Bucking an industry trend, Umpqua Holdings Corp. in Portland, Ore., is ramping up its commercial real estate lending to fill what it sees as a void in its markets.

The $11.8 billion-asset company announced Monday that it has created a new commercial real estate division that will provide investors and developers with construction financing and loans on both owner-occupied and income-producing properties.

John Swanson, Umpqua's commercial real estate manager and the head of the new unit, said Umpqua wants to expand its commercial real estate capabilities at a time when other banks are de-emphasizing construction and real estate lending. The Pacific Northwest was hit particularly hard by the real estate bust and, as a result, many banks have scaled back their CRE lending and are focusing more on commercial and industrial lending.

"Our plan is to take advantage of the slow recovery to provide real estate financing to our bank customers and prospects that we want to have as customers," Swanson said in an interview Tuesday.

He identified multi-family lending in the Seattle region as a particular area of growth as demand for apartment rentals continues to increase. He said the unit is also eyeing opportunities in lending on office and industrial properties.

Umpqua had been making commercial real estate loans through its commercial banking operations. Swanson said that the bank decided to establish a separate unit to accelerate its growth. The division has offices in Seattle and Portland and a third will open in Walnut Creek, Calif., in the coming months, he said.

Swanson said that Umpqua is well positioned to sharpen its focus on real estate because its own credit quality is improving. The bank said October that its third-quarter provision for loan losses fell 41% from the previous quarter, to $9.1 million, and that it net chargeoffs in the quarter fell to their lowest levels since the first quarter of 2008.

To ensure the bank avoids problem loans, Swanson said it will be conservative in its underwriting will and require certain occupancy and leasing levels for apartment and office buildings.

Based in Seattle, Swanson joined Umpqua in 2010. Prior to that, he was a senior vice president and Seattle market manager in U.S. Bancorp's commercial real estate unit. He will report to Cort O'Haver, Umpqua's executive vice president of commercial banking.

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