days past due from the required payment date at month-end or when a closed-end loan 90 to 120 days is past due from the required payment date at month-end.

Doubtful—Loans or leases classified as doubtful, risk rated 9, have all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work towards strengthening of the asset, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, and perfection of liens on additional collateral and refinancing plans. In certain circumstances, a doubtful rating will be temporary, while the Bank is awaiting an updated collateral valuation. In these cases, once the collateral is valued and appropriate margin applied, the remaining un-collateralized portion will be charged-off. The remaining balance, properly margined, may then be upgraded to substandard, however must remain on non-accrual.  Commercial and commercial real estate homogeneous doubtful loans or leases, risk rated 9, are 90 to 179 days past due from the required payment date at month-end. 
Loss—Loans or leases classified as loss, risk rated 10, are considered un-collectible and of such little value that the continuance as an active Bank asset is not warranted. This rating does not mean that the loan or lease has no recovery or salvage value, but rather that the loan or lease should be charged-off now, even though partial or full recovery may be possible in the future. For a commercial or commercial real estate homogeneous loss loan or lease to be risk rated 10, the loan or lease is 180 days and more past due from the required payment date. These loans are generally charged-off in the month in which the 180 day time period elapses. Residential, consumer and other homogeneous loans are risk rated 10, when a loan becomes past due 120 cumulative days from the contractual due date.  Residential and consumer loans secured by real estate are generally charged down to net realizable value in the month in which the loan becomes 180 days past due. All other residential, consumer, and other homogeneous loans are generally charged-off in the month in which the 120 day period elapses. 
Impaired—Loans are classified as impairedwhen, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement, without unreasonable delay. This generally includes all loans classified as non-accrual and troubled debt restructurings. Impaired loans are risk rated for internal and regulatory rating purposes, but presented separately for clarification. 

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The following tables summarize our internal risk rating by loan and lease class for the loan and lease portfolio, including purchased credit impaired loans, as of September 30, 2019 and December 31, 2018: 
(in thousands)September 30, 2019
 Pass/WatchSpecial MentionSubstandardDoubtfulLoss
Impaired (1)
Total
Commercial real estate       
Non-owner occupied term, net$3,428,080  $35,036  $19,100  $—  $160  $13,179  $3,495,555  
Owner occupied term, net2,468,692  69,676  23,057  80  —  4,794  2,566,299  
Multifamily, net3,468,743  8,850  2,393  —  —  —  3,479,986  
Construction & development, net741,050  30,164  —  —  —  —  771,214  
Residential development, net191,500  —  —  —  —  —  191,500  
Commercial   
Term, net2,269,473  10,752  25,498    5,030  2,310,759  
Lines of credit & other, net1,190,456  44,219  18,995  227  —  858  1,254,755  
Leases & equipment finance, net1,451,038  7,199  9,906  13,796  2,006  1,808  1,485,753  
Residential  
Mortgage, net (2)
4,201,253  8,034  36,214  —  173  —  4,245,674  
Home equity loans & lines, net1,220,793  2,487  1,012  —  286  —  1,224,578  
Consumer & other, net490,608  3,288  796  —  29  —  494,721  
Total, net of deferred fees and costs$21,121,686  $219,705  $136,971  $14,105  $2,658  $25,669  $21,520,794  
(1) The percentage of impaired loans classified as pass/watch, special mention and substandard was 3.3%, 13.6% and 83.1%, respectively, as of September 30, 2019.
(2) Includes government guaranteed GNMA mortgage loans that Umpqua has the right but not the obligation to repurchase that are past due 90 days or more, totaling $5.2 million at September 30, 2019, which is included in the substandard category.

(in thousands)December 31, 2018
 Pass/WatchSpecial MentionSubstandardDoubtfulLoss
Impaired (1)
Total
Commercial real estate       
Non-owner occupied term, net$3,497,801  $38,346  $23,234  $—  $122  $13,562  $3,573,065  
Owner occupied term, net2,422,351  28,447  22,136  54  327  7,056  2,480,371  
Multifamily, net3,284,445  11,481  4,539  —  —  4,298  3,304,763  
Construction & development, net734,318  —  1,936  —  —  —  736,254  
Residential development, net196,890  —  —  —  —  —  196,890  
Commercial        
Term, net2,196,753  15,519  5,670  53  69  14,859  2,232,923  
Lines of credit & other, net1,103,677  42,831  20,639  313  —  2,065  1,169,525  
Leases & equipment finance, net1,296,235  8,571  8,754  14,247  1,931  417  1,330,155  
Residential        
Mortgage, net (2)
3,588,976  5,169  38,766  —  2,162  —  3,635,073  
Home equity loans & lines, net1,172,040  1,878  1,418  —  1,141  —  1,176,477  
Consumer & other, net582,962  3,622  559  —  27  —  587,170  
Total, net of deferred fees and costs$20,076,448  $155,864  $127,651  $14,667  $5,779  $42,257  $20,422,666  
(1) The percentage of impaired loans classified as pass/watch, special mention and substandard was 3.2%, 8.8% and 88.0%, respectively, as of December 31, 2018.
(2) Includes government guaranteed GNMA mortgage loans that Umpqua has the right but not the obligation to repurchase that are past due 90 days or more, totaling $8.9 million at December 31, 2018, which is included in the substandard category.

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Troubled Debt Restructurings

At September 30, 2019March 31, 2020 and December 31, 2018, impaired2019, troubled debt restructured loans of $14.3$20.5 million and $13.9$18.6 million, respectively, were classified as accruing restructured loans. The restructurings were granted in response to borrower financial difficulty,difficulties, and generally provide for a temporary modification of loan repayment terms. In order for a newly restructured loan to be considered for accrual status, the loan's collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow. Impaired restructured loans carry a specific allowance and the allowance on impaired restructured loans is calculated consistently across the portfolios. 

There were $500,000 available commitments for troubled debt restructurings outstanding as of September 30, 2019 and $338,000 as of December 31, 2018. 
The following tables present troubled debt restructurings by accrual versus non-accrual status and by loan classportfolio segment as of September 30, 2019March 31, 2020 and December 31, 2018: 2019:
(in thousands) September 30, 2019
 Accrual StatusNon-Accrual StatusTotal Modifications
Commercial real estate, net$3,999  $6,599  $10,598  
Commercial, net5,308  93  5,401  
Residential, net5,002  —  5,002  
Total, net of deferred fees and costs$14,309  $6,692  $21,001  
March 31, 2020
(in thousands)(in thousands)December 31, 2018(in thousands)Accrual StatusNon-Accrual StatusTotal Modification# of Contracts
Accrual StatusNon-Accrual StatusTotal Modifications
Commercial real estate, netCommercial real estate, net$4,524  $9,290  $13,814  Commercial real estate, net$5,045  $329  $5,374   
Commercial, netCommercial, net3,696  8,736  12,432  Commercial, net3,600  —  3,600   
Residential, netResidential, net5,704  —  5,704  Residential, net11,832  —  11,832  70  
Consumer & other, netConsumer & other, net64  —  64   
Total, net of deferred fees and costsTotal, net of deferred fees and costs$20,541  $329  $20,870  84  
December 31, 2019
(in thousands)(in thousands)Accrual StatusNon-Accrual StatusTotal Modification# of Contracts
Commercial real estate, netCommercial real estate, net$3,968  $—  $3,968  3
Commercial, netCommercial, net4,105  —  4,105  2
Residential, netResidential, net10,460  —  10,460  54
Consumer & other, netConsumer & other, net43  —  43  3
Total, net of deferred fees and costsTotal, net of deferred fees and costs$13,924  $18,026  $31,950  Total, net of deferred fees and costs$18,576  $—  $18,576  62

The Bank's policy is that loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain.  The Bank's policy generally refers to six months
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Table of payment performance as sufficient to warrant a return to accrual status.Contents

There were 0 new restructured loans during the three months ended September 30, 2019 and September 30, 2018. The following tables presenttable presents newly restructured loans that occurred during the ninethree months ended September 30, 2019March 31, 2020 and September 30, 2018:2019:

Three Months Ended
(in thousands)(in thousands)Nine Months Ended(in thousands)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018
Commercial real estate, netCommercial real estate, net$118  $—  Commercial real estate, net$—  $118  
Commercial, netCommercial, net1,842  —  Commercial, net—  1,842  
Residential, netResidential, net 106  Residential, net5,678  —  
Consumer & other, netConsumer & other, net24  —  
Total, net of deferred fees and costsTotal, net of deferred fees and costs$1,967  $106  Total, net of deferred fees and costs$5,702  $1,960  

For the periods presented in the tablestable above, the outstanding recorded investment was the same pre and post modification and all modifications were combination modifications. There were $890,000 financing receivables modified as troubled debt restructurings within the previous 12 months for which there was a payment default during the three months ended March 31, 2020. There were 0 financing receivables modified as troubled debt restructurings within the previous 12 months for which there was a payment default during the three and nine months ended September 30, 2019 and 2018.prior period.

Credit Quality Indicators

Management regularly reviews loans and leases in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading. In addition, the board reviews and approves the credit quality indicators each year. The Bank differentiates its lending portfolios into homogeneous and non-homogeneous loans and leases. Homogeneous loans and leases are risk rated on a single risk rating scale based on the past due status of the loan or lease.

The Bank's risk rating methodology for its non-homogeneous loans and leases uses a dual risk rating approach to assess the credit risk. This approach uses two scales to provide a comprehensive assessment of credit default risk and recovery risk. The probability of default scale measures a borrower's credit default risk using risk ratings ranging from 1 to 16, where a higher rating represents higher risk. The loss given default scale measures the amount of loss that may not be recovered in the event of a default, using six alphabetic ratings from A-F, where a higher rating represents higher risk. The LGD scale quantifies recovery risk associated with an event of default and predicts the amount of loss that would be incurred on a loan or lease if a borrower were to experience a major default and includes variables that may be external to the borrower, such as industry, geographic location, and credit cycle stage. It could also include variables specific to the borrower such as their probability of default and bankruptcies as well as variables specific to the loan or lease, including collateral valuation, covenant structure and debt type. The product of the borrower's PD and a loan or lease LGD is the loan or lease expected loss, expressed as a percentage. This provides a common language of credit risk across different loans.

The PD scale estimates the likelihood that a borrower will experience a major default on any of its debt obligations within a specified time period. Examples of major defaults include payments 90 days or more past due, non-accrual classification, bankruptcy filing, or a full or partial charge-off of a loan or lease. As such, the PD scale represents the credit quality indicator for non-homogeneous loans and leases.

The credit quality indicator rating categories follow regulatory classification and can be generally described by the following groupings for loans and leases:

Pass—A pass loan or lease is a loan or lease with a credit risk level acceptable to the Bank for extending credit and maintaining normal credit monitoring. For non-homogeneous loans and leases to be classified as pass, the PD rating is from 1 through 9. For homogeneous loans and leases to be classified as pass, the loan or lease is 30 days or less past due from the required payment at month-end.

Watch—A watch loan or leaseis considered pass rated but has a heightened level of unacceptable default risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower risk rating would be appropriate within a short period of time. For non-homogeneous loans and leases to be classified as watch, the PD rating is from 10 through 11.

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Special Mention—A special mention loan or lease has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. These borrowers have an elevated probability of default but not to the point of a substandard classification. For non-homogeneous loans and leases to be classified as special mention, the PD rating is 12. For commercial homogeneous loans and leases to be classified as special mention, the loan or lease is greater than 30 to 59 days past due from the required payment date. Residential and consumer homogeneous loans are special mention when the loan is greater than 30 to 89 days past due from the required payment date.

Substandard—A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. For non-homogeneous loans and leases to be classified as substandard, the PD rating is from 13 through 14. Commercial homogeneous loans and leases are classified as a substandard loan or lease when the loan or lease is 60 to 89 days past due from the required payment date and is the maximum rating for loans previously charged down to net realizable value. Residential and consumer homogeneous loans are classified as a substandard loan when an open-end loan is 90 to 180 days past due from the required payment date at month-end or when a closed-end loan is 90 to 119 days past due from the required payment date.

Doubtful—Loans or leases classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. A default event and the possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work towards strengthening of the asset, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. For non-homogeneous loans and leases to be classified as doubtful, the PD rating is 15. Commercial homogeneous doubtful loans or leases are 90 to 179 days past due from the required payment date.

Loss—Loans or leases classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan or lease has no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this asset even though partial or full recovery may be affected in the future. For non-homogeneous loans and leases to be classified as loss the PD rating is 16. For a commercial homogeneous loan or lease to be loss rated, the loan or lease is 180 days or more past due from the required payment date. These loans and leases are generally charged-off or charged down to net realizable value in the month in which the 180-day time period elapses. Residential and consumer homogeneous loans are classified as loss when a loan becomes past due 120 days or more from the required payment date. Residential and consumer loans secured by real estate are generally charged down to net realizable value in the month in which the loan becomes 180 days past due. All other residential and consumer homogeneous loans are generally charged-off in the month in which the 120-day period elapses.


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The following table represents the amortized costs basis of the loans and leases by credit classification and vintage year by loan and lease class of financing receivable as of March 31, 2020:
(in thousands)Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving to Non-Revolving Loans Amortized Cost
March 31, 202020202019201820172016PriorTotal
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
Pass$162,764  $736,325  $592,092  $398,692  $422,735  $1,243,342  $3,277  $4,216  $3,563,443  
Special mention—  6,777  —  8,921  406  8,756  —  —  24,860  
Substandard874  8,026  —  —  952  11,615  —  —  21,467  
Doubtful—  —  —  —  2,564  740  —  —  3,304  
Loss—  —  —  —  —  346  —  —  346  
Total non-owner occupied term, net$163,638  $751,128  $592,092  $407,613  $426,657  $1,264,799  $3,277  $4,216  $3,613,420  
Owner occupied term, net
Credit quality indicator:
Pass$100,193  $443,632  $370,834  $378,139  $293,050  $805,380  $5,299  $815  $2,397,342  
Special mention3,669  4,535  7,815  753  5,909  13,214  —  —  35,895  
Substandard—  3,635  1,742  886  5,245  24,806  —  —  36,314  
Doubtful—  810  —  —  —  —  —  —  810  
Loss—  —  —  —  —  1,826  —  —  1,826  
Total owner occupied term, net$103,862  $452,612  $380,391  $379,778  $304,204  $845,226  $5,299  $815  $2,472,187  
Multifamily, net
Credit quality indicator:
Pass$83,557  $877,552  $680,886  $658,134  $342,644  $760,130  $25,342  $2,973  $3,431,218  
Special mention—  —  —  —  —  32,401  —  —  32,401  
Substandard—  —  —  —  —  598  —  —  598  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  —  —  —  —  —  —  —  —  
Total multifamily, net$83,557  $877,552  $680,886  $658,134  $342,644  $793,129  $25,342  $2,973  $3,464,217  
Construction & development, net
Credit quality indicator:
Pass$1,638  $173,393  $253,964  $221,121  $15,418  $807  $—  $—  $666,341  
Special mention—  —  1,634  —  —  —  —  —  1,634  
Substandard—  —  —  —  —  —  —  —  —  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  —  —  —  —  —  —  —  —  
Total construction & development, net$1,638  $173,393  $255,598  $221,121  $15,418  $807  $—  $—  $667,975  
Residential development, net
Credit quality indicator:
Pass$3,225  $19,398  $3,820  $443  $—  $—  $157,834  $2,874  $187,594  
Special mention—  —  —  —  —  —  —  —  —  
Substandard—  —  —  —  —  —  —  —  —  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  —  —  —  —  —  —  —  —  
Total residential development, net$3,225  $19,398  $3,820  $443  $—  $—  $157,834  $2,874  $187,594  
Total commercial real estate$355,920  $2,274,083  $1,912,787  $1,667,089  $1,088,923  $2,903,961  $191,752  $10,878  $10,405,393  
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(in thousands)Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving to Non-Revolving Loans Amortized Cost
March 31, 202020202019201820172016PriorTotal
Commercial:
Term, net
Credit quality indicator:
Pass$114,570  $436,486  $377,297  $286,267  $96,080  $274,444  $660,452  $12,656  $2,258,252  
Special mention—  243  177  318  7,195  4,837  15,500  —  28,270  
Substandard—  421  10,112  5,382  1,660  2,754  5,952  3,419  29,700  
Doubtful—  —  638  211  —  —  —  —  849  
Loss—  —  135  154  213  —  —  —  502  
Total term, net$114,570  $437,150  $388,359  $292,332  $105,148  $282,035  $681,904  $16,075  $2,317,573  
Lines of credit & other, net
Credit quality indicator:
Pass$8,791  $30,652  $32,363  $4,893  $3,929  $1,297  $1,045,637  $4,342  $1,131,904  
Special mention—  1,401  —  —  —  —  43,033  1,555  45,989  
Substandard—  706  —  691  669  1,750  11,695  14,646  30,157  
Doubtful—  —  —  —  —  —   —   
Loss—  —  —  —  —  —  —  —  —  
Total lines of credit & other, net$8,791  $32,759  $32,363  $5,584  $4,598  $3,047  $1,100,366  $20,543  $1,208,051  
Leases & equipment finance, net
Credit quality indicator:
Pass$189,753  $581,908  $341,793  $182,028  $101,417  $26,810  $—  $—  $1,423,709  
Special mention433  5,115  7,402  12,971  2,148  6,859  —  —  34,928  
Substandard137  1,680  7,805  7,264  1,751  59  —  —  18,696  
Doubtful—  4,593  4,456  2,740  1,232  265  —  —  13,286  
Loss—  462  845  461  280  95  —  —  2,143  
Total lease & equipment finance, net$190,323  $593,758  $362,301  $205,464  $106,828  $34,088  $—  $—  $1,492,762  
Total commercial$313,684  $1,063,667  $783,023  $503,380  $216,574  $319,170  $1,782,270  $36,618  $5,018,386  
Residential:
Mortgage, net
Credit quality indicator:
Pass$133,745  $1,380,067  $598,603  $554,168  $587,734  $889,637  $—  $—  $4,143,954  
Special mention—  175  533  2,949  1,195  4,783  —  —  9,635  
Substandard—  709  2,406  8,078  9,022  18,871  —  —  39,086  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  359  378  —  —  496  —  —  1,233  
Total mortgage, net$133,745  $1,381,310  $601,920  $565,195  $597,951  $913,787  $—  $—  $4,193,908  
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(in thousands)Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisRevolving to Non-Revolving Loans Amortized Cost
March 31, 202020202019201820172016PriorTotal
Home equity loans & lines, net
Credit quality indicator:
Pass$—  $127  $22  $—  $383  $21,043  $1,179,440  $42,597  $1,243,612  
Special mention—  —  —  —  —  232  2,945  633  3,810  
Substandard—  —  22  —  —  48  655  413  1,138  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  —  —  —  —  —  403  189  592  
Total home equity loans & lines, net$—  $127  $44  $—  $383  $21,323  $1,183,443  $43,832  $1,249,152  
Total residential$133,745  $1,381,437  $601,964  $565,195  $598,334  $935,110  $1,183,443  $43,832  $5,443,060  
Consumer & other, net:
Credit quality indicator:
Pass$13,656  $35,020  $17,361  $77,240  $37,378  $24,179  $174,063  $1,714  $380,611  
Special mention15  110  127  881  760  425  1,053  190  3,561  
Substandard—  45  14   18   329  48  465  
Doubtful—  —  —  —  —  —  —  —  —  
Loss—  —  —  —  —    —   
Total consumer & other, net$13,671  $35,175  $17,502  $78,124  $38,156  $24,613  $175,446  $1,952  $384,639  
Grand total$817,020  $4,754,362  $3,315,276  $2,813,788  $1,941,987  $4,182,854  $3,332,911  $93,280  $21,251,478  


Note 5 – Residential Mortgage Servicing Rights 
 
The Company measures its residential mortgage servicing rights ("MSR") at fair value with changes in fair value reported in residential mortgage banking revenue in the Condensed Consolidated Statements of Income.revenue. The following table presents the changes in the Company's residential mortgage servicing rights ("MSR") for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019: 

(in thousands) Three Months EndedNine Months Ended
 September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Balance, beginning of period$139,780  $166,217  $169,025  $153,151  
Additions for new MSR capitalized7,393  8,622  16,772  22,012  
Changes in fair value:    
Changes due to collection/realization of expected cash flows over time(6,835) (6,007) (20,171) (18,108) 
Changes due to valuation inputs or assumptions (1)
11,045  6,206  (14,243) 17,983  
Balance, end of period$151,383  $175,038  $151,383  $175,038  

Three Months Ended
 (in thousands) March 31, 2020March 31, 2019
Balance, beginning of period$115,010  $169,025  
Additions for new MSR capitalized10,023  3,887  
Changes in fair value:  
Changes due to collection/realization of expected cash flows over time(5,329) (6,431) 
Changes due to valuation inputs or assumptions (1)
(25,358) (7,535) 
Balance, end of period$94,346  $158,946  
(1)The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.

Information related to our serviced loan portfolio as of September 30, 2019March 31, 2020 and December 31, 20182019 is as follows: 
(dollars in thousands)(dollars in thousands)September 30, 2019December 31, 2018(dollars in thousands)March 31, 2020December 31, 2019
Balance of loans serviced for othersBalance of loans serviced for others$15,707,519  $15,978,885  Balance of loans serviced for others$12,533,045  $12,276,943  
MSR as a percentage of serviced loansMSR as a percentage of serviced loans0.96 %1.06 %MSR as a percentage of serviced loans0.75 %0.94 %
 
The amount of contractually specified servicing fees, late fees and ancillary fees earned, recorded in residential mortgage banking revenue on the Condensed Consolidated Statements of Income, was $11.3$8.9 million and $33.2$10.8 million for the three and nine months ended September 30,March 31, 2020 and 2019, respectively, as compared to $10.3 million and $31.2 million for the three and nine months ended September 30, 2018, respectively.
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Note 6 – Commitments and Contingencies 
 
Financial Instruments with Off-Balance-Sheet Risk — The Company's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of the Bank's business and involve elements of credit, liquidity, and interest rate risk. 
 
The following table presents a summary of the Bank's commitments and contingent liabilities:  
 (in thousands)
As of September 30, 2019March 31, 2020
Commitments to extend credit$5,661,0805,604,860  
Forward sales commitments$637,954712,798  
Commitments to originate residential mortgage loans held for sale$421,515814,941  
Standby letters of credit$83,227100,456  
 
The Bank is a party to financial instruments with off-balance-sheet credit risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve elements of credit and interest-rate risk similar to the risk involved in on-balance sheet items. The contract or notional amounts of those instruments reflect the extent of the Bank's involvement in particular classes of financial instruments. 
 
The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. 

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There were 0 financial guarantees in connection with standby letters of credit that the Bank was required to perform on during the three and nine months ended September 30, 2019March 31, 2020 and September 30, 2018.2019. At September 30, 2019,March 31, 2020, approximately $63.0$91.1 million of standby letters of credit expire within one year, and $20.2$9.4 million expire thereafter.

Residential mortgage loans sold into the secondary market are sold with limited recourse against the Company, meaning that the Company may be obligated to repurchase or otherwise reimburse the investor for incurred losses on any loans that suffer an early payment default, are not underwritten in accordance with investor guidelines or are determined to have pre-closing borrower misrepresentations. As of September 30, 2019,March 31, 2020, the Company had a residential mortgage loan repurchase reserve liability of $1.6$1.8 million. For loans sold to GNMA, the Bank has a unilateral right, but not the obligation, to repurchase loans that are past due 90 days or more. As of September 30, 2019,March 31, 2020, the Bank has recorded a liability for the loans subject to this repurchase right of $5.2$5.3 million, and has recorded these loans as part of the loan portfolio as if wethe Bank had repurchased these loans.
 
Legal Proceedings—Umpqua is involved in legal proceedings occurring in the ordinary course of business. Based on information currently available, advice of counsel and available insurance coverage, we believemanagement believes that the eventual outcome of actions against the Company or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on ourits consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to our results of operations for any particular period.

Contingencies—In late 2017, the Company launched "Umpqua Next Gen," an initiative designed to modernize and evolve the Bank focusing on operational excellence, balanced growth and human-digital programs. As part of this initiative, the Company evaluated every part of our operations and how we could evolve to deliver a highly differentiated and compelling banking experience. In 2018, Umpqua consolidated 31 stores. During the nine months ended September 30, 2019, Umpqua consolidated 16 stores and sold 4 stores. The Next Gen strategy involves evaluation of possible future consolidations and Umpqua plans to consolidate 7 additional stores in 2019.

Concentrations of Credit Risk— The Bank grants real estate mortgage, real estate construction, commercial, agricultural and installment loans and leases to customers throughout Oregon, Washington, California, Idaho, and Nevada. In management's judgment, a concentration exists in real estate-related loans, which represented approximately 75%76% of the Bank's loan and lease portfolio at September 30, 2019March 31, 2020 and December 31, 2018.2019.  Commercial real estate concentrations are managed to assure wide geographic and business diversity. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary market areas in particular, could have an adverse impact on the repayment of these loans.  Personal and business incomes, proceeds from the sale of real property, or proceeds from refinancing, represent the primary sources of repayment for a majority of these loans. 
 
The Bank recognizes the credit risks inherent in dealing with other depository institutions. Accordingly, to prevent excessive exposure to any single correspondent, the Bank has established general standards for selecting correspondent banks as well as internal limits for allowable exposure to any single correspondent. In addition, the Bank has an investment policy that sets forth limitations that apply to all investments with respect to credit rating and concentrations with an issuer.
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Note 7 – Derivatives 
 
The Bank may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments and residential mortgage loans held for sale. None of the Company's derivatives are designated as hedging instruments.  Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy. 

The Bank enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage loan commitments.  Credit risk associated with forward contracts is limited to the replacement cost of those forward contracts in a gain position.  There were 0 counterparty default losses on forward contracts in the three and nine months ended September 30, 2019March 31, 2020 and 2018.2019.  Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Bank limits its exposure to market risk by monitoring differences between commitments to customers and forward contracts with broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the Company completes the transaction by either paying or receiving a fee to or from the broker/dealer equal to the increase or decrease in the market value of the forward contract. At September 30, 2019,March 31, 2020, the Bank had commitments to originate mortgage loans held for sale totaling $421.5$814.9 million and forward sales commitments of $638.0$712.8 million, which are used to hedge both on-balance sheet and off-balance sheet exposures. 
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The Bank executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies.  Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of September 30, 2019,March 31, 2020, the Bank had 824863 interest rate swaps with an aggregate notional amount of $5.4$6.1 billion related to this program.  As of December 31, 2018,2019, the Bank had 767846 interest rate swaps with an aggregate notional amount of $4.2$5.7 billion related to this program.

At September 30, 2019March 31, 2020 and December 31, 2018,2019, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $4.0$8.1 million and $12.7$7.0 million, respectively.  The Bank has collateral posting requirements for initial margins with its clearing members and clearing houses and has been required to post collateral against its obligations under these agreements of $84.3$112.1 million and $36.9$86.2 million as of September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. 

Umpqua'sThe Bank's interest rate swap derivatives are cleared through the Chicago Mercantile Exchange and London Clearing House. These clearing houses characterize the variation margin payments, for derivative contracts that are referred to as settled-to-market, as settlements of the derivative's mark-to-market exposure and not collateral. UmpquaThe Company accounts for the variation margin as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative asset and liability. As of September 30,March 31, 2020 and December 31, 2019, the variation margin adjustment was a negative adjustmentadjustments of $199.2$373.4 million as compared to a negative adjustment of $32.5and $144.8 million, at December 31, 2018.respectively.
 
The Bank incorporates credit valuation adjustments ("CVA") to appropriately reflect nonperformance risk in the fair value measurement of its derivatives. The net CVA decreased the settlement values of the Bank's net derivative assets by $14.0$23.5 million and $3.0$9.1 million as of September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Various factors impact changes in the CVA over time, including changes in the credit spreads of the parties to the contracts, as well as changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

The Bank also executes foreign currency hedges as a service for customers. These foreign currency hedges are then offset with hedges with other third-party banks to limit the Bank's risk exposure.

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The Bank's derivative assets are included in other assets, while the derivative liabilities are included in other liabilities on the condensed consolidated balance sheet. The following table summarizes the types of derivatives, separately by assets and liabilities, and the fair values of such derivatives as of September 30, 2019March 31, 2020 and December 31, 2018:2019:  
(in thousands)(in thousands)Asset DerivativesLiability Derivatives(in thousands)Asset DerivativesLiability Derivatives
Derivatives not designated as hedging instrumentDerivatives not designated as hedging instrumentSeptember 30, 2019December 31, 2018September 30, 2019December 31, 2018Derivatives not designated as hedging instrumentMarch 31, 2020December 31, 2019March 31, 2020December 31, 2019
Interest rate lock commitmentsInterest rate lock commitments$9,070  $6,757  $—  $—  Interest rate lock commitments$23,727  $7,056  $—  $—  
Interest rate forward sales commitmentsInterest rate forward sales commitments801   1,260  2,963  Interest rate forward sales commitments1,161  105  26,092  1,351  
Interest rate swapsInterest rate swaps189,366  42,276  4,010  12,746  Interest rate swaps358,204  142,787  8,128  7,001  
Foreign currency derivativesForeign currency derivatives1,175  450  1,015  273  Foreign currency derivatives792  626  600  456  
Total$200,412  $49,484  $6,285  $15,982  
Total derivative assets and liabilitiesTotal derivative assets and liabilities$383,884  $150,574  $34,820  $8,808  
 
The following table summarizes the types of derivatives and the gains (losses) recorded during the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019:  
(in thousands)(in thousands)Three Months EndedNine Months Ended(in thousands)Three Months Ended
Derivatives not designated as hedging instrumentDerivatives not designated as hedging instrumentSeptember 30, 2019September 30, 2018September 30, 2019September 30, 2018Derivatives not designated as hedging instrumentMarch 31, 2020March 31, 2019
Interest rate lock commitmentsInterest rate lock commitments$922  $(1,623) $2,313  $407  Interest rate lock commitments$16,671  $1,416  
Interest rate forward sales commitmentsInterest rate forward sales commitments(2,467) 2,029  (11,875) 10,773  Interest rate forward sales commitments(31,052) (4,727) 
Interest rate swapsInterest rate swaps(2,281) 224  (8,712) 1,645  Interest rate swaps(14,306) (2,480) 
Foreign currency derivativesForeign currency derivatives527  556  1,522  1,371  Foreign currency derivatives424  471  
Total$(3,299) $1,186  $(16,752) $14,196  
Total derivative lossesTotal derivative losses$(28,263) $(5,320) 
 
The gains and losses on the Company's mortgage banking derivatives are included in mortgage banking revenue. The gains and losses on the Company's interest rate swaps and foreign currency derivatives are included in other income.

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Note 8 (Loss) Earnings Per Common Share  
 
The following is a computation of basic and diluted (loss) earnings per common share for the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019: 
Three Months Ended
(in thousands, except per share data)(in thousands, except per share data)Three Months EndedNine Months Ended (in thousands, except per share data)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Net income$84,502  $90,981  $270,345  $235,952  
Net (loss) incomeNet (loss) income$(1,851,947) $74,033  
      
Weighted average number of common shares outstanding - basicWeighted average number of common shares outstanding - basic220,285  220,224  220,379  220,292  Weighted average number of common shares outstanding - basic220,216  220,366  
Effect of potentially dilutive common shares (1)
Effect of potentially dilutive common shares (1)
298  396  263  459  
Effect of potentially dilutive common shares (1)
—  289  
Weighted average number of common shares outstanding - dilutedWeighted average number of common shares outstanding - diluted220,583  220,620  220,642  220,751  Weighted average number of common shares outstanding - diluted220,216  220,655  
EARNINGS PER COMMON SHARE:    
(LOSS) EARNINGS PER COMMON SHARE:(LOSS) EARNINGS PER COMMON SHARE:  
BasicBasic$0.38  $0.41  $1.23  $1.07  Basic$(8.41) $0.34  
DilutedDiluted$0.38  $0.41  $1.23  $1.07  Diluted$(8.41) $0.34  
(1)Represents the effect of the assumed exercise of stock options, vesting of non-participating restricted shares, and vesting of restricted stock units, based on the treasury stock method. 

There were 947,000 weighted average outstanding restricted shares that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive for the three months ended March 31, 2020.

Note 9 – Segment Information 
 
The Company reports 4 primary segments: Wholesale Bank, Wealth Management, Retail Bank, and Home Lending with the remainder as Corporate and other.

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The Wholesale Bank segment includes lending, treasury and cash management services and customer risk management products to middle market corporate, commercial and business banking customers and includes the operations of FinPac, 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 and small business 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 4 principal lines of business and includes the operations of 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. 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.

The provision for income taxes is typically allocated to business segments using a 25% 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.

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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, 2019
 Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$111,047  $5,491  $84,235  $13,039  $15,161  $228,973  
Provision for loan and lease losses20,693   1,356  904  269  23,227  
Non-interest income16,053  4,713  16,196  47,161  4,389  88,512  
Non-interest expense58,425  10,315  66,461  36,438  11,951  183,590  
Income (loss) before income taxes47,982  (116) 32,614  22,858  7,330  110,668  
Provision (benefit) for income taxes11,995  (29) 8,153  5,715  332  26,166  
Net income (loss)$35,987  $(87) $24,461  $17,143  $6,998  $84,502  
(in thousands)Nine Months Ended September 30, 2019
 Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$330,208  $17,964  $258,730  $33,793  $53,125  $693,820  
Provision for loan and lease losses49,173  826  3,601  1,953  710  56,263  
Non-interest income38,945  13,953  47,377  68,067  87,733  256,075  
Non-interest expense169,178  29,100  196,345  97,892  43,082  535,597  
Income before income taxes150,802  1,991  106,161  2,015  97,066  358,035  
Provision for income taxes37,700  498  26,540  504  22,448  87,690  
Net income$113,102  $1,493  $79,621  $1,511  $74,618  $270,345  
Three Months Ended March 31, 2020
 (in thousands)Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$110,680  $5,416  $81,048  $14,822  $6,569  $218,535  
Provision (recapture) for credit losses102,379  1,940  7,760  6,022  (16) 118,085  
Non-interest income1,610  4,620  14,785  17,685  1,945  40,645  
Goodwill impairment1,033,744  —  751,192  —  —  1,784,936  
Non-interest expense (excluding goodwill impairment)56,356  8,064  64,446  37,284  11,572  177,722  
(Loss) income before income taxes(1,080,189) 32  (727,565) (10,799) (3,042) (1,821,563) 
Provision (benefit) for income taxes (1)
18,017   12,136  (2,700) 2,923  30,384  
Net (loss) income$(1,098,206) $24  $(739,701) $(8,099) $(5,965) $(1,851,947) 
Notable fair value adjustments included in non-interest income:
Residential mortgage servicing rights$—  $—  $—  $(30,687) $—  $(30,687) 
Interest rate swaps(14,306) —  —  —  —  (14,306) 

(in thousands)Three Months Ended September 30, 2018
 Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$113,103  $6,368  $87,885  $10,495  $23,517  $241,368  
Provision (recapture) for loan and lease losses10,786  107  830  202  (214) 11,711  
Non-interest income15,282  4,691  16,105  32,712  3,598  72,388  
Non-interest expense57,359  8,403  64,878  32,808  15,844  179,292  
Income before income taxes60,240  2,549  38,282  10,197  11,485  122,753  
Provision for income taxes15,060  638  9,570  2,550  3,954  31,772  
Net income$45,180  $1,911  $28,712  $7,647  $7,531  $90,981  
(in thousands)Nine Months Ended September 30, 2018
 Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$337,087  $17,907  $248,735  $29,468  $58,052  $691,249  
Provision for loan and lease losses35,430  456  1,785  902  113  38,686  
Non-interest income46,639  14,437  47,291  104,398  9,841  222,606  
Non-interest expense167,539  26,742  206,881  100,137  59,678  560,977  
Income before income taxes180,757  5,146  87,360  32,827  8,102  314,192  
Provision for income taxes45,189  1,287  21,840  8,207  1,717  78,240  
Net income$135,568  $3,859  $65,520  $24,620  $6,385  $235,952  
(1) The Wholesale Bank and Retail Bank do not have the standard tax rate of 25% allocated in the current quarter due to the impact of the goodwill impairment on these reporting units.

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(in thousands)September 30, 2019
 Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Total assets$15,509,793  $684,382  $1,989,096  $4,366,847  $6,380,737  $28,930,855  
Total loans and leases$15,170,243  $668,636  $1,915,330  $3,831,214  $(64,629) $21,520,794  
Total deposits$4,015,123  $1,156,352  $13,711,620  $453,833  $3,097,806  $22,434,734  
Three Months Ended March 31, 2019
 (in thousands)Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Net interest income$108,278  $6,389  $88,448  $9,945  $24,625  $237,685  
Provision for loan and lease losses11,990  245  1,129  127  193  13,684  
Non-interest income8,841  4,538  15,318  11,392  5,651  45,740  
Non-interest expense54,785  8,814  63,491  28,500  16,002  171,592  
Income (loss) before income taxes50,344  1,868  39,146  (7,290) 14,081  98,149  
Provision (benefit) for income taxes12,586  467  9,786  (1,823) 3,100  24,116  
Net income (loss)$37,758  $1,401  $29,360  $(5,467) $10,981  $74,033  
Notable fair value adjustments included in non-interest income:
Residential mortgage servicing rights$—  $—  $—  $(13,966) $—  $(13,966) 
Interest rate swaps(2,480) —  —  —  —  (2,480) 

March 31, 2020
(in thousands)(in thousands)December 31, 2018 (in thousands)Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Total assetsTotal assets$14,920,507  $536,024  $2,015,263  $3,680,004  $5,787,983  $26,939,781  Total assets$15,018,366  $709,672  $2,307,676  $4,368,330  $5,136,338  $27,540,382  
Total loans and leasesTotal loans and leases$14,717,512  $521,988  $1,934,602  $3,320,634  $(72,070) $20,422,666  Total loans and leases$14,675,878  $692,580  $2,205,684  $3,734,858  $(57,522) $21,251,478  
Total depositsTotal deposits$3,776,047  $1,068,025  $13,016,976  $219,584  $3,056,854  $21,137,486  Total deposits$4,396,075  $1,215,952  $14,010,375  $372,308  $2,704,665  $22,699,375  

December 31, 2019
 (in thousands)Wholesale BankWealth ManagementRetail BankHome LendingCorporate & OtherConsolidated
Total assets$14,864,484  $710,873  $2,293,362  $4,423,869  $6,554,221  $28,846,809  
Total loans and leases$14,581,339  $693,569  $2,209,990  $3,768,584  $(57,798) $21,195,684  
Total deposits$4,293,384  $1,221,869  $13,717,335  $279,226  $2,969,690  $22,481,504  
  
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Note 10 – Fair Value Measurement 
 
The following table presents estimated fair values of the Company's financial instruments as of September 30, 2019March 31, 2020 and December 31, 2018,2019, whether or not recognized or recorded at fair value in the Condensed Consolidated Balance Sheets:  
(in thousands)September 30, 2019December 31, 2018
 LevelCarrying ValueFair ValueCarrying ValueFair Value
FINANCIAL ASSETS:    
Cash and cash equivalents $1,191,444  $1,191,444  $622,637  $622,637  
Equity and other investment securities1,2  64,764  64,764  61,841  61,841  
Investment securities available for sale 2,842,076  2,842,076  2,977,108  2,977,108  
Investment securities held to maturity 3,320  4,338  3,606  4,644  
Loans held for sale, at fair value 355,022  355,022  166,461  166,461  
Loans and leases, net
 21,364,506  21,566,083  20,277,795  20,117,939  
Restricted equity securities 54,463  54,463  40,268  40,268  
Residential mortgage servicing rights2,3  151,383  151,383  169,025  169,025  
Bank owned life insurance 318,533  318,533  313,626  313,626  
Derivatives2,3  200,412  200,412  49,484  49,484  
Visa Inc. Class B common stock (1)
 —  —  —  99,353  
FINANCIAL LIABILITIES:    
Deposits1,2  $22,434,734  $22,457,847  $21,137,486  $21,116,852  
Securities sold under agreements to repurchase 296,717  296,717  297,151  297,151  
Borrowings 1,106,674  1,105,167  751,788  738,107  
Junior subordinated debentures, at fair value 267,798  267,798  300,870  300,870  
Junior subordinated debentures, at amortized cost 88,553  69,511  88,724  76,569  
Derivatives 6,285  6,285  15,982  15,982  
(1) In June 2019, the Company sold all 486,346 shares of the Visa Inc. Class B common stock held, an equity security that did not have a readily determinable fair value, resulting in a one-time realized gain of $81.9 million. Accordingly, the book value and fair value are 0 at September 30, 2019, as the Company no longer holds this security.

March 31, 2020December 31, 2019
 (in thousands)LevelCarrying ValueFair ValueCarrying ValueFair Value
Financial assets:    
Cash and cash equivalents1$1,657,716  $1,657,716  $1,362,756  $1,362,756  
Equity and other investment securities1,280,797  80,797  80,165  80,165  
Investment securities available for sale22,890,475  2,890,475  2,814,682  2,814,682  
Investment securities held to maturity33,200  4,065  3,260  4,263  
Loans held for sale, at fair value2481,541  481,541  513,431  513,431  
Loans and leases, net
320,960,058  21,347,804  21,038,055  21,274,319  
Restricted equity securities158,062  58,062  46,463  46,463  
Residential mortgage servicing rights394,346  94,346  115,010  115,010  
Bank owned life insurance1322,717  322,717  320,611  320,611  
Derivatives2,3383,884  383,884  150,574  150,574  
Financial liabilities:    
Deposits1,2$22,699,375  $22,754,353  $22,481,504  $22,503,916  
Securities sold under agreements to repurchase2346,245  346,245  311,308  311,308  
Borrowings21,196,597  1,203,538  906,635  906,160  
Junior subordinated debentures, at fair value3195,521  195,521  274,812  274,812  
Junior subordinated debentures, at amortized cost388,439  54,020  88,496  70,909  
Derivatives234,820  34,820  8,808  8,808  

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Fair Value of Assets and Liabilities Measured on a Recurring Basis 

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2019March 31, 2020 and December 31, 2018:2019: 
(in thousands)
(in thousands)
September 30, 2019
(in thousands)
March 31, 2020
DescriptionDescriptionTotalLevel 1Level 2Level 3DescriptionTotalLevel 1Level 2Level 3
FINANCIAL ASSETS:
Financial assets:Financial assets:
Equity and other investment securitiesEquity and other investment securities    Equity and other investment securities    
Investments in mutual funds and other securitiesInvestments in mutual funds and other securities$52,218  $52,218  $—  $—  Investments in mutual funds and other securities$70,247  $52,911  $17,336  $—  
Equity securities held in rabbi trustsEquity securities held in rabbi trusts12,102  12,102  —  —  Equity securities held in rabbi trusts10,191  10,191  —  —  
Other investments securities (1)
Other investments securities (1)
444  —  444  —  
Other investments securities (1)
359  —  359  —  
Investment securities available for saleInvestment securities available for sale    Investment securities available for sale    
U.S. Treasury and agenciesU.S. Treasury and agencies587,200  —  587,200  —  U.S. Treasury and agencies750,512  —  750,512  —  
Obligations of states and political subdivisionsObligations of states and political subdivisions269,030  —  269,030  —  Obligations of states and political subdivisions252,419  —  252,419  —  
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations1,985,846  —  1,985,846  —  Residential mortgage-backed securities and collateralized mortgage obligations1,887,544  —  1,887,544  —  
Loans held for sale, at fair valueLoans held for sale, at fair value355,022  —  355,022  —  Loans held for sale, at fair value481,541  —  481,541  —  
Residential mortgage servicing rights, at fair value (2)
Residential mortgage servicing rights, at fair value (2)
151,383  —  36,191  115,192  
Residential mortgage servicing rights, at fair value (2)
94,346  —  —  94,436  
DerivativesDerivatives    Derivatives    
Interest rate lock commitmentsInterest rate lock commitments9,070  —  —  9,070  Interest rate lock commitments23,727  —  —  23,727  
Interest rate forward sales commitmentsInterest rate forward sales commitments801  —  801  —  Interest rate forward sales commitments1,161  —  1,161  —  
Interest rate swapsInterest rate swaps189,366  —  189,366  —  Interest rate swaps358,204  —  358,204  —  
Foreign currency derivativeForeign currency derivative1,175  —  1,175  —  Foreign currency derivative792  —  792  —  
Total assets measured at fair valueTotal assets measured at fair value$3,613,657  $64,320  $3,425,075  $124,262  Total assets measured at fair value$3,931,043  $63,102  $3,749,868  $118,163  
FINANCIAL LIABILITIES:
Financial liabilities:Financial liabilities:
Junior subordinated debentures, at fair valueJunior subordinated debentures, at fair value$267,798  $—  $—  $267,798  Junior subordinated debentures, at fair value$195,521  $—  $—  $195,521  
DerivativesDerivatives    Derivatives    
Interest rate forward sales commitmentsInterest rate forward sales commitments1,260  —  1,260  —  Interest rate forward sales commitments26,092  —  26,092  —  
Interest rate swapsInterest rate swaps4,010  —  4,010  —  Interest rate swaps8,128  —  8,128  —  
Foreign currency derivativeForeign currency derivative1,015  —  1,015  —  Foreign currency derivative600  —  600  —  
Total liabilities measured at fair valueTotal liabilities measured at fair value$274,083  $—  $6,285  $267,798  Total liabilities measured at fair value$230,341  $—  $34,820  $195,521  

(1) Other investment securities includes securities held by Umpqua Investments as trading debt securities.
(2) For more discussion of the portion of MSR at fair value transferred to level 2, refer to Note 12, Subsequent Event.
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(in thousands) (in thousands) December 31, 2018(in thousands) December 31, 2019
DescriptionDescriptionTotalLevel 1Level 2Level 3DescriptionTotalLevel 1Level 2Level 3
FINANCIAL ASSETS:
Financial assets:Financial assets:
Equity and other investment securitiesEquity and other investment securities    Equity and other investment securities    
Investments in mutual funds and other securitiesInvestments in mutual funds and other securities$50,475  $50,475  $—  $—  Investments in mutual funds and other securities$67,133  $52,096  $15,037  $—  
Equity securities held in rabbi trustsEquity securities held in rabbi trusts10,918  10,918  —  —  Equity securities held in rabbi trusts12,147  12,147  —  —  
Other investments securities (1)
Other investments securities (1)
448  —  448  —  
Other investments securities (1)
885  —  885  —  
Investment securities available for saleInvestment securities available for saleInvestment securities available for sale
U.S. Treasury and agenciesU.S. Treasury and agencies39,656  —  39,656  —  U.S. Treasury and agencies643,604  —  643,604  —  
Obligations of states and political subdivisionsObligations of states and political subdivisions309,171  —  309,171  —  Obligations of states and political subdivisions261,094  —  261,094  —  
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations2,628,281  —  2,628,281  —  Residential mortgage-backed securities and collateralized mortgage obligations1,909,984  —  1,909,984  —  
Loans held for sale, at fair valueLoans held for sale, at fair value166,461  —  166,461  —  Loans held for sale, at fair value513,431  —  513,431  —  
Residential mortgage servicing rights, at fair valueResidential mortgage servicing rights, at fair value169,025  —  —  169,025  Residential mortgage servicing rights, at fair value115,010  —  —  115,010  
DerivativesDerivatives    Derivatives    
Interest rate lock commitmentsInterest rate lock commitments6,757  —  —  6,757  Interest rate lock commitments7,056  —  —  7,056  
Interest rate forward sales commitmentsInterest rate forward sales commitments —   —  Interest rate forward sales commitments105  —  105  —  
Interest rate swapsInterest rate swaps42,276  —  42,276  —  Interest rate swaps142,787  —  142,787  —  
Foreign currency derivativeForeign currency derivative450  —  450  —  Foreign currency derivative626  —  626  —  
Total assets measured at fair valueTotal assets measured at fair value$3,423,919  $61,393  $3,186,744  $175,782  Total assets measured at fair value$3,673,862  $64,243  $3,487,553  $122,066  
FINANCIAL LIABILITIES:
Financial liabilities:Financial liabilities:
Junior subordinated debentures, at fair valueJunior subordinated debentures, at fair value$300,870  $—  $—  $300,870  Junior subordinated debentures, at fair value$274,812  $—  $—  $274,812  
DerivativesDerivatives    Derivatives    
Interest rate forward sales commitmentsInterest rate forward sales commitments2,963  —  2,963  —  Interest rate forward sales commitments1,351  —  1,351  —  
Interest rate swapsInterest rate swaps12,746  —  12,746  —  Interest rate swaps7,001  —  7,001  —  
Foreign currency derivativeForeign currency derivative273  —  273  —  Foreign currency derivative456  —  456  —  
Total liabilities measured at fair valueTotal liabilities measured at fair value$316,852  $—  $15,982  $300,870  Total liabilities measured at fair value$283,620  $—  $8,808  $274,812  

(1) Other investment securities includes securities held by Umpqua Investments as trading debt securities.

The following methods were used to estimate the fair value of each class of financial instrument that is carried at fair value in the tables above: 
 
Securities— Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available. Management periodically reviews the pricing information received from the third-party pricing service and compares it to a secondary pricing service, evaluating significant price variances between services to determine an appropriate estimate of fair value to report.
 
Loans Held for Sale— Fair value for residential mortgage loans originated as held for sale is determined based on quoted secondary market prices for similar loans, including the implicit fair value of embedded servicing rights.
 
Residential Mortgage Servicing Rights— The fair value of the MSRMSRs is estimated using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income net of servicing costs. This model is periodically validated by an independent model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants. Approximately $36.2 million of MSR was held for sale as of September 30, 2019, so the fair value of this portion was based upon the sales price as the transaction was completed shortly after quarter end. Accordingly, the portion of the MSR asset sold in the fourth quarter were transferred to level 2 in the fair value hierarchy.
 
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Junior Subordinated Debentures— The fair value of junior subordinated debentures is estimated using an income approach valuation technique.  The significant inputs utilized in the estimation of fair value of these instruments are the credit risk adjusted spread and three-month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability, contemplating the inherent risk of the obligation. The Company periodically utilizes a valuation firm to determine or validate the reasonableness of inputs and factors that are used to determine the fair value. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants.  Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, we havethe Company has classified this as a Level 3 fair value measure.  
 
Derivative Instruments— The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate.  The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. The fair value of the interest rate swaps is determined using a discounted cash flow technique incorporating credit valuation adjustments to reflect nonperformance risk in the measurement of fair value. Although the Bank has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the CVA associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2019,March 31, 2020, the Bank has assessed the significance of the impact of the CVA on the overall valuation of its interest rate swap positions and has determined that the CVA are not significant to the overall valuation of its interest rate swap derivatives. As a result, the Bank has classified its interest rate swap derivative valuations in Level 2 of the fair value hierarchy.   
 
Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) 
 
The following table provides a description of the valuation technique, significant unobservable inputs, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at September 30, 2019:March 31, 2020: 
Financial InstrumentFair ValueValuation TechniqueUnobservable InputRange of InputsWeighted Average
Residential mortgage servicing rights$94,346 Discounted cash flow  
  Constant prepayment rate13.35% 11.94 - 68.65%15.53%
  Discount rate9.75% 9.5 - 12.5%9.73%
Interest rate lock commitments$23,727 Internal pricing model
Pull-through rate87.56% 51.36 - 100.00%84.74%
Junior subordinated debentures$195,521 Discounted cash flow  
  Credit spread5.27% 5.34 - 7.97%6.96%

Generally, any significant increases in the constant prepayment rate and discount rate utilized in the fair value measurement of the residential mortgage servicing rights will result in negative fair value adjustments (and a decrease in the fair value measurement). Conversely, a decrease in the constant prepayment rate and discount rate will result in a positive fair value adjustment (and increase in the fair value measurement).

An increase in the pull-through rate utilized in the fair value measurement of the interest rate lock commitment derivative will result in positive fair value adjustments (and an increase in the fair value measurement). Conversely, a decrease in the pull-through rate will result in a negative fair value adjustment (and a decrease in the fair value measurement).

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Management believes that the credit risk adjusted spread utilized in the fair value measurement of the junior subordinated debentures carried at fair value is indicative of the nonperformance risk premium a willing market participant would require under current market conditions, that is, the inactive market. Management attributes the change in fair value of the junior subordinated debentures during the period to market changes in the nonperformance expectations and pricing of this type of debt. The widening of the credit risk adjusted spread above the Company's contractual spreads has primarily contributed to the positivedecrease in the estimated fair value adjustments.value.  Future contractions in the instrument-specific credit risk adjusted spread relative to the spread currently utilized to measure the Company's junior subordinated debentures at fair value as of September 30, 2019,March 31, 2020, or the passage of time, will result in negativean increase in the estimated fair value adjustments.value.  Generally, an increase in the credit risk adjusted spread and/or the forward swap interest rate curve will result in positivea decrease in the estimated fair value adjustments (and decrease the fair value measurement).value. Conversely, a decrease in the credit risk adjusted spread and/or the forward swap interest rate curve will result in negativean increase in the estimated fair value adjustments (and increase the fair value measurement).value.
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The following tables provide a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019: 

Three Months EndedThree Months Ended
March 31, 2020March 31, 2019
(in thousands)(in thousands)Three Months EndedThree Months Ended(in thousands)Residential mortgage servicing rightsInterest rate lock commitments, netJunior subordinated debentures, at fair valueResidential mortgage servicing rightsInterest rate lock commitments, netJunior subordinated debentures, at fair value
Beginning BalanceBeginning Balance$115,010  $7,056  $274,812  $169,025  $6,757  $300,870  
September 30, 2019September 30, 2018
Residential mortgage servicing rights  Interest rate lock commitments, net  Junior subordinated debentures, at fair value  Residential mortgage servicing rights  Interest rate lock commitments, net  Junior subordinated debentures, at fair value  
Beginning Balance$139,780  $8,149  $277,028  $166,217  $6,782  $280,669  
Transfer out of Level 3(36,191) —  —  —  —  —  
Change included in earningsChange included in earnings4,210  1,456  4,495  199  (284) 4,486  Change included in earnings(30,687) 4,694  3,890  (13,966) 1,697  4,772  
Change in fair values included in comprehensive income/lossChange in fair values included in comprehensive income/loss—  —  (8,450) —  —  2,409  Change in fair values included in comprehensive income/loss—  —  (78,862) —  —  (6,564) 
Purchases and issuancesPurchases and issuances7,393  9,027  —  8,622  4,679  —  Purchases and issuances10,023  27,001  —  3,887  5,399  —  
Sales and settlementsSales and settlements—  (9,562) (5,275) —  (6,018) (4,718) Sales and settlements—  (15,024) (4,319) —  (5,679) (4,957) 
Ending BalanceEnding Balance$115,192  $9,070  $267,798  $175,038  $5,159  $282,846  Ending Balance$94,346  $23,727  $195,521  $158,946  $8,174  $294,121  
Net change in unrealized gains or (losses) relating to items held at end of period$11,045  $9,070  $(3,955) $6,206  $5,159  $6,895  
Change in unrealized gains or losses for the period included in earnings for assets held at end of periodChange in unrealized gains or losses for the period included in earnings for assets held at end of period$(25,358) $23,727  $3,890  $(7,535) $8,174  $4,772  
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at end of periodChange in unrealized gains or losses for the period included in other comprehensive income for assets held at end of period$—  $—  $(78,862) $—  $—  $(6,564) 
Nine Months EndedNine Months Ended
September 30, 2019September 30, 2018
Residential mortgage servicing rights  Interest rate lock commitments, net  Junior subordinated debentures, at fair value  Residential mortgage servicing rights  Interest rate lock commitments, net  Junior subordinated debentures, at fair value  
Beginning Balance$169,025  $6,757  $300,870  $153,151  $4,752  $277,155  
Transfer out of Level 3(36,191) —  —  —  —  —  
Change included in earnings(34,414) 4,455  13,952  (125) (1,288) 12,544  
Change in fair values included in comprehensive income/loss—  —  (32,254) —  —  5,605  
Purchases and issuances16,772  21,318  —  22,012  19,211  —  
Sales and settlements—  (23,460) (14,770) —  (17,516) (12,458) 
Ending Balance$115,192  $9,070  $267,798  $175,038  $5,159  $282,846  
Net change in unrealized gains or (losses) relating to items held at end of period$(14,243) $9,070  $(18,302) $17,983  $5,159  $18,149  

Changes in residential mortgage servicing rights carried at fair value are recorded in residential mortgage banking revenue within non-interest income. Gains (losses) on interest rate lock commitments carried at fair value are recorded in residential mortgage banking revenue within non-interest income. The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities. 

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The change in fair value of junior subordinated debentures is attributable to the change in the instrument specific credit risk, accordingly, the unrealized gains on fair value of junior subordinated debentures for the three and nine months ended September 30, 2019March 31, 2020 of $8.5$78.9 million and $32.3 million, respectively, are recorded net of tax as an other comprehensive gain of $6.3$58.6 million. Comparatively, gains of $6.6 million and $24.0 million, respectively. Comparatively, losses of $2.4 million and $5.6 million, respectively, were recorded net of tax as an other comprehensive lossincome of $1.8$4.9 million and $4.2 million, respectively, for the three and nine months ended September 30, 2018.March 31, 2019. The gain recorded for the three and nine months ended September 30, 2019March 31, 2020 was due primarily to a declinean overall increase in the discount rates partially offset bydue to an increase in the credit spread, partially offset by a decrease in projected payments as compared to prior periods.

From time to time, certain assets are measured at fair value on a nonrecurring basis.  These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment, typically on collateral dependent loans. 
 
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Fair Value of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis 
 
The following tables present information about the Company's assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period.  The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon. 
March 31, 2020
(in thousands)(in thousands)September 30, 2019 (in thousands)TotalLevel 1Level 2Level 3
TotalLevel 1Level 2Level 3
Loans and leasesLoans and leases$25,000  $—  $—  $25,000  Loans and leases$11,957  $—  $—  $11,957  
Goodwill (Wholesale Bank and Retail Bank)Goodwill (Wholesale Bank and Retail Bank)—  —  —  —  
Other real estate ownedOther real estate owned2,390  —  —  2,390  Other real estate owned207  —  —  207  
$27,390  $—  $—  $27,390  
Total assets measured at fair value on a nonrecurring basisTotal assets measured at fair value on a nonrecurring basis$12,164  $—  $—  $12,164  


December 31, 2019
(in thousands)
(in thousands)
December 31, 2018
(in thousands)
TotalLevel 1Level 2Level 3
TotalLevel 1Level 2Level 3
Loans and leasesLoans and leases$98,696  $—  $—  $98,696  Loans and leases$18,134  $—  $—  $18,134  
Other real estate ownedOther real estate owned7,532  —  —  7,532  Other real estate owned2,079  —  —  2,079  
$106,228  $—  $—  $106,228  
Total assets measured at fair value on a nonrecurring basisTotal assets measured at fair value on a nonrecurring basis$20,213  $—  $—  $20,213  

The following table presents the losses resulting from nonrecurring fair value adjustments for the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019:  

Three Months Ended
(in thousands)
(in thousands)
Three Months EndedNine Months Ended
(in thousands)
March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Loans and leasesLoans and leases$20,435  $14,436  $51,212  $42,158  Loans and leases$22,042  $15,496  
Goodwill impairment (Wholesale Bank and Retail Bank)Goodwill impairment (Wholesale Bank and Retail Bank)1,784,936  —  
Other real estate ownedOther real estate owned279  —  3,013  66  Other real estate owned117  59  
Total loss from nonrecurring measurementsTotal loss from nonrecurring measurements$20,714  $14,436  $54,225  $42,224  Total loss from nonrecurring measurements$1,807,095  $15,555  

Goodwill was evaluated for impairment as of March 31, 2020, for the Retail Bank and Wholesale Bank reporting units. Refer to Note 11 - Goodwill, for discussion of the Company's goodwill impairment analysis.

The following provides a description of the valuation technique and inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis.basis, excluding goodwill. Unobservable inputs and qualitative information about the unobservable inputs are not presented as the fair value is determined by third-party information. information for loans and other real estate owned.

The loans and leases amounts above represent impaired, collateral dependent loans and leases that have been adjusted to fair value.  When we identify a collateral dependent loan or lease is identified as impaired, we measurecollateral dependent, the Bank measures the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan or lease, the fair value of collateral is generally estimated by obtaining external appraisals, but in some cases, the value of the collateral may be estimated as having little to no value. If we determineit is determines that the value of the impairedcollateral dependent loan or lease is less than its recorded investment, we recognizethe Bank recognizes this impairment and adjustadjusts the carrying value of the loan or lease to fair value through the allowance for loan and leasecredit losses.  The loss represents charge-offs or impairments on collateral dependent loans and leases for fair value adjustments based on the fair value of collateral.
 
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The other real estate owned amount above represents impaired real estate that has been adjusted to fair value.  Other real estate owned represents real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property's new basis. Any write-downs based on the asset's fair value at the date of acquisition are charged to the allowance for loan and leasecredit losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on other real estate owned for fair value adjustments based on the fair value of the real estate. 
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Fair Value Option
The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale accounted for under the fair value option as of September 30, 2019March 31, 2020 and December 31, 2018:2019:

March 31, 2020December 31, 2019
(in thousands)(in thousands)September 30, 2019December 31, 2018(in thousands)Fair Value Aggregate Unpaid Principal BalanceFair Value Less Aggregate Unpaid Principal BalanceFair ValueAggregate Unpaid Principal BalanceFair Value Less Aggregate Unpaid Principal Balance
Fair Value Aggregate Unpaid Principal BalanceFair Value Less Aggregate Unpaid Principal BalanceFair ValueAggregate Unpaid Principal BalanceFair Value Less Aggregate Unpaid Principal Balance
Loans held for sale Loans held for sale$355,022  $343,073  $11,949  $166,461  $160,270  $6,191   Loans held for sale$471,307  $446,466  $24,841  $513,431  $496,683  $16,748  

Residential mortgage loans held for sale accounted for under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are reported as a component of residential mortgage banking revenue. For the three and nine months ended September 30,March 31, 2020 and 2019, the Company recorded a net decreaseincrease in fair value of $1.9$8.1 million and an increase of $5.8 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded a net decrease in fair value of $6.5 million and $1.1$2.8 million, respectively.

The Company selected the fair value measurement option for existingcertain junior subordinated debentures (the Umpqua Statutory Trusts) and for junior subordinated debentures acquired from Sterling.debentures. The remaining junior subordinated debentures were acquired through previous business combinations and were measured at fair value at the time of acquisition and subsequently measured at amortized cost.

Accounting for the selected junior subordinated debentures at fair value enables usthe Company to more closely align our financial performance with the economic value of those liabilities. Additionally, we believe it improves ourthe ability to manage the market and interest rate risks associated with the junior subordinated debentures. The junior subordinated debentures measured at fair value and amortized cost are presented as separate line items on the balance sheet. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants under current market conditions as of the measurement date.

Due to inactivity in the junior subordinated debenture market and the lack of observable quotes of our,the Company's, or similar, junior subordinated debenture liabilities or the related trust preferred securities when traded as assets, we utilizethe Company utilizes an income approach valuation technique to determine the fair value of these liabilities using our estimation of market discount rate assumptions. The Company monitors activity in the trust preferred and related markets, to the extent available, evaluates changes related to the current and anticipated future interest rate environment, and considers our entity-specific creditworthiness, to validate the reasonableness of the credit risk adjusted spread and effective yield utilized in ourthe discounted cash flow model. WeThe Company also consider changes in the interest rate environment in ourthe valuation, specifically the absolute level and the shape of the slope of the forward swap curve.

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Note 11LeasesGoodwill

The Bank leases store locations, corporate office space, and equipment under non-cancelable leases. Leases with an initial termAt March 31, 2020, goodwill totaled $2.7 million, after a goodwill impairment of 12 months or less are not recorded on$1.8 billion was taken during the balance sheet.

The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially allquarter, as compared to goodwill of the leases provide$1.8 billion at December 31, 2019. Goodwill is required to be allocated to reporting units, which the Company with one or more optionshas determined to renew, with renewal terms that can extendbe the lease term from one to 10 years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties. Our sublease portfolio consists ofsame as its operating leases of mainly former store locations or excess space in store or corporate facilities.
The following table presents the balance sheet information related to leases as of September 30, 2019:

(in thousands) 
LeasesSeptember 30, 2019
Operating lease right-of-use assets$108,187 
Operating lease liabilities$116,924 
segments.

The following table presentssummarizes the components of lease expensechange in the Company's goodwill for the three and nine months ended September 30, 2019:March 31, 2020:
Goodwill
(in thousands)GrossAccumulated ImpairmentTotal
Balance, December 31, 2019$1,900,727  $(113,076) $1,787,651  
Goodwill impairment—  (1,784,936) (1,784,936) 
Balance, March 31, 2020$1,900,727  $(1,898,012) $2,715  

(in thousands) Three Months EndedNine Months Ended
Lease CostsSeptember 30, 2019September 30, 2019
Operating lease costs$8,091  $24,333  
Short-term lease costs184  660  
Variable lease costs (2) 
Sublease income(625) (2,027) 
Net lease costs$7,651  $22,964  

Prior to the adoption of ASU 2016-02, rent expense for the three and nine months ended September 30, 2018 was $9.6 million and $28.6 million, respectively, and was partially offset by rent income of $671,000 and $2.0 million, respectively.

The following table presents the supplemental cash flow information related to leases for the nine months ended September 30, 2019:

(in thousands) Nine Months Ended
Cash FlowsSeptember 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$24,773 
Right of use assets obtained in exchange for new operating lease liabilities$15,339 

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The following table presentsAs of March 31, 2020 and December 31, 2019, goodwill was allocated to the maturities of lease liabilitiesreporting units as of September 30, 2019:follows:

(in thousands) 
YearOperating Leases
Remainder of 2019$8,239  
202029,392  
202123,842  
202218,497  
202314,513  
Thereafter37,701  
Total lease payments132,184  
Less: imputed interest(15,260) 
Present value of lease liabilities$116,924  
Goodwill
(in thousands)Wholesale BankWealth ManagementRetail BankTotal
Allocated goodwill, December 31, 2019$1,033,744  $2,715  $751,192  $1,787,651  
Goodwill impairment(1,033,744) —  (751,192) (1,784,936) 
Allocated goodwill, March 31, 2020$—  $2,715  $—  $2,715  

The following table presentsCompany updated its goodwill assessment for the operating lease termWholesale Bank and discount rate asRetail Bank reporting units at March 31, 2020, due to events and circumstances indicating potential impairment. Impairment of September 30, 2019:

September 30, 2019
Weighted-average remaining lease term (years)6.8
Weighted-average discount rate3.60 %
goodwill is the condition that exists when the carrying amount of a reporting unit that includes goodwill exceeds its fair value. A goodwill impairment is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

The following table sets forth,Company assessed qualitative factors that indicated that it was more likely than not that goodwill was impaired. Based on that assessment, the Company determined that for the Wholesale Bank and Retail Bank reporting units, the qualitative analysis determined that there were negative indicators that would require a quantitative assessment of goodwill due to the decline in the current economic environment, specifically interest rates and the Company's stock price, as of December 31, 2018,well as decreasing cash flow projections for these reporting units based on the future minimum lease payments under non-cancelable leaseslow interest rate environment and future minimum income receivable under non-cancelable operating subleases:potentially higher credit losses.

(in thousands) 
YearLeases PaymentsSubleases Income
2019$33,948  $2,851  
202029,535  2,711  
202123,898  2,333  
202218,250  1,718  
202314,100  1,337  
Thereafter37,963  3,477  
Total$157,694  $14,427  
The Company performed a quantitative analysis of the Wholesale Bank and Retail Bank reporting units, by comparing the fair value of these reporting units with their carrying amount. The Company estimated the fair value of its Wholesale Bank and Retail Bank reporting units using an income approach to estimate the fair value of both reporting units. The income approach estimates the fair value of the reporting units by discounting management's projections of the reporting units' cash flows, including a terminal value to estimate the fair value of cash flows beyond the final year of projected results, discounted using an estimated cost of capital discount rate. The Company also considered the market and cost approaches when determining the fair value of the reporting units.

The projected cash flows used to estimate fair value of the reporting units was lower than previous projections due to declining interest rate forecasts for a prolonged low-interest rate environment, due to the significant impact of the Federal Reserve's rate cuts and the impact of the COVID-19 pandemic on the economy. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires management to make assumptions and estimates regarding the Company's future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

Upon completing the quantitative impairment analysis, the Company recorded a goodwill impairment of $1.8 billion, which represented the entire amount of goodwill allocated to the Wholesale Bank and Retail Bank reporting units. The remaining goodwill of $2.7 million after the impairment relates to the Wealth Management reporting unit.

Note 12– Subsequent Event - Income Taxes

On October 1, 2019, Umpqua closed onThe Company and its subsidiaries file income tax returns in the saleU.S. federal jurisdiction, as well as in the majority of states and in Canada. As of March 31, 2020, the mortgage servicing rightsCompany has a net deferred tax liability of $51.1 million, which includes $2.0 million of state net operating loss ("NOL") carry-forwards, expiring in tax years 2029-2031. The Company believes that it is more likely than not that the benefit from only certain state NOL carry-forwards will not be realized and therefore has provided a valuation allowance of $1.1 million against the deferred tax assets relating to $3.4 billionthese NOL carry-forwards. The Company had gross unrecognized tax benefits of mortgage loans serviced for others. The sale resulted in a gain on fair value$4.3 million as of $7.8 million recorded atMarch 31, 2020. If recognized, the end ofunrecognized tax benefit would reduce the third quarter, as the mortgage servicing rights are recorded at fair value.2020 annual effective tax rate by 0.24%.

The Company's consolidated effective tax rate as a percentage of pre-tax loss for the three months ended March 31, 2020 was (1.7)%, as compared to a percentage of pre-tax net income of 24.6% for the three ended March 31, 2019. The effective tax rate became negative primarily due to the impairment of non-deductible goodwill during the three months ended March 31, 2020.
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Item 2.         Management's Discussion and Analysis of Financial Condition and Results of Operations 
 
Forward-Looking Statements 
 
This Report contains certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These statements may include statements that expressly or implicitly predict future results, performance or events. Statements other than statements of historical fact are forward-looking statements. You can find many of these statements by looking for words such as "anticipates," "expects," "believes," "estimates," "intends" and "forecast," and words or phrases of similar meaning. We make forward-looking statements regardingabout the projected impact on our business operations of the COVID-19 global pandemic; the results and performance of models and economic forecasts used in our calculation of the ACL; projected sources of funds;funds and the Company's liquidity position; Next Gen initiatives; investments in data, analytics, technology, training and marketing; our securities portfolio; loan sales; adequacy of our allowance for loan and leasecredit losses, andincluding the reserve for unfunded commitments; provision for loan and leasecredit losses; impairednon-performing loans and future losses; performance of troubled debt restructurings; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including mortgage servicing rights values and sensitivity analyses; store consolidations; tax rates; and the effect of accounting pronouncements;pronouncements and changes in accounting methodology. Risks that could cause results to differ from forward-looking statements we make are set forth in our filings with the SEC and include, without limitation: current and future economic and market conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, and any slowdown in economic growth particularly in the western United States; the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates; our ability to effectively manage problem credits; our ability to successfully implement efficiency and operational excellence initiatives; our ability to successfully develop and market new products and technology; and changes in accounting methodology.laws or regulations. We also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements, applicable law and regulations (including federal securities laws and state and federal banking laws and regulations), and other factors deemed relevant by the Company's Board of Directors, and may be subject to regulatory approval or conditions. Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. The COVID-19 coronavirus pandemic, including the governmental reaction to COVID-19 as well as the economic impacts, may materially impact our business, liquidity and financial position, results of operations, and stock price, as more fully described in Part II Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. Risks and uncertainties include those set forth in our filings with the Securities and Exchange Commission (the "SEC") and the following factors that might cause actual results to differ materially from those presented: 
continued deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans;
our ability to successfully implement and sustain information technology product and system enhancements and operational initiatives;
our ability to attract new deposits and loans and leases;
our ability to retain deposits, especially during store consolidations; 
demand for financial services in our market areas; 
competitive market pricing factors; 
our ability to effectively develop and implement new technology;
deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans; 
continued market interest rate volatility; 
prolonged low interest rate environments;
compression of our net interest margin; 
stability and cost of funding sources;
continued availability of borrowings and other funding sources such as brokered and public deposits; 
changes in legal or regulatory requirements or the results of regulatory examinations that could increase expenses or restrict growth;
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our ability to recruit and retain key management and staff; 
availability of, and competition for, acquisition opportunities;
significant decline in the market value of the Company that could result in an impairment of goodwill; 
our ability to raise capital or incur debt on reasonable terms; 
regulatory limits on the Bank's ability to pay dividends to the Company; 
financial services reform and the impact of legislation and implementing regulations on our business operations, including our compliance costs, interest expense, and revenue;
a breach or failure of our operational or security systems, or those of our third-party vendors, including as a result of cyber-attacks; and
competition, including from financial technology companies.
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There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Forward-looking statements are made as of the date of this Form 10-Q. We do not intend to update these forward-looking statements. Readers should consider any forward-looking statements in light of this explanation, and we caution readers about relying on forward-looking statements.
  
General 
Umpqua Holdings Corporation, an Oregon corporation, is a financial holding company with two principal operating subsidiaries, Umpqua Bank and Umpqua Investments, Inc. The Bank's wholly-owned subsidiary, Financial Pacific Leasing, Inc., is a commercial equipment leasing company.

With headquarters located in Roseburg, Oregon, theUmpqua Bank is considered one of the most innovative community banks in the United States, recognized nationally and internationally for its unique company culture and customer experience strategy, which we believe differentiates the Company from its competition. The Bank provides a wide range of banking, wealth management, mortgage and other financial services to corporate, institutional and individual customers, and also has a wholly-owned subsidiary, Financial Pacific Leasing, Inc., a commercial equipment leasing company.customers.

Umpqua Investments is a registered broker-dealer and registered investment advisor with offices in Oregon, Washington, and California, and also offers products and services through Umpqua Bank stores. The firm is one of the oldest investment companies in the Northwest. Umpqua Investments offers a full range of investment products and services including: stocks, fixed income securities (municipal, corporate, and government bonds, CDs, and money market instruments), mutual funds, annuities, options, retirement planning, advisory account services, goals basedgoals-based planning and insurance.

Along with its subsidiaries, the Company is subject to the regulations of state and federal agencies and undergoes periodicregular examinations by these regulatory agencies.  
  
Executive Overview 
 
Significant items for the three and nine months ended September 30, 2019March 31, 2020 were as follows: 

Recent Developments – COVID 19

We expect that the COVID-19 coronavirus pandemic and the related governmental reaction will negatively impact our business including our liquidity and financial position, results of operations, and stock price among other negative impacts. These risks to our business are more fully described in Part II, item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. We are closely monitoring the impact of COVID-19 on all aspects of our business.

At this time, while we have identified risks discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q, we are unable to predict specifically how the COVID-19 coronavirus pandemic and related governmental reaction will negatively impact our business due to numerous uncertainties, including the duration of the pandemic, the impact to our customers and associates, actions that may be taken by governmental authorities, including preventing or curtailing our operations, and other consequences. To curtail the impact of COVID-19 on our business operations, we have modified our operations to comply with multiple state-level proclamations and Centers for Disease Control and Prevention ("CDC") guidance and best practices by restricting travel, maintaining remote work programs for associates, restricting lobby access to stores, increasing cleaning scope and frequency, and deploying resources for new programs such as the Payroll Protection Program ("PPP"). We have also addressed other customer needs during the pandemic by continuing to offer our Umpqua Go-To application which offers customers and associates a safe and effective way to conduct banking, payment deferrals and fee waivers, and active participation in federal relief programs including the CARES Act and Economic Injury Disaster Loan program.
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We increased our community support by announcing $2.0 million in grants and investments to organizations providing COVID-19 community relief and small business microloans, activating an associate 3:1 giving match to donations, and initiating virtual volunteerism opportunities. We enhanced associate benefits by introducing supplemental front line associate pay, providing a pandemic pay bank for associates needing additional paid time off due to COVID-19 impacts, and implementing flexible work rotations and remote work for higher-risk associates.

While we do not know and cannot quantify specific impacts, the extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic; actions taken by governmental authorities and other third parties in response to the pandemic; the effect on our customers, counterparties, employees and third party service providers; and the effect on economies and markets.

The following is a discussion of our results for the quarter ended March 31, 2020 as compared to the applicable prior periods.

Financial Performance
 
Net loss per diluted common share was $8.41 for the three months ended March 31, 2020, compared to net income per diluted common share was $0.38 and $1.23of $0.34 for the three and nine months ended September 30, 2019 comparedMarch 31, 2019.  The significant decline relates to $0.41 and $1.07the impact of goodwill impairment, provision for credit losses, as well as interest margin compression during the three and nine monthsfirst quarter of 2020.

During the quarter ended September 30, 2018.  March 31, 2020, goodwill impairment was $1.8 billion. We conducted an interim impairment analysis due to the decline in the economic environment, specifically the impact of significant decreases in interest rates, declines in the Company's stock price, as well as potentially higher credit losses. The non-cash goodwill impairment recorded does not impact tangible equity or our regulatory capital ratios.
 
Net interest margin, on a tax equivalent basis, was 3.63% and 3.78%3.41% for the three and nine months ended September 30, 2019March 31, 2020, as compared to 4.09% and 4.00%4.03% for the three and nine months ended September 30, 2018.March 31, 2019.  The decrease in net interest margin for the three and nine months ended September 30, 2019,March 31, 2020, compared to the same periodsperiod in the prior year, was driven by an increase in the cost of interest-bearing liabilities coupled with lower average yields on interest-bearing assets due to the securities portfolio, offset by higher average yields ondecline in interest rates since March 31, 2019, in addition to the loan and lease portfolio.decline in rates during the first quarter of 2020 related to the COVID-19 global pandemic.

Residential mortgage banking revenue was $47.0 million and $67.8$17.5 million for the three and nine months ended September 30, 2019,March 31, 2020, as compared to $31.5 million and $103.1$11.2 million for the three and nine months ended September 30, 2018.March 31, 2019.  The increase for the three month period was primarily driven by an increase in the income from the origination and sale of residential mortgages of $10.4$25.0 million, as compared to the prior period, as well as a gain on fair value ofperiod. This reflects an increase in the MSR asset of $4.2 million as compared to a gain of $199,000 for the same period in 2018. The higher gain on the fair value was mainly due to the $7.8 million gain recorded for the portion of mortgage servicing rights held for sale at the end of the quarter. The closed loans for sale volume increased 12%of 136% for the three months ended September 30, 2019,March 31, 2020, as compared to the same period in the prior year and the gain on sale margin increased to 3.72%3.43%, compared to 2.77%2.95% in the same period of the prior year. The decrease for the nine month period was primarily drivenThese increases were partially offset by a loss on fair value of the MSR asset of $34.4$30.7 million, as compared to a loss of $125,000$14.0 million for the same period in 2018.2019. The closed loans for sale volume decreased 11% forincrease in the nine months ended September 30, 2019, as comparedloss on fair value was directly related to the same perioddecrease in the prior year; which was offset by the gain on sale margin which increasedmortgage rates contributing to 3.40%, compared to 3.15%an increase in the same period of the prior year.prepayment assumptions.

In June 2019,Total gross loans and leases were $21.3 billion as of March 31, 2020, an increase of $55.8 million, as compared to December 31, 2019.  The increase is due to loan production in the Company sold allcommercial portfolio, however new commercial loan production declined late in the quarter as the pandemic was unfolding.
Total deposits were $22.7 billion as of its holdingsMarch 31, 2020, an increase of Visa Inc. Class B common stock for a one-time gain of $81.9$217.9 million, whichcompared to December 31, 2019.  This increase was due to growth in non-interest bearing demand deposits and money market deposits, partially offset by a $7.2 million lossdecreases in time deposits.
Total consolidated assets were $27.5 billion as of March 31, 2020, compared to $28.8 billion at December 31, 2019. The decrease was mainly due to the goodwill impairment, as well as an increase in the allowance for credit losses on the sale of debt securities during the nine months ended September 30, 2019.loans and leases, partially offset by an increase in on-balance sheet liquidity.

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Total gross loans and leases were $21.5 billion as of September 30, 2019,The Company has been an increase of $1.1 billion, as compared to December 31, 2018.  The increase is due to strong loan productionactive participant in the residential real estate, commercial loan, and commercial real estate portfolios.
Total deposits were $22.4 billionPaycheck Protection Program ("PPP"), created as of September 30, 2019, an increase of $1.3 billion, compared to December 31, 2018.  This increase was due to growth in time deposit and non-interest bearing demand deposits.
Total consolidated assets were $28.9 billion as of September 30, 2019, compared to $26.9 billion at December 31, 2018. The increase was due to strong loan and deposit growth during the year. A portionpart of the increase was dueCARES Act, offering PPP loans to the additionboth customers and non-customers throughout our footprint. As of the operating lease rightdate of use assets recordedthis filing, the Company expects to process more than 13,000 PPP loan applications and fund approximately $2.0 billion in PPP loans. The average size of each PPP loan is expected to be approximately $148,000. The PPP loans will increase loan balances temporarily and PPP specific loan balances will decline as customers complete the applicable loan forgiveness process through the Company and the Small Business Administration ("SBA"). The Company will fund the PPP loans with a resultmix of usual source of funds as well as the PPP lending facility offered by the Federal Reserve. The Company is awaiting additional information from the Federal Reserve and the SBA as it relates to other financial characteristics of the application of the new lease standard, ASC 842 as of January 1, 2019.  program.

Credit Quality

Non-performing assets decreasedincreased to $71.4$89.3 million, or 0.25%0.32% of total assets, as of September 30, 2019,March 31, 2020, as compared to $98.2$67.5 million, or 0.36%0.23% of total assets, as of December 31, 2018.2019.  Non-performing loans and leases were $67.4$86.3 million, or 0.31%0.41% of total loans and leases, as of September 30, 2019,March 31, 2020, as compared to $87.3$64.2 million, or 0.43%0.30% of total loans and leases, as of December 31, 2018.2019.

The allowance for credit losses on loans and leases was $291.4 million, an increase of $133.8 million, as compared to December 31, 2019. The reserve for unfunded commitments was $20.9 million, an increase of $15.8 million, as compared to December 31, 2019. The significant increases in the allowances for credit losses is due to the economic forecasts anticipating a continued economic downturn as a result of the COVID-19 coronavirus pandemic, as well as the implementation of CECL. The initial adjustment to the allowance for credit losses, which includes the allowance for credit losses on loans and leases and the reserve for unfunded commitments, was $53.2 million, to record the adoption of CECL as of January 1, 2020.

The provision for loan and leasecredit losses was $23.2 million and $56.3$118.1 million for the three and nine months ended September 30, 2019,March 31, 2020, as compared to $11.7 million and $38.7$13.8 million for the three and nine months ended September 30, 2018.March 31, 2019. The increase for the three and nine months ended September 30, 2019,March 31, 2020, compared to the same periodsperiod of the prior year, was primarily attributable to strong growththe economic forecasts influenced by the COVID-19 global pandemic used in the loan and lease portfolio, along with higher net charge-offs.CECL calculation of the allowance for credit losses. As an annualized percentage of average outstanding loans and leases, the provision for loan and leasecredit losses recorded for the three and nine months ended September 30, 2019March 31, 2020 was 0.44% and 0.36%, respectively,2.24% as compared to 0.24% and 0.27%, respectively, for the same periodsperiod in 2018.2019.

Capital and Growth Initiatives

The Company's total risk based capital ratio was 13.6%13.7% and its Tier 1 common to risk weighted assets ratio was 10.9%10.7% as of September 30, 2019.March 31, 2020. As of December 31, 2018,2019, the Company's total risk based capital ratio was 13.5%14.0% and its Tier 1 common to risk weighted assets ratio was 10.7%11.2%.
 
Cash dividends declared in the thirdfirst quarter of 20192020 were $0.21 per common share.

WeDue to the COVID-19 global pandemic, the Umpqua Go-To® application's message volumes have increased as the app provides customers and bankers a healthy and secure way to conduct transactions, initiate applicable COVID-19 relief, and get answers to critical questions. During this difficult time, we continue to make progress on "Umpqua Next Gen," an initiative started in late 2017 designed to modernize and evolve the Bank. We focusedfocus on operational excellence balanced growth and human digital programs in 2018. Duringfocus on the nine months ended September 30, 2019, Umpqua continued store rationalization, consolidating 16 storeswell-being of our customers, associates, and selling an additional 4 stores, as part of this initiative, with plans to consolidate 7 additional stores by the end of the year. We have utilized the savings generated from store consolidations to reinvest in technology, data and analytics, new customer-focused technologies, associate training, a re-designed corporate website, digital marketing efforts, and new online account origination capabilities. The Company rolled out "Go-To" the industry's first human digital banking platform earlier this year, already reaching 34,000 enrolled customers. In addition, the Bank continues to implement predictive analytics tools to assist bankers with serving their customers.communities.

Summary of Critical Accounting Policies 
 
Our critical accounting policies are described in detail in the Summary of Critical Accounting Policies section of the Form 10-K for the year ended December 31, 2018,2019, filed with the SEC on February 21, 2019.27, 2020. The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. During the three months ended March 31, 2020, the Company implemented CECL, due to the significance of the implementation, the following Allowance for Credit Losses Policy has been updated from the policies disclosed in our prior financial statement. The Company’sCompany's critical accounting policies also include the allowance for loan and lease losses and reserve for unfunded commitments, residential mortgage servicing rights, valuation of goodwill, and fair value. During the quarter, the Company elected to change the date of the annual goodwill impairment analysis from December 31 to October 31. The Company believes this change is immaterial and does not expect the change to produce different impairment results. There have been no other material changes to the valuation techniques or models during the ninethree months ended September 30, 2019.March 31, 2020. 

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Allowance for Credit Losses Policy

The Bank has established an ACL Committee, which is responsible for, among other things, regularly reviewing the ACL methodology, including allowance levels and ensuring that it is designed and applied in accordance with generally accepted accounting principles. The Bank's Audit and Compliance Committee provides board oversight of the ACL process and reviews and approves the ACL methodology on a quarterly basis.

CECL is not prescriptive in the methodology used to determine the expected credit loss estimate. Therefore, management has flexibility in selecting the methodology. However, the expected credit losses must be estimated over a financial asset's contractual term, adjusted for prepayments, utilizing quantitative and qualitative factors.

The estimate of current expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is the starting point for estimating expected credit losses. Adjustments are made to historical loss experience to reflect differences in asset-specific risk characteristics, such as underwriting standards, portfolio mix or asset terms, and differences in economic conditions – both current conditions and reasonable and supportable forecasts. When the Company is not able to make or obtain reasonable and supportable forecasts for the entire life of the financial asset, it has estimated expected credit losses for the remaining life after the forecasted period, using an approach that reverts to historical credit loss information.

The Company utilizes complex models to obtain reasonable and supportable forecasts; most of the models calculate two predictive metrics, the probability of default and loss given default. The PD measures the probability that a loan will default within a given time horizon and primarily measures the adequacy of the debtor's cash flow as the primary source of repayment of the loan or lease. The LGD is the expected loss which would be realized presuming a default has occurred and primarily measures the value of the collateral or other secondary source of repayment related to the collateral.

Loans and leases deemed to be collateral dependent or reasonably expected troubled debt restructured or troubled debt restructured are individually evaluated for loss based on the underlying collateral or a discounted cash flow analysis.

Loss factors from the models, prepayment speeds, and qualitative factors are input into the Company's CECL accounting application which aggregates the information. The Company then uses two methods to calculate the current expected credit loss: 1) the discounted cash flow method, which is used for all loans except lines of credit and 2) the non-discounted cash flow method which is used for lines of credit due to the difficulty of calculating an effective interest rate when lines of credit have not yet been drawn on.

The reserve for unfunded commitments is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ACL and RUC are monitored on a regular basis and are based on management's evaluation of numerous factors. These factors include the CECL model outputs; 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.

Management believes that the ACL was adequate as of March 31, 2020. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ACL and could result in additional provision for loan and lease losses in future periods.
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Results of Operations
 
Overview 
 
For the three and nine months ended September 30, 2019,March 31, 2020, net incomeloss was $84.5 million and $270.3 million,$1.9 billion or $0.38 and $1.23$8.41 per diluted common share, as compared to net income of $91.0 million and $236.0$74.0 million or $0.41 and $1.07$0.34 per diluted common share for the three and nine months ended September 30, 2018.

March 31, 2019. The decrease in net income for the three months ended September 30, 2019,March 31, 2020, compared to the same period of the prior year wasis attributable to goodwill impairment, a decrease in net interest income, an increase in the provision for loan and leasecredit losses and an increase in non-interest expense, offsetexpense. The goodwill impairment was due to an interim impairment analysis triggered by anthe deterioration in the economic environment, resulting from the COVID-19 pandemic, specifically the reduction in interest rates, the increase in non-interest incomeprojected credit losses, and a decreasethe decline in income tax expense.the Company's stock price. The decrease in net interest income was driven by higher cost of funds, due to competitive rates and pricing specials on the deposit portfolio, as well as lower average yields on the securities portfolios, offset by higher volume and average yields on the loan and lease portfolio.interest-earning assets as rates continued to decline. The increase in the provision for loan and leasecredit losses is primarily attributabledue to growththe COVID-19 global pandemic influenced economic forecast used in the loan and lease portfolio, as well as an increase in net charge-offs.calculation of the allowance for credit losses using CECL. The increase in non-interest expense was driven by higher mortgage banking related expenses and exit and disposal costs during the period, as well as increased losses on other real estate owned during the period. The increase in non-interest income was driven by an increase in residential mortgage revenue, due to a higher gain on the fair market value of the MSR asset, driven by the $7.8 million fair value gain recorded for the portion of the mortgage servicing rights held for sale at the end of the quarter.

The increase in net income for the nine months ended September 30, 2019, compared to the same period of the prior year was attributablesalaries and employee benefits primarily related to an increase in non-interest income and a decrease in non-interest expense, offset by an increase in the provision for loan and lease losses as well as in income tax expense. The increase in non-interest income was primarilyhome lending compensation due to higher originations during the one-time gain on sale of Visa Inc. Class B common stock held by the Company, partially offset by a decrease in residential mortgage banking revenue. The decrease in non-interest expense was driven by lower salaries and benefits expense, resulting from the Company's operational excellence initiatives, a reduction in consulting fees, lower occupancy and equipment expense resulting from the reduction in the number of store locations, as well as lower FDIC assessments, offset by a loss on other real estate owned.period.

The following table presents the return on average assets, average common shareholders' equity and average tangible common shareholders' equity for the three and nine months ended September 30, 2019March 31, 2020 and 2018.2019. For each of the periodsperiod presented, the table includes the calculated ratios based on reported net income. Our return on average common shareholders' equity is negatively impacted as the result of capital required to support goodwill. To the extent this performance metric is used to compare our performance with other financial institutions that do not have merger and acquisition-related intangible assets, we believe it is beneficial to also consider the return on average tangible common shareholders' equity. The return on average tangible common shareholders' equity is calculated by dividing net income by average shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs). The return on average tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with the return on average common shareholders' equity.  

Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity
Three Months Ended
(dollars in thousands) (dollars in thousands) Three Months EndedNine Months Ended (dollars in thousands) March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Return on average assetsReturn on average assets1.18 %1.36 %1.31 %1.21 %Return on average assets(25.82)%1.12 %
Return on average common shareholders' equityReturn on average common shareholders' equity7.87 %9.00 %8.67 %7.90 %Return on average common shareholders' equity(174.94)%7.34 %
Return on average tangible common shareholders' equityReturn on average tangible common shareholders' equity13.67 %16.42 %15.32 %14.49 %Return on average tangible common shareholders' equity(301.30)%13.17 %
Calculation of average common tangible shareholders' equity:Calculation of average common tangible shareholders' equity:    Calculation of average common tangible shareholders' equity:  
Average common shareholders' equityAverage common shareholders' equity$4,260,810  $4,011,856  $4,169,008  $3,991,773  Average common shareholders' equity$4,257,711  $4,091,174  
Less: average goodwill and other intangible assets, net(1)Less: average goodwill and other intangible assets, net(1)(1,808,191) (1,814,000) (1,809,583) (1,815,521) Less: average goodwill and other intangible assets, net(1)(1,785,608) (1,811,007) 
Average tangible common shareholders' equityAverage tangible common shareholders' equity$2,452,619  $2,197,856  $2,359,425  $2,176,252  Average tangible common shareholders' equity$2,472,103  $2,280,167  
(1) The average goodwill and other intangible assets reflects that the impairment charge was at the end of the period. In future periods, this average will reflect that the majority of goodwill has been written-off.

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Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy. Umpqua believes the exclusion of certain intangible assets in the computation of tangible common equity and tangible common equity ratio provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results and capital of the Company.  Tangible common equity is calculated as total shareholders' equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs).  In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs).  The tangible common equity ratio is calculated as tangible common shareholders' equity divided by tangible assets. The tangible common equity and tangible common equity ratio is considered a non-GAAP financial measure and should be viewed in conjunction with the total shareholders' equity and the total shareholders' equity ratio. 

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The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of September 30, 2019March 31, 2020 and December 31, 2018:2019: 

(dollars in thousands)
(dollars in thousands)
September 30, 2019December 31, 2018
(dollars in thousands)
March 31, 2020December 31, 2019
Total shareholders' equityTotal shareholders' equity$4,289,516  $4,056,442  Total shareholders' equity$2,507,611  $4,313,915  
Subtract:Subtract:  Subtract:    
GoodwillGoodwill1,787,651  1,787,651  Goodwill2,715  1,787,651  
Other intangible assets, netOther intangible assets, net19,750  23,964  Other intangible assets, net17,099  18,346  
Tangible common shareholders' equityTangible common shareholders' equity$2,482,115  $2,244,827  Tangible common shareholders' equity$2,487,797  $2,507,918  
Total assetsTotal assets$28,930,855  $26,939,781  Total assets$27,540,382  $28,846,809  
Subtract:Subtract:Subtract:
GoodwillGoodwill1,787,651  1,787,651  Goodwill2,715  1,787,651  
Other intangible assets, netOther intangible assets, net19,750  23,964  Other intangible assets, net17,099  18,346  
Tangible assetsTangible assets$27,123,454  $25,128,166  Tangible assets$27,520,568  $27,040,812  
Tangible common equity ratioTangible common equity ratio9.15 %8.93 %Tangible common equity ratio9.04 %9.27 %
 
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited.  Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
  
Net Interest Income 
 
Net interest income for the three months ended September 30, 2019March 31, 2020 was $229.0$218.5 million, a decrease of $12.4$19.2 million compared to the same period in 2018.2019. The decrease in net interest income for the three months ended September 30, 2019March 31, 2020 as compared to the same period in 2018,2019, was driven by growthlower yields on interest-earning assets offset by higher volume, due to the interest rate cuts that the Federal Reserve instituted during the quarter as a response to the COVID-19 global pandemic, in addition to rate decreases in the second half of 2019. Average interest-bearing liabilities and an increase inalso increased, although the average cost of funds due to competitive rates and pricing specials on the deposit portfolio, as well as lower average yields on the securities portfolio. The decrease was partially offset by the higher yields and growth in the loan and lease portfolio.

Net interest income for the nine months ended September 30, 2019 was $693.8 million, an increase of $2.6 million compared to the same period in 2018. The increase in net interest income for the nine months ended September 30, 2019 as compared to the same period in 2018, was driven by growth in interest-earning assets, specifically the loan and lease portfolio, reflecting strong growth during the period, along with higher average yields on loans and leases and loans held for sale. The increase was partially offset by increased volumes of interest-bearing liabilities and an increase in the average cost of funds.was relatively flat.

The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.63% and 3.78%, respectively,3.41% for the three and nine months ended September 30, 2019,March 31, 2020, a decrease of 4662 basis points and 22 basis points, respectively, as compared to the same periodsperiod in 2018.2019. The decrease in net interest margin for the three and nine months ended September 30, 2019,March 31, 2020, primarily resulted from an increasea decrease in the costaverage yields on interest-earning assets and higher average volume of interest-bearing liabilities, which was partially offset by higher average yields on the loan and lease portfolio. The cost of interest bearing liabilities increased 43 basis points and 47 basis points, respectively, for the three and nine months ended September 30, 2019, as compared to the same periods in 2018.growth. The yield on loans and leases increaseddecreased by 448 basis points and 15 basis points, respectively, for the three and nine months ended September 30, 2019,March 31, 2020, as compared to the same periodsperiod in 2018.2019, primarily attributable to the decrease in short-term interest rates. The cost of interest-bearing deposits increased 6 basis points for the three months ended March 31, 2020, as compared to the same period in 2019, due to the growth in higher cost time deposits.
 
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Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds. The Company continues to be "asset-sensitive." In a decliningAs interest rate environment, arates have declined, the decrease in yields on earning assets, coupled with little or no change in cost of funds, coupled with a decrease in yieldshas compressed the net interest margin. Further rate changes will continue to have an impact on earning assets could further compress theour net interest margin.

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The following tables presenttable presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019: 
Three Months Ended
March 31, 2020March 31, 2019
(dollars in thousands)(dollars in thousands)Three Months Ended (dollars in thousands)Average BalanceInterest Income or ExpenseAverage Yields or RatesAverage BalanceInterest Income or ExpenseAverage Yields or Rates
September 30, 2019September 30, 2018
Average BalanceInterest Income or ExpenseAverage Yields or RatesAverage BalanceInterest Income or ExpenseAverage Yields or Rates
INTEREST-EARNING ASSETS:INTEREST-EARNING ASSETS:        INTEREST-EARNING ASSETS:        
Loans held for saleLoans held for sale$328,155  $3,953  4.82 %$320,494  $4,220  5.27 %Loans held for sale$406,434  $4,264  4.20 %$187,656  $2,790  5.95 %
Loans and leases (1)Loans and leases (1)21,170,915  262,158  4.93 %19,709,113  242,190  4.89 %
Loans and leases (1)
21,196,989  241,729  4.58 %20,388,988  255,957  5.06 %
Taxable securitiesTaxable securities2,648,092  13,145  1.99 %2,687,635  24,984  3.72 %Taxable securities2,760,461  17,283  2.50 %2,757,644  20,473  2.96 %
Non-taxable securities (2)Non-taxable securities (2)252,765  2,086  3.30 %278,937  2,519  3.61 %
Non-taxable securities (2)
241,105  1,894  3.14 %287,366  2,580  3.59 %
Temporary investments and interest-bearing cashTemporary investments and interest-bearing cash759,416  4,204  2.20 %558,597  2,800  1.99 %Temporary investments and interest-bearing cash1,084,854  3,331  1.23 %153,347  925  2.44 %
Total interest-earning assetsTotal interest-earning assets25,159,343  $285,546  4.52 %23,554,776  $276,713  4.67 %Total interest-earning assets25,689,843  268,501  4.19 %23,775,001  282,725  4.79 %
Other assetsOther assets3,197,639    2,906,750    Other assets3,154,930��   3,036,620    
Total assetsTotal assets$28,356,982    $26,461,526    Total assets$28,844,773    $26,811,621    
INTEREST-BEARING LIABILITIES:INTEREST-BEARING LIABILITIES:      INTEREST-BEARING LIABILITIES:      
Interest-bearing demand depositsInterest-bearing demand deposits$2,363,626  $3,117  0.52 %$2,369,092  $2,241  0.38 %Interest-bearing demand deposits$2,471,556  $3,543  0.58 %$2,319,718  $2,640  0.46 %
Money market depositsMoney market deposits6,962,370  16,575  0.94 %6,150,199  6,820  0.44 %Money market deposits7,107,626  11,759  0.66 %6,391,721  11,017  0.70 %
Savings depositsSavings deposits1,462,198  557  0.15 %1,483,687  452  0.12 %Savings deposits1,485,171  241  0.07 %1,488,530  270  0.07 %
Time depositsTime deposits4,501,270  25,627  2.26 %3,894,163  16,179  1.65 %Time deposits4,630,956  24,747  2.15 %4,104,356  20,167  1.99 %
Total interest-bearing depositsTotal interest-bearing deposits15,289,464  45,876  1.19 %13,897,141  25,692  0.73 %Total interest-bearing deposits15,695,309  40,290  1.03 %14,304,325  34,094  0.97 %
Repurchase agreements and federal funds purchasedRepurchase agreements and federal funds purchased313,089  448  0.57 %278,131  103  0.15 %Repurchase agreements and federal funds purchased337,796  395  0.47 %371,336  810  0.88 %
BorrowingsBorrowings860,285  4,238  1.95 %787,074  3,439  1.73 %Borrowings906,624  4,046  1.79 %793,797  3,683  1.88 %
Junior subordinated debenturesJunior subordinated debentures365,079  5,652  6.14 %369,183  5,640  6.06 %Junior subordinated debentures361,983  4,903  5.45 %389,103  5,987  6.24 %
Total interest-bearing liabilitiesTotal interest-bearing liabilities16,827,917  $56,214  1.33 %15,331,529  $34,874  0.90 %Total interest-bearing liabilities17,301,712  49,634  1.15 %15,858,561  44,574  1.14 %
Non-interest-bearing depositsNon-interest-bearing deposits6,880,093    6,865,676    Non-interest-bearing deposits6,880,457    6,505,615    
Other liabilitiesOther liabilities388,162    252,465    Other liabilities404,893    356,271    
Total liabilitiesTotal liabilities24,096,172    22,449,670    Total liabilities24,587,062    22,720,447    
Common equityCommon equity4,260,810    4,011,856    Common equity4,257,711    4,091,174    
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$28,356,982    $26,461,526    Total liabilities and shareholders' equity$28,844,773    $26,811,621    
NET INTEREST INCOMENET INTEREST INCOME$229,332   $241,839   NET INTEREST INCOME$218,867   $238,151   
NET INTEREST SPREADNET INTEREST SPREAD 3.19 % 3.77 %NET INTEREST SPREAD 3.04 % 3.65 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)3.63 %4.09 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)
3.41 %4.03 %
(1)Non-accrual loans and leases are included in the average balance.   
(2)Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $359,000$332,000 for the three months ended September 30, 2019,March 31, 2020, as compared to $471,000$466,000 for the same period in 2018. 2019. 

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(dollars in thousands)Nine Months Ended
 September 30, 2019September 30, 2018
 Average BalanceInterest Income or ExpenseAverage Yields or RatesAverage BalanceInterest Income or ExpenseAverage Yields or Rates
INTEREST-EARNING ASSETS:      
Loans held for sale$260,600  $10,069  5.15 %$304,912  $11,002  4.81 %
Loans and leases (1)20,724,820  778,899  5.02 %19,397,476  707,019  4.87 %
Taxable securities2,696,001  44,479  2.20 %2,734,443  50,083  2.44 %
Non-taxable securities (2)270,461  6,991  3.45 %281,538  7,697  3.65 %
Temporary investments and interest bearing cash567,709  9,837  2.32 %441,067  6,044  1.83 %
Total interest-earning assets24,519,591  $850,275  4.63 %23,159,436  $781,845  4.51 %
Other assets3,112,041    2,896,043    
Total assets$27,631,632    $26,055,479    
INTEREST-BEARING LIABILITIES:      
Interest-bearing demand deposits$2,338,787  $8,555  0.49 %$2,338,396  $5,016  0.29 %
Money market deposits6,702,551  42,943  0.86 %6,460,770  18,429  0.38 %
Savings deposits1,468,449  1,237  0.11 %1,467,866  866  0.08 %
Time deposits4,381,484  70,826  2.16 %3,446,181  38,250  1.48 %
Total interest-bearing deposits14,891,271  123,561  1.11 %13,713,213  62,561  0.61 %
Repurchase agreements and federal funds purchased325,281  1,661  0.68 %288,751  321  0.15 %
Borrowings852,659  12,484  1.96 %796,991  10,278  1.72 %
Junior subordinated debentures378,816  17,520  6.18 %370,093  15,972  5.77 %
Total interest-bearing liabilities16,448,027  $155,226  1.26 %15,169,048  $89,132  0.79 %
Non-interest-bearing deposits6,648,638    6,655,431    
Other liabilities365,959    239,227    
Total liabilities23,462,624    22,063,706    
Common equity4,169,008    3,991,773    
Total liabilities and shareholders' equity$27,631,632    $26,055,479    
NET INTEREST INCOME$695,049   $692,713   
NET INTEREST SPREAD 3.37 %  3.72 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)  3.78 %  4.00 %
(1)Non-accrual loans and leases are included in the average balance.   
(2)Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $1.2 million for the nine months ended September 30, 2019, as compared to $1.5 million for the same period in 2018. 

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The following tables settable sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for the three and nine months ended September 30, 2019March 31, 2020 as compared to the same periodsperiod in 2018.2019. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances. 
 
 (in thousands)
Three Months Ended September 30,
 2019 compared to 2018
 Increase (decrease) in interest income and expense due to changes in
 VolumeRateTotal
INTEREST-EARNING ASSETS:   
Loans held for sale$101  $(368) $(267) 
Loans and leases18,071  1,897  19,968  
Taxable securities(363) (11,476) (11,839) 
Non-taxable securities (1)
(225) (208) (433) 
Temporary investments and interest bearing cash1,088  316  1,404  
     Total (1)
18,672  (9,839) 8,833  
INTEREST-BEARING LIABILITIES:   
Interest bearing demand deposits(5) 881  876  
Money market deposits1,008  8,747  9,755  
Savings deposits(7) 112  105  
Time deposits2,799  6,649  9,448  
Repurchase agreements13  332  345  
Borrowings337  462  799  
Junior subordinated debentures(63) 75  12  
Total4,082  17,258  21,340  
Net increase (decrease) in net interest income (1)$14,590  $(27,097) $(12,507) 


Three Months Ended March 31,
 2020 compared to 2019
 Increase (decrease) in interest income and expense due to changes in
  (in thousands)
VolumeRateTotal
INTEREST-EARNING ASSETS:   
Loans held for sale$2,470  $(996) $1,474  
Loans and leases10,140  (24,368) (14,228) 
Taxable securities20  (3,210) (3,190) 
Non-taxable securities (1)
(386) (300) (686) 
Temporary investments and interest bearing cash3,072  (666) 2,406  
Total interest-earning assets (1)
15,316  (29,540) (14,224) 
INTEREST-BEARING LIABILITIES:   
Interest bearing demand deposits188  715  903  
Money market deposits1,273  (531) 742  
Savings deposits—  (29) (29) 
Time deposits2,842  1,738  4,580  
Repurchase agreements(219) (196) (415) 
Borrowings530  (167) 363  
Junior subordinated debentures(384) (700) (1,084) 
Total interest-bearing liabilities4,230  830  5,060  
Net increase (decrease) in net interest income (1)
$11,086  $(30,370) $(19,284) 
(1)Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.
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(in thousands)Nine Months Ended September 30,
 2019 compared to 2018
 Increase (decrease) in interest income and expense due to changes in
 VolumeRateTotal
INTEREST-EARNING ASSETS:   
Loans held for sale$(1,673) $740  $(933) 
Loans and leases49,402  22,478  71,880  
Taxable securities(695) (4,909) (5,604) 
Non-taxable securities (1)
(296) (410) (706) 
Temporary investments and interest bearing cash1,975  1,818  3,793  
     Total (1)
48,713  19,717  68,430  
INTEREST-BEARING LIABILITIES:   
Interest bearing demand deposits 3,538  3,539  
Money market715  23,799  24,514  
Savings—  371  371  
Time deposits12,148  20,428  32,576  
Repurchase agreements387  953  1,340  
Borrowings751  1,455  2,206  
Junior subordinated debentures383  1,165  1,548  
Total14,385  51,709  66,094  
Net increase in net interest income (1)
$34,328  $(31,992) $2,336  

(1)Tax exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.

Provision for Loan and LeaseCredit Losses 
 
The provision for credit losses was $118.1 million for the three months ended March 31, 2020, as compared to $13.8 million (which includes both the provision for loan and lease losses was $23.2 million and $56.3 million, respectively,the provision for reserve for unfunded commitments) for the three and nine months ended September 30, 2019, as compared to $11.7 million and $38.7 million, respectively, for the three and nine months ended September 30, 2018.March 31, 2019. The increase in the provision for the three and nine months ended September 30, 2019March 31, 2020 as compared to the same prior year periodsperiod is primarily attributable to growth ineconomic forecasts related to the loanCOVID-19 global pandemic and lease portfolio, as well as an increase in net charge-offs. As an annualized percentage of average outstanding loans and leases, the provision for loan and leasecredit losses recorded for the three and nine months ended September 30, 2019March 31, 2020 was 0.44% and 0.36%, respectively,2.24% as compared to 0.24% and 0.27% for the same periodsperiod in 2018.2019. 
 
For the three and nine months ended September 30, 2019,March 31, 2020, net charge-offs were $18.0$21.7 million and $44.8 million, respectively, or 0.34% and 0.29%, respectively,0.41% of average loans and leases (annualized), as compared to $12.2$13.7 million and $35.3 million, respectively, or 0.25% and 0.24%, respectively,0.27% of average loans and leases (annualized), for the three and nine months ended September 30, 2018.March 31, 2019. The majority ofincrease in net charge-offs relatefor the quarter was primarily due to losses realized in the leasea single charge-off on a syndicated national credit to a regional air transportation lessor whose financial conditions and equipment finance portfolio, which is included in the commercial loan portfolio.prospects were adversely impacted by COVID-19.

The Company recognizes the charge-off of impairment reserves on impairedTypically, loans in a non-accrual status will not have an allowance for credit loss as they will be written down to their net realizable value or charged-off. However, the periodnet realizable value for homogeneous leases and equipment financing are determined by the loss given default calculated by the CECL model, and therefore homogenous leases and equipment financing on non-accrual will have an allowance for credit loss amount until they arise for collateral-dependent loans.become 181 days past due, at which time they are charged-off. Therefore, the non-accrual loans of $31.6$39.1 million as of September 30, 2019March 31, 2020 have beena related allowance for credit losses of $11.6 million, with the remaining loans written-down to their estimated fair value, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices. 

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Non-Interest Income 
 
Non-interest income for the three and nine months ended September 30, 2019March 31, 2020 was $88.5$40.6 million, and $256.1a decrease of $5.1 million respectively, an increase of $16.1 million and $33.5 million, respectively, or 22% and 15%, respectively,11% as compared to the same periodsperiod in 2018.2019. The following table presents the key components of non-interest income for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 
(in thousands)Three Months EndedNine Months Ended
 September 30,September 30,
 20192018Change AmountChange Percent20192018Change AmountChange Percent
Service charges on deposits$16,627  $15,574  $1,053  %$47,858  $46,089  $1,769  %
Brokerage revenue4,060  3,947  113  %11,850  12,302  (452) (4)%
Residential mortgage banking revenue, net47,000  31,484  15,516  49 %67,760  103,085  (35,325) (34)%
(Loss) gain on sale of debt securities, net—  —  —  nm  (7,186) 14  (7,200) nm  
Gain (loss) on equity securities, net257  (462) 719  (156)%83,559  (1,894) 85,453  nm  
Gain on loan and lease sales, net1,762  2,772  (1,010) (36)%5,864  5,350  514  10 %
BOLI income2,067  2,051  16  %6,328  6,181  147  %
Other income16,739  17,022  (283) (2)%40,042  51,479  (11,437) (22)%
Total$88,512  $72,388  $16,124  22 %$256,075  $222,606  $33,469  15 %
nm = Not meaningful
2019: 
Service charges on deposits for the three and nine months ended September 30, 2019, increased $1.1 million and $1.8 million, respectively, due to an increase in analyzed account fees during the periods.

The loss on sale of debt securities for the nine months ended September 30, 2019, increased $7.2 million as compared to the same period of the prior year, due to a strategic restructuring of our available for sale debt securities portfolio to reduce interest rate sensitivity for a potentially decreasing interest rate environment, increase operational efficiency, and improve the cash liquidity position of the Company.

Gain on equity securities for the nine months ended September 30, 2019, compared to the same period in the prior year increased due primarily to the one-time gain on sale of all of the owned shares of Visa Inc. Class B common stock held by the Company during the second quarter.

The fluctuations in the gain on loan and lease sales for the three and nine months ended September 30, 2019, are due to changes in the mix and volume of loans sold during the periods.
Three Months Ended
 March 31,
 (in thousands)20202019Change AmountChange Percent
Service charges on deposits$15,638  $15,278  $360  %
Brokerage revenue4,015  3,810  205  %
Residential mortgage banking revenue, net17,540  11,231  6,309  56 %
Loss on sale of debt securities, net(133) —  (133) nm  
Gain on equity securities, net814  695  119  17 %
Gain on loan and lease sales, net1,167  769  398  52 %
BOLI income2,129  2,168  (39) (2)%
Other (expense) income(525) 11,789  (12,314) (104)%
Total non-interest income$40,645  $45,740  $(5,095) (11)%
nm = Not meaningful

Other income for the ninethree months ended September 30, 2019March 31, 2020 compared to the same period in the prior year decreased by $11.4$12.3 million. The decrease was primarily related to a decline inloss on the swap derivative fair value and other derivative related incomeof $14.3 million attributable to the decrease in short and long-term interest rates during the period, as wellcompared to a loss of $2.5 million in the prior year.

Residential mortgage banking revenue for the three months ended March 31, 2020, as a decreasecompared to the same period of debt capital market swap fee revenue of $1.5 million2019, increased by $6.3 million. The increase for the three month period was primarily driven by an increase in originations during the periods due to lower interest rates, offset by a higher loss on fair value of the timingMSR asset of production.
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Table$30.7 million as compared to a loss on fair value of Contents
$14.0 million for the same period in 2019. In addition, the closed loans for sale volume for the three months ended March 31, 2020, increased 136% and the gain on sale margin increased 48 basis points to 3.43%, compared to 2.95% in the same period of the prior year. The following table presents our residential mortgage banking revenues for the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019: 


Three Months Ended
(in thousands)
(in thousands)
Three Months EndedNine Months Ended(in thousands)March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Origination and saleOrigination and sale$31,432  $20,983  $68,956  $71,979  Origination and sale$39,347  $14,373  
ServicingServicing11,358  10,302  33,218  31,231  Servicing8,880  10,824  
Change in fair value of MSR asset:Change in fair value of MSR asset:Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over timeChanges due to collection/realization of expected cash flows over time(6,835) (6,007) (20,171) (18,108) Changes due to collection/realization of expected cash flows over time(5,329) (6,431) 
Changes in valuation inputs or assumptions (1)
Changes in valuation inputs or assumptions (1)
11,045  6,206  (14,243) 17,983  
Changes in valuation inputs or assumptions (1)
(25,358) (7,535) 
Balance, end of periodBalance, end of period$47,000  $31,484  $67,760  $103,085  Balance, end of period$17,540  $11,231  
(1)The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.

Residential mortgage banking revenue for the three and nine months ended September 30, 2019, as compared to the same periods of 2018 increased by $15.5 million and decreased by $35.3 million, respectively. The increase for the three month period was primarily driven by a higher gain on fair value of the MSR asset of $4.2 million as compared to a gain on fair value of $199,000 for the same period in 2018, as well as increased originations during the period. The gain on fair value of the MSR asset was driven by the $7.8 million fair value gain recorded for the portion of mortgage servicing rights held for sale at the end of the quarter. In addition, the closed loans for sale volume for the three months ended September 30, 2019, increased 21% and the gain on sale margin increased to 3.72%, compared to 2.77% in the same period of the prior year.

The decrease for the nine months ended September 30, 2019, was the result of a higher loss on fair value of the MSR asset of $34.4 million as compared to a loss on fair value of $125,000 for the same period in 2018. This decrease was due to decreased interest rates during the nine months ended September 30, 2019 which caused prepayment speeds to rise as well as changes to inputs and assumptions in the valuation model. The closed loans for sale volume for the nine months ended September 30, 2019, decreased 11%, which was offset by the gain on sale margin increasing to 3.40%, compared to 3.15% in the same period of the prior year.


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Non-Interest Expense 
 
Non-interest expense for the three months ended September 30, 2019March 31, 2020 was $183.6 million,$2.0 billion, an increase of $4.3 million$1.8 billion or 2%1,044% as compared to the same period in 2018. Non-interest2019. Excluding the goodwill impairment, non-interest expense for the nine months ended September 30, 2019 was $535.6increased $6.1 million a decrease of $25.4 million or 5% as compared toover the same period in 2018.the prior year. The following table presents the key elements of non-interest expense for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019: 
Three Months Ended
 March 31,
 (in thousands)20202019Change AmountChange Percent
Salaries and employee benefits$109,774  $100,658  $9,116  %
Occupancy and equipment, net37,001  36,245  756  %
Communications3,128  4,220  (1,092) (26)%
Marketing2,530  2,726  (196) (7)%
Services10,770  12,210  (1,440) (12)%
FDIC assessments2,542  2,942  (400) (14)%
Intangible amortization1,247  1,404  (157) (11)%
Other expenses10,730  11,187  (457) (4)%
Non-interest expense before goodwill impairment177,722  171,592  6,130  %
Goodwill impairment1,784,936  —  1,784,936  nm  
Total non-interest expense$1,962,658  $171,592  $1,791,066  1,044 %
nm = Not meaningful

(in thousands)Three Months EndedNine Months Ended
 September 30,September 30,
 20192018Change AmountChange Percent20192018Change AmountChange Percent
Salaries and employee benefits$106,819  $103,575  $3,244  %$311,526  $323,466  $(11,940) (4)%
Occupancy and equipment, net35,446  36,530  (1,084) (3)%107,723  112,775  (5,052) (4)%
Communications3,617  4,165  (548) (13)%11,743  13,045  (1,302) (10)%
Marketing3,804  3,969  (165) (4)%10,842  8,857  1,985  22 %
Services15,326  14,794  532  %40,763  46,482  (5,719) (12)%
FDIC assessments2,587  4,303  (1,716) (40)%8,366  13,475  (5,109) (38)%
Loss (gain) on other real estate owned, net1,188  (128) 1,316  nm  3,815  (258) 4,073  nm  
Intangible amortization1,405  1,541  (136) (9)%4,214  4,624  (410) (9)%
Other expenses13,398  10,543  2,855  27 %36,605  38,511  (1,906) (5)%
Total$183,590  $179,292  $4,298  %$535,597  $560,977  $(25,380) (5)%
nm = Not meaningful
Goodwill impairment of $1.8 billion was recorded for the three months ended March 31, 2020 due to an interim impairment analysis triggered by the decline in interest rates and economic impacts of COVID-19, as well as declines in the Company's stock price. The impairment was a result of market volatility and forecasts for a prolonged low interest rate environment, as well as estimated higher credit losses expected due to the economic downturn.

Salaries and employee benefits increased by $3.2$9.1 million for the three months ended September 30, 2019 and decreased by $11.9 million for the nine months ended September 30, 2019,March 31, 2020 as compared to the same periodsperiod in the prior year. The increase in salaries and employee benefits for the three months ended September 30, 2019,March 31, 2020, is primarily related to an increase in home lending compensation of $8.1 million related to higher mortgage banking related expenses, due to increased originationsorigination volumes during the period. The decrease in salaries and employee benefits for the nine months ended September 30, 2019, is primarily related to lower compensation, payroll taxes, and employee severance, resulting from the Company's operational efficiency initiatives in 2018, as well as lower group insurance rates during the period offset by the increase in mortgage banking related expenses.

Occupancy and equipment expense decreased by $1.1 million and $5.1 million, respectively, for the three and nine months ended September 30, 2019, as compared to the same periods in the prior year resulting from the reduction in the number of store locations.

Communications expense decreased by $548,000 and $1.3$1.1 million respectively, for the three and nine months ended September 30, 2019,March 31, 2020, as compared to the same period in the prior year due to a decrease in data processing costs during the periodsperiod as the Company has executed on its operational expenditureoperating expense initiatives, including improved procurement and contract renegotiation, as well as fewer stores in the footprint.

MarketingServices expense increaseddecreased by $2.0$1.4 million for the ninethree months ended September 30, 2019,March 31, 2020, as compared to the same period in the prior year dueyear. The decrease primarily relates to the marketing effortslower consulting fees related to drive our strategic initiatives, including to gain traction with wholesale and middle-market customers and to promote our Go-To app, as well as digital marketing for new customers.

Services expense decreased by $5.7 million for the nine months ended September 30, 2019, as compared toconsulting fees in the same period inof the prior year primarily related to lower consulting fees to assist with the identification and implementation of organizational simplification andoperational efficiencies that did not recur in the same periodfirst quarter of the prior year.

FDIC assessments decreased by $1.7 million and $5.1 million for the three and nine months ended September 30, 2019,2020. In addition, current consulting engagements have been put on hold in some cases due to the discontinuation of the large-institution surcharge that had been included in the assessment in the prior periods.

The loss on other real estate owned for both the three and nine months ended September 30, 2019, was due to a valuation adjustment and subsequent loss on the sale of one property.

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Other non-interest expense increased by $2.9 million for the three months ended September 30, 2019 and decreased by $1.9 million for the nine months ended September 30, 2019, as compared to the same periods in the prior year. The increase for the three months ended September 30, 2019 isCOVID-19 related to an increase in exit and disposal costs as well as state and local business taxes paid during the three months ended September 30, 2019. The decrease for the nine months ended September 30, 2019 is primarily related to a decrease in exit and disposal costs as the Company consolidated 16 stores and sold 4 in the nine months ended September 30, 2019 as compared to the 31 stores consolidated in 2018.stay-home orders.

Income Taxes 
 
The Company's consolidated effective tax rate as a percentage of pre-tax incomeloss for the three and nine months ended September 30, 2019,March 31, 2020, was 23.6% and 24.5%,(1.7)% as compared to 25.9% and 24.9%the percentage of pre-tax income of 24.6% for the three and nine months ended September 30, 2018.March 31, 2019. The effective tax rate for the three months ended March 31, 2020, became negative primarily due to the impairment of non-deductible goodwill. Additionally, the effective tax rates differed from the statutory rate principally because of state taxes, the relative amount of income earned in each state jurisdiction, non-taxable income arising from bank-owned life insurance, income on tax-exempt investment securities, non-deductible FDIC premiums and tax credits arising from low income housing investments.

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FINANCIAL CONDITION 
 
Cash and Cash Equivalents

Cash and cash equivalents were $1.7 billion at March 31, 2020, compared to $1.4 billion at December 31, 2019. The increase is mainly in interest bearing cash and temporary investments and reflects management's strategy to adopt an elevated on-balance sheet, high quality liquid asset position to enhance liquidity flexibility given market volatility and uncertainty as a result of COVID-19.

Investment Securities 
 
Equity and other securities were $64.8$80.8 million at September 30, 2019,March 31, 2020, up from $61.8$80.2 million at December 31, 2018.2019.
 
Investment debt securities available for sale were $2.8$2.9 billion as of September 30, 2019,March 31, 2020, compared to $3.0$2.8 billion at December 31, 2018.2019.  The decreaseincrease was due to sales and paydowns of $778.3 million, partially offset by purchases of $563.6$140.4 million of investment securities as well as an increase of $107.6 million in fair value of investment securities available for sale.sale, partially offset by sales and paydowns of $168.9 million.
 
The following tables present the available for sale and held to maturity investment debt securities portfolio by major type as of September 30, 2019March 31, 2020 and December 31, 2018: 2019: 
Investment Securities Available for Sale
 March 31, 2020December 31, 2019
 (dollars in thousands)Fair Value%Fair Value%
U.S. Treasury and agencies$750,512  26 %$643,604  23 %
Obligations of states and political subdivisions252,419  %261,094  %
Residential mortgage-backed securities and collateralized mortgage obligations1,887,544  65 %1,909,984  68 %
Total available for sale securities$2,890,475  100 %$2,814,682  100 %

(dollars in thousands)Investment Securities Available for Sale
 September 30, 2019December 31, 2018
 Fair Value%Fair Value%
U.S. Treasury and agencies$587,200  21 %$39,656  %
Obligations of states and political subdivisions269,030  %309,171  10 %
Residential mortgage-backed securities and collateralized mortgage obligations1,985,846  70 %2,628,281  89 %
Total$2,842,076  100 %$2,977,108  100 %

Investment Securities Held to Maturity
March 31, 2020December 31, 2019
(dollars in thousands)(dollars in thousands)Investment Securities Held to Maturity (dollars in thousands)Amortized
Cost
%Amortized
Cost
%
September 30, 2019December 31, 2018
Amortized
Cost
%Amortized
Cost
%
Residential mortgage-backed securities and collateralized mortgage obligationsResidential mortgage-backed securities and collateralized mortgage obligations$3,320  100 %$3,606  100 %Residential mortgage-backed securities and collateralized mortgage obligations$3,200  100 %$3,260  100 %
Total$3,320  100 %$3,606  100 %
Total held to maturity securitiesTotal held to maturity securities$3,200  100 %$3,260  100 %
 
 
We review investment securities on an ongoing basis for the presence of other-than-temporary impairment or permanent impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors.   

In June 2019, the Company completed a strategic restructuring of a portion of the available for sale debt securities portfolio. This restructuring resulted in the sale of certain securities at a gross loss of $7.3 million. This was a tactical effort to reduce interest rate sensitivity for a potentially decreasing interest rate environment and improve the cash liquidity position of the Company. The sales were primarily residential mortgage-backed securities and collateralized mortgage obligations and the purchases were non-callable agency bonds. The transaction resulted in an increased duration of the overall investment securities portfolio and a reduction in the portion of investments subject to prepayment.
 
Gross unrealized losses in the available for sale investment portfolio were $5.2 million$322,000 at September 30, 2019.March 31, 2020.  This consisted primarily of unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations of $4.9 million.$307,000. The unrealized losses were attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no allowance for credit losses was considered necessary on these securities are considered only temporarily impaired due to these changes in market interest rates.as of March 31, 2020.

Restricted Equity Securities 
 
Restricted equity securities were $54.5$58.1 million at September 30, 2019March 31, 2020 and $40.3$46.5 million at December 31, 2018,2019, the majority of which represents the Bank's investment in the FHLB of Des Moines. The increase is attributable to purchases of FHLB stock during the period due to additional borrowing activity. FHLB stock is carried at par and does not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions and can only be purchased and redeemed at par. 

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Loans and Leases
 
Total loans and leases outstanding at September 30, 2019March 31, 2020 were $21.5$21.3 billion, an increase of $1.1 billion$55.8 million as compared to December 31, 2018.2019. The increase is attributable to net new loan and lease originations of $1.2 billion,$109.5 million, partially offset by loans sold of $82.9$20.9 million, net charge-offs of $21.7 million, and charge-offstransfers to loans held for sale of $57.0$10.2 million.

The following table presents the concentration distribution of the loan and lease portfolio, net of deferred fees and costs, as of September 30, 2019March 31, 2020 and December 31, 2018.2019:

March 31, 2020December 31, 2019
  (dollars in thousands)
AmountPercentageAmountPercentage
Commercial real estate    
Non-owner occupied term, net$3,613,420  17 %$3,545,566  17 %
Owner occupied term, net2,472,187  12 %2,496,088  12 %
Multifamily, net3,464,217  16 %3,514,774  16 %
Construction & development, net667,975  %678,740  %
Residential development, net187,594  %189,010  %
Commercial  
Term, net2,317,573  11 %2,232,817  10 %
Lines of credit & other, net1,208,051  %1,212,393  %
Leases & equipment finance, net1,492,762  %1,465,489  %
Residential  
Mortgage, net4,193,908  20 %4,215,424  20 %
Home equity loans & lines, net1,249,152  %1,237,512  %
Consumer & other, net384,639  %407,871  %
Total, net of deferred fees and costs$21,251,478  100 %$21,195,684  100 %

 (dollars in thousands)
September 30, 2019December 31, 2018
 AmountPercentageAmountPercentage
Commercial real estate    
Non-owner occupied term, net$3,495,555  16.2 %$3,573,065  17.5 %
Owner occupied term, net2,566,299  11.9 %2,480,371  12.1 %
Multifamily, net3,479,986  16.2 %3,304,763  16.2 %
Construction & development, net771,214  3.6 %736,254  3.6 %
Residential development, net191,500  0.9 %196,890  1.0 %
Commercial  
Term, net2,310,759  10.8 %2,232,923  10.9 %
Lines of credit & other, net1,254,755  5.8 %1,169,525  5.7 %
Leases & equipment finance, net1,485,753  6.9 %1,330,155  6.5 %
Residential  
Mortgage, net4,245,674  19.7 %3,635,073  17.8 %
Home equity loans & lines, net1,224,578  5.7 %1,176,477  5.8 %
Consumer & other, net494,721  2.3 %587,170  2.9 %
Total, net of deferred fees and costs$21,520,794  100.0 %$20,422,666  100.0 %
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Asset Quality and Non-Performing Assets 

The following table summarizes our non-performing assets and restructured loans as of September 30, 2019March 31, 2020 and December 31, 2018:2019:   
(dollars in thousands)
(dollars in thousands)
September 30, 2019December 31, 2018
(dollars in thousands)
March 31, 2020December 31, 2019
Loans and leases on non-accrual statusLoans and leases on non-accrual status$31,636  $50,823  Loans and leases on non-accrual status$39,128  $26,244  
Loans and leases past due 90 days or more and accruing (1)
Loans and leases past due 90 days or more and accruing (1)
35,745  36,444  
Loans and leases past due 90 days or more and accruing (1)
47,185  37,969  
Total non-performing loans and leasesTotal non-performing loans and leases67,381  87,267  Total non-performing loans and leases86,313  64,213  
Other real estate ownedOther real estate owned4,026  10,958  Other real estate owned3,020  3,295  
Total non-performing assetsTotal non-performing assets$71,407  $98,225  Total non-performing assets$89,333  $67,508  
Restructured loans (2)
Restructured loans (2)
$14,309  $13,924  
Restructured loans (2)
$20,541  $18,576  
Allowance for loan and lease losses$156,288  $144,871  
Allowance credit losses on loans and leasesAllowance credit losses on loans and leases$291,420  $157,629  
Reserve for unfunded commitmentsReserve for unfunded commitments5,085  4,523  Reserve for unfunded commitments20,927  5,106  
Allowance for credit lossesAllowance for credit losses$161,373  $149,394  Allowance for credit losses$312,347  $162,735  
Asset quality ratios:Asset quality ratios:  Asset quality ratios:  
Non-performing assets to total assetsNon-performing assets to total assets0.25 %0.36 %Non-performing assets to total assets0.32 %0.23 %
Non-performing loans and leases to total loans and leasesNon-performing loans and leases to total loans and leases0.31 %0.43 %Non-performing loans and leases to total loans and leases0.41 %0.30 %
Allowance for loan and leases losses to total loans and leases0.73 %0.71 %
Allowance for credit losses on loans and leases to total loans and leasesAllowance for credit losses on loans and leases to total loans and leases1.37 %0.74 %
Allowance for credit losses to total loans and leasesAllowance for credit losses to total loans and leases0.75 %0.73 %Allowance for credit losses to total loans and leases1.47 %0.77 %
Allowance for credit losses to total non-performing loans and leasesAllowance for credit losses to total non-performing loans and leases239 %171 %Allowance for credit losses to total non-performing loans and leases362 %253 %
(1)Excludes government guaranteed GNMA mortgage loans that Umpqua has the right but not the obligation to repurchase that are past due 90 days or more totaling $5.2$5.3 million and $8.9$4.3 million at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
(2)Represents accruing restructured loans performing according to their restructured terms. 

The purchased non-credit impaired loans had remaining discount that is expected to accrete into interest income over the life of the loans of $16.6 million and $24.7 million, as of September 30, 2019At March 31, 2020 and December 31, 2018, respectively. The purchased credit impaired loan pools had remaining discounts2019, troubled debt restructurings of $20.5 million and $24.9 million, as of September 30, 2019 and December 31, 2018, respectively.

Loans acquired with deteriorated credit quality are accounted for as purchased credit impaired pools. Typically, this would include loans that were considered non-performing or restructured as of acquisition date. Accordingly, subsequent to acquisition, loans included in the purchased credit impaired pools are not reported as non-performing loans based upon their individual performance status, so the categories of nonaccrual, impaired and 90 days past due and accruing do not include any purchased credit impaired loans.

At September 30, 2019 and December 31, 2018, impaired loans of $14.3 million and $13.9$18.6 million, respectively, were classified as performingaccruing restructured loans. The restructurings were granted in response to borrower financial difficulty, and generally provide for a temporary modification of loan repayment terms. In order for a new restructured loan to be considered performing and on accrual status, the loan's collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan must be current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow.
  
A further decline in the economic conditions due to the COVID-19 global pandemic as well as in our general market areas or other factors could adversely impact individual borrowers or the loan portfolio in general. Accordingly, there can be no assurance that loans will not become 90 days or more past due, become impaired or placed on non-accrual status, restructured or transferred to other real estate owned in the future. Umpqua is committed to helping borrowers during this unprecedented time of uncertainty and is working with customers on payment deferrals and other loan modifications.

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Allowance for Loan and LeaseCredit Losses and Reserve for Unfunded Commitments 
 
The ALLLACL totaled $156.3$291.4 million at September 30, 2019,March 31, 2020, an increase of $11.4$133.8 million from $144.9$157.6 million at December 31, 2018.2019. The following table shows the activity in the ALLLACL for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019: 

Three Months Ended
(dollars in thousands)March 31, 2020March 31, 2019
Allowance for credit losses
Beginning allowance for credit losses for loans and leases$157,629  $144,871  
Beginning reserve for unfunded commitments5,106  4,523  
Beginning allowance for credit losses162,735  149,394  
Impact of adoption of CECL53,237  —  
Provision for credit losses (1)
118,085  13,815  
Loans charged-off:  
Charge-offs(24,455) (17,152) 
Recoveries2,745  3,469  
Net charge-offs(21,710) (13,683) 
Ending allowance for credit losses for loans and leases291,420  144,872  
Ending reserve for unfunded commitments20,927  4,654  
Ending allowance for credit losses$312,347  $149,526  
As a percentage of average loans and leases (annualized):
Net charge-offs0.41 %0.27 %
Provision for credit losses2.24 %0.27 %
Recoveries as a percentage of charge-offs11.22 %20.23 %
(1) For comparability, the provision for credit losses includes both the provision for loan and lease losses and the provision for unfunded commitments in prior periods.

 (dollars in thousands)
Three Months EndedNine Months Ended
 September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Balance, beginning of period$151,069  $144,556  $144,871  $140,608  
Loans charged-off:    
Charge-offs(23,112) (15,896) (56,971) (46,523) 
Recoveries5,104  3,655  12,125  11,255  
Net charge-offs(18,008) (12,241) (44,846) (35,268) 
Provision for loan and lease losses23,227  11,711  56,263  38,686  
Balance, end of period$156,288  $144,026  $156,288  $144,026  
As a percentage of average loans and leases (annualized):
Net charge-offs0.34 %0.25 %0.29 %0.24 %
Provision for loan and lease losses0.44 %0.24 %0.36 %0.27 %
Recoveries as a percentage of charge-offs22.08 %22.99 %21.28 %24.19 %
With the adoption of CECL, we recorded a one-time cumulative-effect pre-tax adjustment in the amount of $53.2 million. The allowance for credit losses on loans and leases increased by $50.0 million and the allowance for unfunded commitments increased by $3.2 million, resulting in a January 1, 2020, or day 1, balance of the Allowance for Credit Losses of $216.0 million.

The increase in allowanceprovision for credit losses was $118.1 million for the three months ended March 31, 2020, which includes both the provision for loan and lease losses as of September 30,well as the provision for unfunded commitments. The increase from $13.8 million for the three months ended March 31, 2019, comparedwas principally attributable to the same periodCOVID-19 pandemic and its impact on the forecasts used to determine the expected credit losses of the prior year was primarily attributable to growth in the loan and lease portfolio. Additional discussion on the change in provision for loan and lease losses is provided under the heading Provision for Loan and LeaseLosses above.
 
The following table sets forth the allocation of the allowance for loancredit losses on loans and lease lossesleases and percent of loans in each category to total loans and leases as of September 30, 2019March 31, 2020 and December 31, 2018: 2019: 
March 31, 2020December 31, 2019
 (dollars in thousands)Amount% Loans to total loansAmount% Loans to total loans
Commercial real estate$99,778  49 %$50,847  49 %
Commercial146,607  23 %73,820  23 %
Residential34,251  26 %24,714  26 %
Consumer & other10,784  %8,248  %
Allowance for credit losses on loans and leases$291,420   $157,629   

(dollars in thousands)September 30, 2019December 31, 2018
 Amount% Loans to total loansAmount% Loans to total loans
Commercial real estate$51,201  48.8 %$47,904  50.4 %
Commercial70,956  23.5 %63,957  23.1 %
Residential24,556  25.4 %22,034  23.6 %
Consumer & other9,575  2.3 %10,976  2.9 %
Allowance for loan and lease losses$156,288   $144,871   
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At September 30, 2019,To calculate the recorded investment in loans classified as impaired totaled $25.7 million, withACL, the models use a corresponding valuation allowance (included inforecast of future economic conditions and are dependent upon specific macroeconomic variables that are relevant to each of the allowance forBank's loan and lease losses) of $198,000.  The valuation allowance on impaired loans representsportfolios. As such, the impairment reserves on performing current and former restructured loans and nonaccrual loans. At December 31, 2018, the total recorded investment in impaired loans was $42.3 million, with a corresponding valuation allowance (includedeconomic variables in the allowancemodels we use to determine the ACL could result in volatility as these assumptions change over time. In addition, the forward looking assumptions revert to historical data when they reach the point where future assumptions are no longer estimated. The below table displays several of the key economic assumptions used in the credit loss models for loanJanuary 1, 2020 (used to determine the day 1 adjustment) and lease losses) of $180,000.  March 31, 2020 (used to determine the first quarter provision), which are pre and post COVID-19 and its related economic impacts.
UnitsFirst Quarter 2020Second Quarter 2020Third Quarter 2020Fourth Quarter 20202020202120222023
Change in Gross Domestic Product
January 1, 2020% AR0.91.91.81.81.61.81.81.8
March 31, 2020% AR-2.5-18.310.92.4-2.22.74.73.4
Unemployment Rate
January 1, 2020%3.63.73.83.83.73.944.2
March 31, 2020%3.88.76.36.56.36.65.24.3
Median Existing-Home Price
January 1, 2020$ 000s277.7279.6281.5283.6280.6289297.8307.1
March 31, 2020$ 000s284.3284.3281.7277.6282280.1293.6309.8
Consumer Price Index
January 1, 2020% AR1.922.61.622.122
March 31, 2020% AR0.7-4.33.120.72.82.72.4
Treasury Yield: 10-Yr Bond
January 1, 2020%1.681.731.81.821.762.032.362.67
March 31, 2020%1.30.420.630.770.781.392.263.09
S&P 500
January 1, 20201941=13047.33077.63103.53134.83090.83212.43344.73469
March 31, 20201941=13103.22625.42472.12410.52652.82704.63101.63254.6
CRE Price Index
January 1, 2020index306.2307.3308.4309.3309.3312.7318.1326.3
March 31, 2020index309.7287.2271.4265.5265.5284.7318.3340.2

We believe that the allowance for loan and leasecredit losses and the reserve for unfunded commitments at September 30, 2019 areMarch 31, 2020 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available. This assessment, based in part on historical levels of net charge-offs, loan and lease growth, and a detailed review ofIf the quality ofeconomic conditions continue to decline, the loan and lease portfolio, involves uncertainty and judgment. Therefore, the adequacy of the ALLL and RUC cannot be determined with precision andBank may be subject to changeneed additional provisions for credit losses in future periods. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require additional charges to the provision for loan and lease losses in future periods if warranted as a result of their review.
 
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Residential Mortgage Servicing Rights 
 
The following table presents the key elements ofchanges in our residential mortgage servicing rights portfolio for the three and nine months ended September 30, 2019March 31, 2020 and 2018: 2019: 

Three Months Ended
(in thousands)
(in thousands)
Three Months EndedNine Months Ended
(in thousands)
March 31, 2020March 31, 2019
September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Balance, beginning of periodBalance, beginning of period$139,780  $166,217  $169,025  $153,151  Balance, beginning of period$115,010  $169,025  
Additions for new MSR capitalizedAdditions for new MSR capitalized7,393  8,622  16,772  22,012  Additions for new MSR capitalized10,023  3,887  
Changes in fair value:Changes in fair value:Changes in fair value:
Changes due to collection/realization of expected cash flows over timeChanges due to collection/realization of expected cash flows over time(6,835) (6,007) (20,171) (18,108) Changes due to collection/realization of expected cash flows over time(5,329) (6,431) 
Changes due to valuation inputs or assumptions (1)
Changes due to valuation inputs or assumptions (1)
11,045  6,206  (14,243) 17,983  
Changes due to valuation inputs or assumptions (1)
(25,358) (7,535) 
Balance, end of periodBalance, end of period$151,383  $175,038  $151,383  $175,038  Balance, end of period$94,346  $158,946  
(1)The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.

On October 1, 2019, Umpqua closed on the sale
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Table of the mortgage servicing rights to $3.4 billion of mortgage loans serviced for others. The sale of $36.2 million in MSR assets resulted in a gain on fair value of $7.8 million recorded at the end of the third quarter, as the mortgage servicing rights are recorded at fair value.Contents

Information related to our residential serviced loan portfolio as of September 30, 2019March 31, 2020 and December 31, 20182019 was as follows: 
(dollars in thousands)(dollars in thousands)September 30, 2019December 31, 2018(dollars in thousands)March 31, 2020December 31, 2019
Balance of loans serviced for othersBalance of loans serviced for others$15,707,519  $15,978,885  Balance of loans serviced for others$12,533,045  $12,276,943  
MSR as a percentage of serviced loansMSR as a percentage of serviced loans0.96 %1.06 %MSR as a percentage of serviced loans0.75 %0.94 %

Mortgage servicing rights are adjusted to fair value quarterly with the change recorded in mortgage banking revenue. The value of servicing rights can fluctuate based on changes in interest rates and other factors. Generally, as interest rates decline and loansborrowers are prepaidable to take advantage of a refinance incentive, prepayments increase and the total value of existing servicing rights declines as no furtherexpectations of future servicing fees are collected.collections decline. Mortgage rates decreased during the ninethree months ended September 30, 2019,March 31, 2020, which caused prepayment speed assumptions to rise. This partially offset the $7.8 million fair value gain recorded for the portion of mortgage servicing rights held for sale at the end of the quarter.

The fair value of the MSR asset increased $11.0decreased by $25.4 million and decreased $14.2 million, respectively, due to changes to inputs to the valuation model including changes in discount rates and prepayment speeds, as well aswhich was due to decreases in the increase in value based on the sales price of MSR assets held for sale,long term interest rates during the three and nine months ended September 30, 2019.period. The fair value of the MSR asset decreased $6.8$5.3 million and $20.2 million, respectively, due to the passage of time, including the impact of regularly scheduled repayments, paydowns and payoffs during the three and nine months ended September 30, 2019. The change in the fair value of the MSR portfolio for the three and nine months ended September 30, 2018, due to the passage of time, including the impact of regularly scheduled repayments, paydowns and payoffs was a decrease of $6.0 million and $18.1 million, respectively, offset by an increase of $6.2 million for the three months ended and a decrease of $18.0 million, due to changes in the valuation inputs and assumptions.March 31, 2020.
 
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Goodwill and Other Intangible Assets
 
At September 30, 2019March 31, 2020 and December 31, 2018,2019, we had goodwill of $2.7 million and $1.8 billion.billion, respectively. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired. There were no changes to goodwill duringGoodwill impairment of $1.8 billion was recorded for the ninethree months ended September 30, 2019.
At September 30, 2019, we had other intangible assetsMarch 31, 2020 due to an interim impairment analysis triggered by the decline in interest rates and economic impacts of $19.8 million, compared to $24.0 million at December 31, 2018.   As partCOVID-19, as well as declines in the Company's stock price. The impairment was a result of market volatility and forecasts for a business acquisition, the fair value of identifiable intangible assets suchprolonged low interest rate environment, as core deposits, which include all deposits except certificates of deposit, are recognized at the acquisition date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives, and are also reviewed for impairment. We amortize other intangible assets on an accelerated or straight-line basis over an estimated ten year life. The decrease from December 31, 2018 relateswell as forecasted higher credit losses expected due to the amortization of the other intangible assets of $4.2 million for the nine months ended September 30, 2019.forecasted economic downturn.
  ��
Deposits 

Total deposits were $22.4$22.7 billion at September 30, 2019,March 31, 2020, an increase of $1.3 billion,$217.9 million, as compared to December 31, 2018.2019. The increase is attributable to growth in time deposits and non-interest bearing demand and money market deposits.
 
The following table presents the deposit balances by major category as of September 30, 2019March 31, 2020 and December 31, 2018:2019: 
March 31, 2020December 31, 2019
(dollars in thousands) (dollars in thousands) September 30, 2019December 31, 2018 (dollars in thousands)AmountPercentageAmountPercentage
AmountPercentageAmountPercentage
Non-interest bearing demandNon-interest bearing demand$7,123,180  32 %$6,667,467  32 %Non-interest bearing demand$7,169,907  32 %$6,913,375  31 %
Interest bearing demandInterest bearing demand2,406,404  11 %2,340,471  11 %Interest bearing demand2,482,908  11 %2,524,534  11 %
Money marketMoney market6,646,383  30 %6,645,390  31 %Money market7,082,011  31 %6,930,815  31 %
SavingsSavings1,469,302  %1,492,685  %Savings1,486,909  %1,471,475  %
Time, $100,000 or greaterTime, $100,000 or greater3,589,406  16 %2,947,084  14 %Time, $100,000 or greater3,265,147  14 %3,420,446  15 %
Time, less than $100,000Time, less than $100,0001,200,059  %1,044,389  %Time, less than $100,0001,212,493  %1,220,859  %
Total$22,434,734  100 %$21,137,486  100 %
Total depositsTotal deposits$22,699,375  100 %$22,481,504  100 %
 
The Company's brokered deposits totaled $1.5$1.0 billion at September 30, 2019,March 31, 2020, compared to $1.4$1.2 billion at December 31, 2018.2019.  

Borrowings 
 
At September 30, 2019,March 31, 2020, the Bank had outstanding $296.7$346.2 million of securities sold under agreements to repurchase, a decreasean increase of $434,000$34.9 million from December 31, 2018.2019. The Bank had outstanding borrowings consisting of advances from the FHLB as well as federal funds purchased of $1.1$1.2 billion at September 30, 2019,March 31, 2020, which increased $354.9$290.0 million from December 31, 2018.2019 as the Company increased on balance sheet liquidity. The FHLB advances are secured by investment securities and loans secured by real estate. The FHLB advances have fixed interest rates ranging from 1.40%0.60% to 7.10% and mature in 2020 through 2030.

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Junior Subordinated Debentures 
 
We had junior subordinated debentures with carrying values of $356.4$284.0 million and $389.6$363.3 million at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.  The decrease is due to the change$78.9 million decrease in fair value for the junior subordinated debentures elected to be carried at fair value. The decline is due to mostly to an increase in the credit spread, in addition to the implied forward curve shifting lower. As of September 30, 2019,March 31, 2020, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis based on a spread over three month LIBOR.  

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Liquidity and Cash Flow 
 
The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs. The Bank's liquidity strategy was adjusted to adopt an elevated on-balance sheet liquidity position to further enhance flexibility due to the increased market volatility and uncertainty as a result of the COVID-19 pandemic.
 
We monitor the sources and uses of funds on a daily basis to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance.  Public deposits represented 8% of total deposits at September 30, 2019March 31, 2020 and 9% of total deposits at December 31, 2018.2019. The amount of collateral required varies by state and may also vary by institution within each state, depending on the individual state's risk assessment of depository institutions. Changes in the pledging requirements for uninsured public deposits may require pledging additional collateral to secure these deposits, drawing on other sources of funds to finance the purchase of assets that would be available to be pledged to satisfy a pledging requirement, or could lead to the withdrawal of certain public deposits from the Bank. In addition to liquidity from core deposits and the repayments and maturities of loans and investment securities, the Bank can utilize established uncommitted federal funds lines of credit, sell securities under agreements to repurchase, borrow on a secured basis from the FHLB or issue brokered certificates of deposit.  
 
The Bank had available lines of credit with the FHLB totaling $7.3$6.7 billion at September 30, 2019,March 31, 2020, subject to certain collateral requirements, namely the amount of pledged loans and investment securities. The Bank had available lines of credit with the Federal Reserve totaling $695.5$569.7 million, subject to certain collateral requirements, namely the amount of certain pledged loans. The Bank had uncommitted federal funds line of credit agreements with additional financial institutions totaling $460.0 million at September 30, 2019.March 31, 2020. Availability of these lines is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage. 
 
The Company is a separate entity from the Bank and must provide for its own liquidity. Substantially all of the Company's revenues are obtained from dividends declared and paid by the Bank. There were $164.5$61.5 million of dividends paid by the Bank to the Company in the ninethree months ended September 30, 2019.March 31, 2020.  There are statutory and regulatory provisions that could limit the ability of the Bank to pay dividends to the Company. We believe that such restrictions will not have an adverse impact on the ability of the Company to fund its quarterly cash dividend distributions to common shareholders and meet its ongoing cash obligations, which consist principally of debt service on the outstanding junior subordinated debentures.  
 
As disclosed in the Condensed Consolidated Statements of Cash Flows, net cash used in operating activities was $77.9$118.7 million during the ninethree months ended September 30, 2019,March 31, 2020, with the difference between cash used in operating activities and net incomeloss consisting of goodwill impairment of $1.8 billion, originations of loans held for sale of $2.0$1.1 billion, the net increase in other assets of $183.1 million, gain on equity securities of $83.6$219.2 million, and gain on sale of loans of $65.7$38.3 million, offset by proceeds from the sale of loans held for sale of $1.9$1.2 billion, provision for loan and lease losses of $56.3$118.1 million, and a loss on fair value of residential mortgage servicing rights carried at fair value of $34.4 million, and depreciation, amortization and accretion of $33.1$30.7 million. This compares to net cash provided byused in operating activities of $318.6$53.6 million during the ninethree months ended September 30, 2018,March 31, 2019, with the difference between cash provided by operating activities and net income consisting of originations of loans held for sale of $487.1 million, the net increase in other assets of $57.0 million and net decrease in other liabilities and depreciation, amortization and accretion.of $28.9 million, offset by proceeds from the sale of loans held for sale of $428.3 million.
 
Net cash of $908.9$74.4 million used in investing activities during the ninethree months ended September 30, 2019,March 31, 2020, consisted principally of net loan originations of $1.2 billion, purchases of investment securities available for sale of $563.6$140.4 million, purchasenet loan originations of $109.5 million, and purchases of restricted equity securities of $220.2 million, and net cash paid in divestiture of stores of $44.6$20.0 million, offset by proceeds from investment securities available for sale of $778.3$168.9 million, redemption of restricted equity securities of $206.0 million,and proceeds from sales of loans of $88.8 million and proceeds from sale of equity securities of $81.9$22.0 million. This compares to net cash of $847.2$53.5 million used inprovided by investing activities during the ninethree months ended September 30, 2018,March 31, 2019, which consisted principally of net loan originations of $991.7 million, purchases of investment securities available for sale of $283.9 million, purchasesredemption of restricted equity securities of $45.6$198.2 million and net cash paid in divestiture of a store of $35.2 million, offset by proceeds from investment securities available for sale of $341.7$119.4 million, proceeds from the sale of loans and leases of $119.8 million and redemptionoffset by purchases of restricted equity securities of $48.8$205.4 million, and net cash paid on divestiture of a store of $44.6 million.
 
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Net cash of $1.6 billion$488.1 million provided by financing activities during the ninethree months ended September 30, 2019,March 31, 2020, primarily consisted of $1.3 billionproceeds from borrowings of $600.0 million and $218.0 million net increase in deposits, and proceeds from borrowings of $810.7 million, offset by $455.7$310.0 million repayment of borrowings and $138.9$46.2 million of dividends paid on common stock. This compares to net cash of $773.6$280.2 million provided by financing activities during the ninethree months ended September 30, 2018,March 31, 2019, which consisted primarily of $981.6proceeds from borrowings of $230.7 million and $155.9 million net increase in deposits, and proceeds from borrowings ofoffset by $50.0 million offset by $127.7repayment of borrowings and $46.3 million of dividends paid on common stock and $100.7 million repayment of borrowings.stock.
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Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during 2019,2020, it is possible that our deposit growth for 20192020 may not be maintained at previous levels due to pricing pressure or store consolidations. In addition, in order to generate deposit growth, our pricing may need to be adjusted in a manner that results in increased interest expense on deposits.
  
Off-balance-Sheet Arrangements 
 
Information regarding Off-Balance-Sheet Arrangements is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.
  
Concentrations of Credit Risk 

Information regarding Concentrations of Credit Risk is included in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Capital Resources 
 
Shareholders' equity at September 30, 2019March 31, 2020 was $4.3$2.5 billion, an increasea decrease of $233.1 million$1.8 billion from December 31, 2018.2019. The increasedecrease in shareholders' equity during the ninethree months ended September 30, 2019March 31, 2020 was principally due to the net income and other comprehensive income forloss during the period, offset by declared common dividends.quarter, related mainly to the goodwill impairment during the quarter.

The Company's dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis. There is no assurance that future cash dividends on common shares will be declared or increased. The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the three and nine months ended September 30, 2019March 31, 2020 and 2018:   
2019:     
Three Months EndedNine Months Ended Three Months Ended
September 30, 2019September 30, 2018September 30, 2019September 30, 2018 March 31, 2020March 31, 2019
Dividend declared per common shareDividend declared per common share$0.21  $0.21  $0.63  $0.61  Dividend declared per common share$0.21  $0.21  
Dividend payout ratioDividend payout ratio55 %51 %51 %57 %Dividend payout ratio(2)%62 %

As of September 30, 2019,March 31, 2020, a total of 9.99.5 million shares are available for repurchase under the Company's current share repurchase plan. During the ninethree months ended September 30, 2019, 300,000March 31, 2020, 331,000 shares were repurchased under this plan. The Board of Directors approved an extension of the repurchase plan to July 31, 2021. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, and our capital plan.  In addition, our stock plans provide that option and award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares. 

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The following table shows the Company's consolidated and the Bank's capital adequacy ratios compared to the regulatory minimum capital ratio and the regulatory minimum capital ratio needed to qualify as a "well-capitalized" institution, as calculated under regulatory guidelines of the Basel Committee on Banking Supervision to the Basel capital framework ("Basel III") at September 30, 2019March 31, 2020 and December 31, 2018:2019: 
 

ActualFor Capital Adequacy purposesTo be Well Capitalized
(dollars in thousands)
(dollars in thousands)
ActualFor Capital Adequacy purposesTo be Well Capitalized
(dollars in thousands)
AmountRatioAmountRatioAmountRatio
AmountRatioAmountRatioAmountRatio
September 30, 2019      
March 31, 2020March 31, 2020      
Total CapitalTotal Capital      Total Capital      
(to Risk Weighted Assets)(to Risk Weighted Assets)      (to Risk Weighted Assets)      
ConsolidatedConsolidated$3,061,945  13.63 %$1,797,526  8.00 %$2,246,907  10.00 %Consolidated$3,069,321  13.72 %$1,789,571  8.00 %$2,236,964  10.00 %
Umpqua BankUmpqua Bank$2,905,295  12.94 %$1,795,763  8.00 %$2,244,704  10.00 %Umpqua Bank$2,906,354  13.01 %$1,787,497  8.00 %$2,234,371  10.00 %
Tier I CapitalTier I Capital      Tier I Capital      
(to Risk Weighted Assets)(to Risk Weighted Assets)      (to Risk Weighted Assets)      
ConsolidatedConsolidated$2,449,572  10.90 %$1,348,144  6.00 %$1,797,526  8.00 %Consolidated$2,382,879  10.65 %$1,342,178  6.00 %$1,789,571  8.00 %
Umpqua BankUmpqua Bank$2,743,960  12.22 %$1,346,822  6.00 %$1,795,763  8.00 %Umpqua Bank$2,671,903  11.96 %$1,340,623  6.00 %$1,787,497  8.00 %
Tier I CommonTier I CommonTier I Common
(to Risk Weighted Assets)(to Risk Weighted Assets)(to Risk Weighted Assets)
ConsolidatedConsolidated$2,449,572  10.90 %$1,011,108  4.50 %$1,460,490  6.50 %Consolidated$2,382,879  10.65 %$1,006,634  4.50 %$1,454,026  6.50 %
Umpqua BankUmpqua Bank$2,743,960  12.22 %$1,010,117  4.50 %$1,459,058  6.50 %Umpqua Bank$2,671,903  11.96 %$1,005,467  4.50 %$1,452,341  6.50 %
Tier I CapitalTier I Capital      Tier I Capital      
(to Average Assets)(to Average Assets)      (to Average Assets)      
ConsolidatedConsolidated$2,449,572  9.22 %$1,062,480  4.00 %$1,328,100  5.00 %Consolidated$2,382,879  8.25 %$1,155,518  4.00 %$1,444,397  5.00 %
Umpqua BankUmpqua Bank$2,743,960  10.34 %$1,061,749  4.00 %$1,327,186  5.00 %Umpqua Bank$2,671,903  9.25 %$1,155,379  4.00 %$1,444,224  5.00 %
December 31, 2018      
December 31, 2019December 31, 2019      
Total CapitalTotal Capital      Total Capital      
(to Risk Weighted Assets)(to Risk Weighted Assets)      (to Risk Weighted Assets)      
ConsolidatedConsolidated$2,916,143  13.51 %$1,727,280  8.00 %$2,159,100  10.00 %Consolidated$3,104,444  13.96 %$1,779,265  8.00 %$2,224,081  10.00 %
Umpqua BankUmpqua Bank$2,765,748  12.83 %$1,724,757  8.00 %$2,155,946  10.00 %Umpqua Bank$2,945,830  13.26 %$1,777,265  8.00 %$2,221,581  10.00 %
Tier I CapitalTier I Capital      Tier I Capital      
(to Risk Weighted Assets)(to Risk Weighted Assets)      (to Risk Weighted Assets)      
ConsolidatedConsolidated$2,315,750  10.73 %$1,295,460  6.00 %$1,727,280  8.00 %Consolidated$2,490,709  11.20 %$1,334,449  6.00 %$1,779,265  8.00 %
Umpqua BankUmpqua Bank$2,616,456  12.14 %$1,293,568  6.00 %$1,724,757  8.00 %Umpqua Bank$2,783,095  12.53 %$1,332,949  6.00 %$1,777,265  8.00 %
Tier I CommonTier I CommonTier I Common
(to Risk Weighted Assets)(to Risk Weighted Assets)(to Risk Weighted Assets)
ConsolidatedConsolidated$2,315,750  10.73 %$971,595  4.50 %$1,403,415  6.50 %Consolidated$2,490,709  11.20 %$1,000,837  4.50 %$1,445,653  6.50 %
Umpqua BankUmpqua Bank$2,616,456  12.14 %$970,176  4.50 %$1,401,365  6.50 %Umpqua Bank$2,783,095  12.53 %$999,712  4.50 %$1,444,028  6.50 %
Tier I CapitalTier I Capital      Tier I Capital      
(to Average Assets)(to Average Assets)      (to Average Assets)      
ConsolidatedConsolidated$2,315,750  9.31 %$994,905  4.00 %$1,243,631  5.00 %Consolidated$2,490,709  9.16 %$1,087,509  4.00 %$1,359,387  5.00 %
Umpqua BankUmpqua Bank$2,616,456  10.53 %$994,268  4.00 %$1,242,835  5.00 %Umpqua Bank$2,783,095  10.24 %$1,086,999  4.00 %$1,358,749  5.00 %
 
Item 3.             Quantitative and Qualitative Disclosures about Market Risk 
 
Our assessment of market risk as of September 30, 2019March 31, 2020 indicates there are no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. However due to the impact of declining interest rates resulting from the Federal Reserve monetary policy and programs, and market reaction to the economic impact of the COVID-19 pandemic, the estimated impact on our net interest income over a one-year time horizon has shifted.

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Interest Rate Simulation Impact on Net Interest Income

As of March 31, 2020 and December 31, 2019 and 2018:
March 31, 2020December 31, 2019December 31, 2018
Up 300 basis points7.4 %5.9 %4.9 %
Up 200 basis points4.8 %4.1 %3.3 %
Up 100 basis points2.2 %2.2 %1.7 %
Down 100 basis points(2.0)%(3.8)%(2.8)%
Down 200 basis points(2.5)%(7.4)%(6.3)%
Down 300 basis points(2.7)%(9.4)%(9.5)%

For the scenarios shown, the interest rate simulation assumes a parallel and sustained shift in market interest rates ratably over a twelve-month period and no change in the composition or size of the balance sheet. As rates have declined, our asset sensitivity in an up 200 and 300 basis point environment has increased as interest-earning assets are simulated to reprice in greater velocity or magnitude in comparison to interest-bearing liabilities. In a declining rate environment, the reduced sensitivity, compared to year-end simulation results, reflect more interest-earning assets at or near rate floors, while interest-bearing liabilities reprice lower.
Item 4.             Controls and Procedures 
 
Our management, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, has concluded that our disclosure controls and procedures are effective in timely alerting them to information relating to us that is required to be included in our periodic filings with the SEC. The disclosure controls and procedures were last evaluated by management as of September 30, 2019.March 31, 2020. 

NoWhile we have incorporated additional controls related to our CECL accounting processes into our existing internal control environment, there was no change in our internal controlscontrol over financial reporting that occurred during the thirdfirst quarter of 20192020 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II. OTHER INFORMATION 

Item 1.   Legal Proceedings 

Due to the nature of our business, we are involved in legal proceedings that arise in the ordinary course of our business. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.
 
Item 1A.   Risk Factors 
 
In addition to the other information set forth in this report, you should carefully consider the factors discussed under "Part I--Item 1A--Risk Factors" in our Form 10-K for the year ended December 31, 2018.2019. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. ThereOther than as described below, there have been no other material changes from the risk factors described in our Form 10-K.

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The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic has negatively impacted the economy, changed customer behaviors, disrupted supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. The pandemic has resulted in temporary closures of many businesses and the institution of social distancing and stay at home/sheltering in place requirements in the states and communities we serve. As a result, the demand for our products and services may be significantly impacted, which could adversely affect our revenue. The pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, unemployment levels rise or regional economic conditions worsen. Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic. In response to the pandemic, we have initiated relief programs designed to support our customers and communities including payment deferral programs, deferral-related and other fee waivers, suspended residential property foreclosure sales, and other expanded assistance for customers. Future governmental actions may require these and other types of customer-related responses that could negatively impact our financial results. We could be required to take capital actions in response to the COVID-19 pandemic, including reducing dividends and eliminating stock repurchases. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic; actions taken by governmental authorities and other third parties in response to the pandemic; the effect on our customers, counterparties, employees and third party service providers; and the effect on economies and markets. To the extent that the COVID-19 outbreak continues to adversely affect our business and financial performance, it may also have the effect of heightening many of the other risks identified in the "Risk Factors" section of our most recently filed Annual Report on Form 10-K.

We have adopted new accounting guidance, specifically CECL, to account for our credit losses that may be more volatile and may adversely impact our financial statements when forecasted market conditions change.

In January 2020, the Company adopted the FASB accounting standard update, "Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," which replaces the previous "incurred loss" model for recognizing credit losses with an "expected loss" model referred to as CECL. Under CECL, we will be required to present certain financial assets carried at amortized cost, such as loans and leases held for investment, at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the "incurred loss" model, which delays recognition until it is probable a loss has been incurred. CECL may create more volatility in the level of our allowance for credit losses.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds  
 
(a)Not applicable  
 
(b)Not applicable 

(c)The following table provides information about repurchases of common stock by the Company during the quarter ended September 30, 2019:March 31, 2020: 
PeriodTotal number of Common Shares Purchased (1)Average Price Paid per Common ShareTotal Number of Shares Purchased as Part of Publicly Announced Plan (2)Maximum Number of Remaining Shares that May be Purchased at Period End under the Plan
7/1/19 - 7/31/19300,344  $17.44  300,000  9,855,429  
8/1/19 - 8/31/19176  $15.26  —  9,855,429  
9/1/19 - 9/30/19199  $16.59  —  9,855,429  
Total for quarter300,719  $17.44  300,000   
PeriodTotal number of Common Shares Purchased (1)Average Price Paid per Common ShareTotal Number of Shares Purchased as Part of Publicly Announced Plan (2)Maximum Number of Remaining Shares that May be Purchased at Period End under the Plan
1/1/20 - 1/31/2022,647  $16.94  —  9,855,429  
2/1/20 - 2/29/20464,110  $17.63  331,000  9,524,429  
3/1/20 - 3/31/20—  $—  —  9,524,429  
Total for quarter486,757  $17.60  331,000   
 
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(1)Common shares repurchased by the Company during the quarter consist of cancellation of 719155,757 shares to be issued upon vesting of restricted stock awards to pay withholding taxes. During the three months ended September 30, 2019, 300,000March 31, 2020, 331,000 shares were repurchased pursuant to the Company's publicly announced corporate stock repurchase plan described in (2) below.

(2)The Company's share repurchase plan, which was first approved by its Board of Directors and announced in August 2003, was amended on September 29, 2011 to increase the number of common shares available for repurchase under the plan to 15 million shares. The repurchase program has been extended multiple times by the board with the current expiration date of July 31, 2021. As of September 30, 2019,March 31, 2020, a total of 9.99.5 million shares remained available for repurchase. The timing and amount of future repurchases will depend upon the market price for our common stock, laws and regulations restricting repurchases, asset growth, earnings, and our capital plan.
  
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Item 3.            Defaults upon Senior Securities
 
Not applicable 

Item 4.            Mine Safety Disclosures 

Not applicable 

Item 5.            Other Information

Not applicable  

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Item 6.            Exhibits  
 

Exhibit #Description
3.1
3.2
4.1
4.2The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
10.1* 
31.1
31.2
31.3
32
101.INSInline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019,March 31, 2020, formatted in Inline XBRL (included in Exhibit 101)
*           Indicates compensatory plan or arrangement
(a)          Incorporated by reference to Exhibit 3.1 to Form 8-K filed April 23, 2018
(b)          Incorporated by reference to Exhibit 3.299.2 to Form 8-K filed April 21, 2017March 24, 2020
(c)          Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-8 (No. 333-77259) filed April 28, 1999
(d) Incorporated by reference to Exhibit 10.1 to Form 10-Q filed August 6, 2019

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SIGNATURES 
 
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 
UMPQUA HOLDINGS CORPORATION
(Registrant) 
DatedNovember 6, 2019May 7, 2020
/s/ Cort L. O'Haver                                           
 Cort L. O'Haver
President and Chief Executive Officer  
DatedNovember 6, 2019May 7, 2020/s/ Ronald L. Farnsworth
 Ronald L. Farnsworth  
Executive Vice President/Chief Financial Officer and 
Principal Financial Officer
DatedNovember 6, 2019May 7, 2020/s/ Neal T. McLaughlinLisa M. White
 
Neal T. McLaughlinLisa M. White                                    
ExecutiveSenior Vice President/TreasurerCorporate Controller and 
Principal Accounting Officer

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