Umpqua Holdings Corp. in Portland, Ore., a once active acquirer that has not made a deal in nearly two years, is now flush with cash and sizing up its options.

The $214 million it received through the Treasury Department's Capital Purchase Program pushed its capital "north of 14%, which gives us the ability to look at opportunities," said Raymond P. Davis, Umpqua's chief executive. The $8.3 billion-asset company is not "knocking on doors," but it plans to be "opportunistic."

According to observers, likely targets include PremierWest Bancorp in Medford, Ore., Columbia Banking System Inc. in Tacoma, Columbia Bancorp. in The Dallas, Ore., and Capital Corp. of the West in Merced, Calif. Both Capital Corp. and Columbia Bancorp. have significant exposure to residential construction loans.

Terry L. Cochran, Columbia Bancorp.'s CEO, would not discuss merger speculation. Calls to the other companies were not returned.

Mr. Davis would not discuss specific targets, but he said in an interview last week that Umpqua would entertain deals first within its current area of operations.

"We want to be in healthy markets, and we want institutions that have a good commercial real estate base that we can build on," Mr. Davis said. "Every acquisition has got to be evaluated separately."

Brett Rabatin, a senior bank analyst with First Horizon National Corp.'s FTN Midwest Research Securities Corp., said in an interview last week that banks unable to get money from the Treasury's program may be vulnerable to takeover.

"By the end of the year, if some of these banks haven't said they got" money from the Troubled Asset Relief Program, "people are going to get nervous, and the banks are going to be under considerable pressure to pair up with somebody," he said.

Umpqua might have to fight for some companies, such as Capital Corp., which is based in California's fast-growing Central Valley, and could lose out to bidders like the $4.1 billion-asset Westamerica Bancorp. in San Raphael, Mr. Rabatin said.

Westamerica officials did not return phone calls.

Mr. Davis said he believes the government invested in the strongest companies first, noting that his was the 14th institution to receive funds under the Capital Purchase Program, which was launched in mid-October.

Umpqua would consider buying banks that approach it directly, and it is interested in government-assisted deals, where it would buy the branches, deposits, and certain assets of troubled banks, Mr. Davis said, but only if the government assumed the institution's bad loans.

Analysts say they would not be surprised if Umpqua announced deals in the very near future. Since 2000 it has bought seven banking companies with subsidiaries in Oregon, Washington, and California, where its 148 branches are located.

The pace of acquisitions has slowed because the housing downturn and an increase in bad residential construction loans have made it harder to evaluate the portfolios of many would-be sellers, Mr. Davis said. Its last acquisition was for the $649 million-asset North Bay Bancorp in Napa, Calif., which closed in April of last year.

Umpqua has had problems with residential construction loans, but analysts say its troubles are not as severe as others and are unlikely to deter it from making purchases. Its third-quarter net income rose 3% from a year earlier, to $13.6 million, or 23 cents a share, beating the average estimate of analysts by 2 cents, according to Thomson Reuters. Though its provision for loan losses rose 74%, to $35.5 million, its $128.1 million of nonperforming assets made up just 1.54% of total assets.

"Umpqua still has more pain to come, but I think they have enough capital to weather through it, and Tarp just gives them more money to help fund acquisitions," said Chris Stulpin, an analyst at D.A. Davidson & Co. in Portland.

In a research note issued Monday, Mr. Rabatin wrote that Umpqua has "been more aggressive" than many others in the Pacific Northwest in dealing with credit issues. Cumulative chargeoffs over the past four quarters equaled 10.3% of its residential construction and development loan portfolio as of Sept. 30, the note said. In the construction and development portfolio, that ratio was 5.4%. The average chargeoff ratio for banking companies in the Pacific Northwest was 2.4% in residential construction loans and 2.2% for construction and development loans, according to the note.

Joseph Gladue, an analyst at B. Riley & Co. LLC, said that government-assisted deals may be more in vogue these days, but Umpqua may be able to make deals for relatively healthy banking companies. "In some cases, you could have a CEO who was planning on retiring sometime in the next five years anyway and just decides, in this environment, it may just be a better time to sell," he said.

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