With $225 million of fresh capital on the way, Umpqua Holdings Corp. in Portland, Ore., is on the lookout to buy failed banks — both in its market area and beyond.

Ray Davis, Umpqua's president and chief executive officer, said in an interview Friday that it would target banks with assets of $500 million to $3 billion coming from the Federal Deposit Insurance Corp.

"The acquisitions we would look at would all be FDIC-assisted deals," he said.

His $8.8 billion-asset company announced a stock offering Tuesday and upsized it by almost 30% two days later.

The offering is expected to close this week.

Only a month ago, Davis had told investors that Umpqua did not expect to do a capital raise until its stock price improved, because it would be too dilutive. Its shares had been trading below $8 each, less than tangible book value.

But after a subsequent surge — the shares rose by a third — Umpqua decided to proceed.

"The stock rebounded very nicely," Davis said Friday. "Things have changed in the market, and we were able to take advantage of that."

Brett Rabatin, an analyst at Sterne, Agee & Leach Inc. in Nashville, said the additional capital will increase Umpqua's tangible common equity ratio, from 6.4%, to 9.1%.

Given that healthy capital cushion, Rabatin said, he would not be surprised to see Umpqua announce a bank acquisition in the next six months.

"I wouldn't say it will be a certainty, but it is highly likely," he said. "There are going to be quite a few opportunities to acquire, via assisted transactions, some meaningful branches, loans and deposits — and if the price is right then they don't want to miss the opportunity to do so."

On last month's earnings conference call, Davis also had discussed Umpqua's appetite for deals.

Besides targets in its current market, the company is willing to consider a foray into the Puget Sound area to the north — or elsewhere.

"I don't buy into the theory necessarily that a transaction has to be either in a footprint or in contiguous markets," Davis said. "I don't think that necessarily flows anymore. It boils back to the strategic rationale of the transaction of the market we're getting into and does it make sense for potential growth for us."

Still, Chris Stulpin, an analyst at D.A. Davidson & Co., said Davis is unlikely to go too far afield.

"I don't see him going into Montana," he said. "He may go within a reasonable reach of the footprint, but I don't think he would go too far outside it."

Stulpin said the capital "solidifies" Umpqua as a consolidator in the Pacific Northwest.

It also sets the stage for the company to repay the $214 million it received under the Treasury Department's Troubled Asset Relied Program.

Umpqua said it would consider using the proceeds to redeem the government's preferred shares.

"I am assuming they will pay back Tarp in 2009 and be free of Tarp dividends in 2010," Stulpin said.

Better-than-expected results in the second quarter contributed to Umpqua's stock rally.

After paying dividends on the preferred shares, Umpqua earned $4.4 million, or 7 cents a share, in the second quarter, down 56% from a year earlier. Analysts had expected it to post a loss of 10 cents a share.

Its nonperforming assets increased to 1.71% of total assets, from 1.25%.

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