| Contacts: | Carol K. Nelson, CEO Lars Johnson, CFO 425.339.5500 www.cascadebank.com | NEWS RELEASE |
| | | |
Cascade Financial Reports Fourth Quarter Profits of $2.5 Million;
Checking Deposits up 35%, Total Loans increased 14% and Capital up 31%
Everett, WA – January 27, 2009 – Cascade Financial Corporation (NASDAQ: CASB), parent company of Cascade Bank, today reported it earned $2.5 million, or $0.19 per diluted share, in the fourth quarter of 2008, compared to record earnings of $4.0 million, or $0.33 per diluted share in the fourth quarter a year ago. Fourth quarter results include a $2.4 million loan loss provision compared to $500,000 for the same quarter last year. This provision boosted the total allowance for loan losses to total loans ratio to 1.31%, in response to an increase in nonperforming loans and continued weakening in the local housing market.
“Cascade had strong operating growth in 2008, with pre-tax, pre-provision, pre-OTTI earnings up 8%. Additionally, Cascade was profitable for the quarter and the full year of 2008 despite the Fed’s 175 basis point drop in the target Fed Funds rate during the fourth quarter and the increase in our nonperforming loans,” stated Carol K. Nelson, President and CEO. “Operating results for the fourth quarter and the full year were below the record setting earnings from the respective periods a year ago due to additions to the provision for loan losses and the Other Than Temporary Impairment (OTTI) charge during the third quarter. Despite the increase in the loan loss provision, Cascade is surviving the downturn in the economy better than many of our peers, which is evidenced by our nonperforming assets to total assets ratio.”
“We continue to take a conservative credit stance, and loans on nonaccrual status increased by $24.6 million during the quarter to $40.3 million. The increase came primarily from two residential real estate builder/developer relationships,” added Nelson. Nonperforming loans (NPLs) represented 3.20% of total loans at December 31, 2008, compared to 1.29% or $15.7 million at the end of the preceding quarter and $1.5 million at the end of 2007.
For 2008, net income was $2.1 million, or $0.15 per diluted share, compared to record earnings of $15.5 million, or $1.27 per diluted share, in 2007. The loan loss provision for the year was $7.2 million versus $1.4 million in 2007.
CASCADE FINANCIAL CORPORATION ($ in 000's) | | Year ended 12/31/08 | | | Year ended 12/31/07 | | | % Change | |
| Pre-tax, pre-provision, pre-OTTI earnings | | $ | 26,229 | | | $ | 24,279 | | | | 8 | % |
| Provision for loan losses | | | 7,240 | | | | 1,350 | | | | 436 | % |
| OTTI | | | 17,338 | | | | - | | | NM | |
| (Benefit) provision for income tax | | | (439 | ) | | | 7,383 | | | NM | |
| Net profit after taxes | | $ | 2,090 | | | $ | 15,546 | | | | -87 | % |
“Solid loan growth and our demonstrated ability to expand our checking account balances indicates that our basic business remains strong. With the issuance of senior preferred stock to the U.S. Treasury in November, our capital position was fortified. We are well positioned to weather this challenging economic environment, and take advantage of some of the opportunities created by dislocations in the market,” said Nelson.
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Cascade Financial – 4Q08 Results
January 27, 2009
Page 2
2008 Financial Highlights: (compared to 2007)
| · | Issued $39 million in preferred stock under the US Treasury Capital Purchase Program. |
| · | Risk Based Capital Ratio increased to 13.26%, Tier 1 Capital Ratio increased to 10.30%. |
| · | Net income was $2.1 million for the year. |
| · | Total loans increased 14% to $1.26 billion. |
| · | Total deposits grew 11% to $1.01 billion. |
| · | Checking account balances increased 35%. |
| · | Strong growth in new checking accounts resulted in 27% growth in checking fees. |
| · | Total assets increased 16% to $1.64 billion. |
Loan Portfolio
Compared to a year ago, total loans increased 14% to $1.26 billion at December 31, 2008, from $1.11 billion at December 31, 2007. Cascade has not engaged in the practice of subprime residential lending and the loan portfolio does not contain any such loans.
“The issuance of preferred shares has enabled Cascade to increase its lending,” said Lars Johnson, Chief Financial Officer. “We grew loans by $45.2 million for the quarter ended December 31, 2008 from September 30, 2008, or 16% on an annualized basis. This compared to net loan growth of $18.2 million in third quarter 2008. The largest growth has been in single family mortgages.”
Construction loans outstanding grew 6% to $407 million at December 31, 2008, compared to $382 million a year ago. Business loans increased 4% over the same period to $485 million. Commercial real estate loans increased 2% to $123 million. Permanent multifamily loans increased substantially from year ago levels to $86.9 million, partly as a result of the reclassifications from multifamily construction as projects were completed and met rental goals. Home equity and consumer loans increased 11% to $30.8 million, while residential loans grew 28% to $126 million.
The following table shows loans in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
LOANS ($ in 000's) | | December 31, 2008 | | | September 30, 2008 | | | December 31, 2007 | | | | |
| Business | | $ | 485,060 | | | $ | 473,213 | | | $ | 468,453 | | | | 4 | % |
| R/E Construction | | | 406,505 | | | | 403,569 | | | | 381,810 | | | | 6 | % |
| Commercial R/E | | | 122,951 | | | | 119,787 | | | | 120,421 | | | | 2 | % |
| Multifamily | | | 86,864 | | | | 74,535 | | | | 11,397 | | | | 662 | % |
| Home equity/consumer | | | 30,772 | | | | 29,659 | | | | 27,688 | | | | 11 | % |
| Residential | | | 126,089 | | | | 112,283 | | | | 98,384 | | | | 28 | % |
| Total loans | | $ | 1,258,241 | | | $ | 1,213,046 | | | $ | 1,108,153 | | | | 14 | % |
Credit Quality
“The Puget Sound housing market remains weak and continues to present challenges,” said Robert Disotell, Chief Credit Officer. “We continuously monitor the credit quality of loans in the portfolio and believe the additions to our nonperforming loan totals are prudent. We believe the risk management practices we have in place help us to act quickly in the early identification of deteriorating credits.”
Nonperforming loans (NPLs) increased during the quarter to $40.3 million, which represented 3.20% of total loans at December 31, 2008, compared to 1.29% three months earlier. NPLs were $15.7 million at the end of the preceding quarter and $1.5 million at the end of December 2007.
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Cascade Financial – 4Q08 Results
January 27, 2009
Page 3
The following table shows nonperforming loans in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
NONPERFORMING LOANS ($ in 000's) | | Dec. 31, 2008 | | | # of relationships | | | Sept. 30, 2008 | | | # of relationships | | | Dec. 31, 2007 | | | # of relationships | |
| Construction | | $ | 38,972 | | | | 6 | | | $ | 15,195 | | | | 4 | | | $ | - | | | | - | |
| Business | | | 1,149 | | | | 2 | | | | 288 | | | | 1 | | | | 1,522 | | | | 4 | |
| Residential | | | 155 | | | | 1 | | | | 155 | | | | 1 | | | | - | | | | - | |
| Consumer | | | 2 | | | | 1 | | | | 59 | | | | 1 | | | | 1 | | | | 1 | |
| Total nonperforming loans | | $ | 40,278 | | | | 10 | | | $ | 15,697 | | | | 7 | | | $ | 1,523 | | | | 5 | |
“We continue to build our allowance for loan losses with a provision expense of $2.4 million during the fourth quarter compared to net charge-offs (NCOs) of $506,000, and added $7.2 million to the allowance for loan losses for the year versus NCOs of $2.5 million in 2008,” added Disotell. Net charge-offs were $43,000 in the previous quarter and $99,000 in the fourth quarter a year ago.
During the fourth quarter, $4.4 million was transferred to Real Estate Owned (REO) and sold resulting in no additional net charge-offs. As of December 31, 2008, REO was $1.4 million, which was unchanged from September 30, 2008.
Nonperforming assets were 2.55% of total assets at December 31, 2008, compared to 1.10% at the end of the preceding quarter, and 0.11% a year ago. This compares to a ratio of 3.16% for all Washington State Commercial Banks at September 30, 2008 (the most current data published). The total allowance for loan losses, which includes a $93,000 allowance for off-balance sheet loan commitments, totaled $16.5 million at quarter-end, equal to 1.31% of total loans compared to 1.21% at September 30, 2008, and 1.06% as of December 31, 2007.
Loans delinquent 31-90 days totaled $9.0 million, or 0.73% of total loans at December 31, 2008, compared to $171,000, or 0.01% of total loans at September 30, 2008 and $544,000, or 0.05% of total loans at December 31, 2007. This compares to a ratio of 2.10% for all Washington State Commercial Banks at September 30, 2008, (the most current data published). All loans over 90 days delinquent are on non-accrual status. The increase in the level of delinquencies was primarily attributed to one real estate construction lending relationship totaling $5.5 million and one commercial real estate loan in the amount of $1.9 million.
Capital Management
On November 24, 2008, Cascade completed its $39 million capital raise as a participant in the U.S. Treasury Department’s Capital Purchase Program. Under the terms of the transaction the company issued 38,970 shares of Series A Fixed-Rate Cumulative Perpetual Preferred Stock, and a warrant to purchase 863,442 shares of the company’s common stock at an exercise price of $6.77 per share.
“The additional capital infusion enabled us to provide increased credit to businesses and consumers in our market area,” said Nelson. “As the industry undergoes change, we expect there will be increased opportunities. This additional capital also adds flexibility when considering strategic opportunities that meet our disciplined criteria.”
Cascade remains well capitalized for regulatory purposes with a Tier 1 Capital ratio of 10.30% and Risk Based Capital of 13.26% as of December 31, 2008. Book value per common share was $10.23 at year-end compared to $10.15 a year ago. Tangible book value was $8.15 per common share at year-end, compared to $8.06 a year ago.
In October 2008, Cascade announced a 50% reduction in its fourth quarter cash dividend to $0.045 per common share. “The decision to conserve capital through a reduction in the dividend is in the best long-term interest of our shareholders and will help ensure that Cascade continues to maintain its well capitalized position," added Nelson.
Deposit Growth
“We continued to successfully grow our total checking account balances, which were up $13.6 million, or 8% on a sequential quarter basis and up $48.7 million, or 35% for the year,” said Nelson. “Personal checking account balances grew by 76% or $44.0 million over the course of the year and business checking balances grew 6% or $4.7 million during the same time period. The growth in checking balances resulted in a 27% increase in checking account fees in 2008 compared to 2007. The reductions in money market account balances were primarily from the public sector and the termination of a sweep account agreement with a money center bank. These outflows were offset by higher CD balances.”
Cascade Financial – 4Q08 Results
January 27, 2009
Page 4
The following table shows deposits in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
DEPOSITS ($ in 000's) | | December 31, 2008 | | | September 30, 2008 | | | December 31, 2007 | | | | |
| Personal checking accounts | | $ | 102,123 | | | $ | 90,772 | | | $ | 58,126 | | | | 76 | % |
| Business checking accounts | | | 84,720 | | | | 82,485 | | | | 80,064 | | | | 6 | % |
| Total checking accounts | | | 186,843 | | | | 173,257 | | | | 138,190 | | | | 35 | % |
| Savings and MMDA | | | 204,035 | | | | 266,560 | | | | 327,264 | | | | -38 | % |
| CDs | | | 615,904 | | | | 552,688 | | | | 439,442 | | | | 40 | % |
| Total deposits | | $ | 1,006,782 | | | $ | 992,505 | | | $ | 904,896 | | | | 11 | % |
Operating Results
Net interest income for the fourth quarter was $11.1 million, compared to $11.3 million for the fourth quarter of 2007. Total other income increased 9% to $1.9 million for the quarter, compared to $1.7 million in the fourth quarter a year ago, as checking fees were 23% higher than the same quarter last year. On a sequential quarter basis, decreased checking fees and lower FAS 159 fair value gains led to a decline in non-interest income.
Total other expense was $7.2 million in the fourth quarter of 2008, up just 3% from the same quarter last year. Compensation expense was down 7% from the prior quarter due to substantially reduced bonus payments, and up just 5% for the year.
The efficiency ratio was 55.3% in the fourth quarter of 2008 compared to 53.5% in the same quarter a year ago, and 52.1% for 2008 compared to 52.4% for 2007.
For the full year, net interest income increased 6% to $45.9 million compared to $43.4 million in 2007. Total other income increased 17% to $8.9 million in 2008 compared to $7.6 million in 2007, largely due to the increase in checking fees, which were up $1.0 million to $4.8 million for the year. A $398,000 net gain on the sale of corporate debt from the securities portfolio augmented 2008 income compared to a $435,000 loss on the sale of securities and a $569,000 gain on the termination of advances during 2007. Both the gains and losses in 2007 were primarily related to FAS 159 restructuring during the first half of 2007. Income from Bank Owned Life Insurance (BOLI) grew as Cascade added $4.0 million of BOLI in December 2007, and transferred the majority of the existing policies to a new, higher yielding structure at the same time.
Total other expenses (excluding the OTTI charge) increased 7% to $28.5 million in 2008 compared to $26.7 million in 2007. Total compensation costs were up $727,000. Salary and bonus costs included in compensation expense were flat at $12.5 million in 2008 and 2007. The primary cause of the increase in reported expense was a lower level of deferred fees associated with loan originations of $307,000. Other operating expenses were up $1.1 million year over year with the largest increase due to FDIC insurance premiums of $633,000 and the costs associated with the new Burlington branch which opened in May 2008.
Net Interest Margin & Interest Rate Risk
Cascade’s net interest margin declined to 3.01% for the fourth quarter of 2008 compared to 3.38% for the fourth quarter a year ago. “The income reversal associated with the placement of a net additional $24.6 million on non-accrual, as well as the175 basis point drop in the Fed funds rate, reduced our net interest margin during the fourth quarter,” said Johnson. “Our yield on earning assets dropped 60 basis points compared to the previous quarter, and the cost of liabilities decreased by 11 basis points.”
The net interest margin was 3.52% in the third quarter of 2008. “Approximately 31 basis points of the 3.52% margin in the third quarter was due to the recapture of interest on nonperforming loans that were paid off during the quarter, which provided approximately $1.0 million in additional interest income,” added Johnson. For the full year, the net interest margin was 3.20% compared to 3.34% in 2007.
| | 4Q08 | 3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q07 | 4Q06 |
| Asset yield | 6.07% | 6.67% | 6.31% | 6.62% | 7.20% | 7.29% | 7.30% | 7.17% | 7.03% |
| Liability cost | 3.33% | 3.44% | 3.51% | 4.03% | 4.32% | 4.42% | 4.39% | 4.38% | 4.26% |
| | | | | | | | | | |
| Spread | 2.74% | 3.23% | 2.80% | 2.59% | 2.88% | 2.87% | 2.91% | 2.79% | 2.77% |
| Margin | 3.01% | 3.52% | 3.17% | 3.02% | 3.38% | 3.37% | 3.37% | 3.26% | 3.23% |
Cascade Financial – 4Q08 Results
January 27, 2009
Page 5
Conference Call
Cascade’s management team will host a conference call on Wednesday, January 28, 2009, at 11:00 a.m. PST (2:00 p.m. EST). Interested investors may listen to the call live or via replay at www.cascadebank.com under shareholder information. Investment professionals are invited to dial (800) 218-0204 to participate in the live call. A telephone replay of the call will be available for a month at (303) 590-3000, using passcode 11123778#.
About Cascade Financial
Established in 1916, Cascade Bank, the only operating subsidiary of Cascade Financial Corporation, is a state chartered commercial bank headquartered in Everett, Washington. Cascade Bank has proudly served the Puget Sound region for over 90 years and operates 21 full service branches in Everett, Lynnwood, Marysville, Mukilteo, Shoreline, Smokey Point, Issaquah, Clearview, Woodinville, Lake Stevens, Bellevue, Snohomish, North Bend and Burlington.
In September 2008, President and CEO Carol K. Nelson was named to U.S. Banker magazine’s list of “25 Women to Watch” in its annual ranking of the 25 Most Powerful Women in Banking and Finance. In June 2008, Cascade was ranked #44 on the Seattle Times’ Northwest 100, a list of public companies. In January 2008, Cascade was ranked #10 on Washington CEO magazine’s list of Top 25 Washington Banks.
Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These measures include return on tangible equity and tangible book value per share, efficiency ratio and earnings per share before OTTI. These measures should not be construed as a substitute for GAAP measures; they should be read and used in conjunction with Cascade’s GAAP financial information. A reconciliation of the included non-GAAP financial measures to GAAP measures is included elsewhere in this release.
Forward-Looking Statements
Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Reform Act. CASB’s actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “intend,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could.” These forward-looking statements involve risks and uncertainties including, but not limited to, economic conditions, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including the performance of financial markets, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; results of various investment activities; the effects of competitors’ pricing policies, of changes in laws and regulations on competition and of demographic changes on target market populations’ savings and financial planning needs; industry changes in information technology systems on which we are highly dependent; failure of acquisitions to produce revenue enhancements or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; the adoption of CASB of an FFIEC policy that provides guidance on the reporting of delinquent consumer loans and the timing of associated credit charge-offs for financial institution subsidiaries; and the resolution of legal proceedings and related matters. In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and state regulators, whose policies and regulations could affect CASB’s results. These statements are representative only on the date hereof, and CASB undertakes no obligation to update any forward-looking statements made.
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Cascade Financial – 4Q08 Results
January 27, 2009
Page 6
| BALANCE SHEET | | | | | | | | | | | | |
| (Dollars in thousands except per share amounts) | | December 31, 2008 | | | September 30, 2008 | | | | | | December 31, 2007 | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 11,859 | | | $ | 12,822 | | | | -8 | % | | $ | 12,911 | | | | -8 | % |
| Interest-bearing deposits/Fed funds sold | | | 41,607 | | | | 611 | | | | 6710 | % | | | 1,619 | | | | 2470 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Securities available-for-sale | | | 123,678 | | | | 102,313 | | | | 21 | % | | | 82,860 | | | | 49 | % |
| Securities held-to-maturity | | | 120,594 | | | | 140,615 | | | | -14 | % | | | 137,238 | | | | -12 | % |
| Federal Home Loan Bank (FHLB) stock | | | 11,920 | | | | 11,920 | | | | 0 | % | | | 11,920 | | | | 0 | % |
| Total securities | | | 256,192 | | | | 254,848 | | | | 1 | % | | | 232,018 | | | | 10 | % |
| Loans | | | | | | | | | | | | | | | | | | | | | |
| | Business | | | 485,060 | | | | 473,213 | | | | 3 | % | | | 468,453 | | | | 4 | % |
| | R/E construction | | | 406,505 | | | | 403,569 | | | | 1 | % | | | 381,810 | | | | 6 | % |
| | Commercial R/E | | | 122,951 | | | | 119,787 | | | | 3 | % | | | 120,421 | | | | 2 | % |
| | Multifamily | | | 86,864 | | | | 74,535 | | | | 17 | % | | | 11,397 | | | | 662 | % |
| | Home equity/consumer | | | 30,772 | | | | 29,659 | | | | 4 | % | | | 27,688 | | | | 11 | % |
| | Residential | | | 126,089 | | | | 112,283 | | | | 12 | % | | | 98,384 | | | | 28 | % |
| | Total loans | | | 1,258,241 | | | | 1,213,046 | | | | 4 | % | | | 1,108,153 | | | | 14 | % |
| | Deferred loan fees | | | (3,069 | ) | | | (3,248 | ) | | | -6 | % | | | (3,724 | ) | | | -18 | % |
| | Allowance for loan losses | | | (16,439 | ) | | | (14,531 | ) | | | 13 | % | | | (11,653 | ) | | | 41 | % |
| Loans, net | | | | 1,238,733 | | | | 1,195,267 | | | | 4 | % | | | 1,092,776 | | | | 13 | % |
| REO and other repossessed assets | | | 1,446 | | | | 1,446 | | | | 0 | % | | | - | | | NM | |
| Premises and equipment | | | 15,463 | | | | 15,676 | | | | -1 | % | | | 14,160 | | | | 9 | % |
| Bank owned life insurance | | | 23,638 | | | | 23,388 | | | | 1 | % | | | 22,658 | | | | 4 | % |
| Deferred tax asset | | | 9,828 | | | | 8,437 | | | | 16 | % | | | 1,574 | | | | 524 | % |
| Other assets | | | 13,475 | | | | 14,173 | | | | -5 | % | | | 14,653 | | | | -8 | % |
| Goodwill | | | | 24,585 | | | | 24,585 | | | | 0 | % | | | 24,585 | | | | 0 | % |
| Core deposit intangible, net | | | 493 | | | | 529 | | | | -7 | % | | | 634 | | | | -22 | % |
| | Total assets | | $ | 1,637,319 | | | $ | 1,551,782 | | | | 6 | % | | $ | 1,417,588 | | | | 16 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | | | | |
| | Personal checking accounts | | $ | 102,123 | | | $ | 90,772 | | | | 13 | % | | $ | 58,126 | | | | 76 | % |
| | Business checking accounts | | | 84,720 | | | | 82,485 | | | | 3 | % | | | 80,064 | | | | 6 | % |
| | Total checking accounts | | | 186,843 | | | | 173,257 | | | | 8 | % | | | 138,190 | | | | 35 | % |
| | Savings and money market accounts | | | 204,035 | | | | 266,560 | | | | -23 | % | | | 327,264 | | | | -38 | % |
| | Certificates of deposit | | | 615,904 | | | | 552,688 | | | | 11 | % | | | 439,442 | | | | 40 | % |
| Total deposits | | | 1,006,782 | | | | 992,505 | | | | 1 | % | | | 904,896 | | | | 11 | % |
| FHLB advances | | | 249,000 | | | | 255,000 | | | | -2 | % | | | 231,000 | | | | 8 | % |
| Federal Reserve borrowings | | | 40,000 | | | | 30,000 | | | | 33 | % | | | - | | | NM | |
| Securities sold under agreement to repurchase | | | 146,390 | | | | 120,983 | | | | 21 | % | | | 120,625 | | | | 21 | % |
| Jr. Sub. Deb. (Trust Preferred Securities) | | | 15,465 | | | | 15,465 | | | | 0 | % | | | 15,465 | | | | 0 | % |
| Jr. Sub. Deb. (Trust Preferred Securities), at fair value | | | 10,510 | | | | 10,535 | | | | 0 | % | | | 11,422 | | | | -8 | % |
| Other liabilities | | | 9,050 | | | | 8,194 | | | | 10 | % | | | 12,084 | | | | -25 | % |
| | Total liabilities | | | 1,477,197 | | | | 1,432,682 | | | | 3 | % | | | 1,295,492 | | | | 14 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Equity: | | | | | | | | | | | | | | | | | | | | | |
| Senior preferred stock | | | 36,616 | | | | - | | | NM | | | | - | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | |
| Common stockholders' equity: | | | | | | | | | | | | | | | | | | | | |
| Common stock and paid in capital | | | 40,901 | | | | 40,857 | | | | 0 | % | | | 40,442 | | | | 1 | % |
| Retained earnings | | | 80,876 | | | | 79,753 | | | | 1 | % | | | 82,169 | | | | -2 | % |
| Warrants issued to US Treasury | | | 2,389 | | | | - | | | NM | | | | - | | | NM | |
| Accumulated other comprehensive loss, net | | | (660 | ) | | | (1,510 | ) | | | -56 | % | | | (515 | ) | | | 28 | % |
| Total common stockholders' equity | | | 123,506 | | | | 119,100 | | | | 4 | % | | | 122,096 | | | | 1 | % |
| | Total equity | | | 160,122 | | | | 119,100 | | | | 34 | % | | | 122,096 | | | | 31 | % |
| Total liabilities and equity | | $ | 1,637,319 | | | $ | 1,551,782 | | | | 6 | % | | $ | 1,417,588 | | | | 16 | % |
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Cascade Financial – 4Q08 Results
January 27, 2009
Page 7
| INCOME STATEMENT | | | | | | | | | | | | | | | |
(Dollars in thousands except per share amounts)(Unaudited) | | Quarter Ended December 31, 2008 | | | Quarter Ended September 30, 2008 | | | | | | Quarter Ended December 31, 2007 | | | | |
| Interest income | | $ | 22,419 | | | $ | 24,345 | | | | -8 | % | | $ | 24,137 | | | | -7 | % |
| Interest expense | | | 11,291 | | | | 11,508 | | | | -2 | % | | | 12,820 | | | | -12 | % |
| Net interest income | | | 11,128 | | | | 12,837 | | | | -13 | % | | | 11,317 | | | | -2 | % |
| Provision for loan losses | | | 2,400 | | | | 1,250 | | | | 92 | % | | | 500 | | | | 380 | % |
| Net interest income after provision for loan losses | | | 8,728 | | | | 11,587 | | | | -25 | % | | | 10,817 | | | | -19 | % |
| Other income | | | | | | | | | | | | | | | | | | | | |
| | Checking fees | | | 1,208 | | | | 1,328 | | | | -9 | % | | | 980 | | | | 23 | % |
| | Service fees | | | 266 | | | | 280 | | | | -5 | % | | | 267 | | | | 0 | % |
| | Bank owned life insurance | | | 266 | | | | 271 | | | | -2 | % | | | 205 | | | | 30 | % |
| | Gain/(loss) on sale of securities | | | 2 | | | | (87 | ) | | NM | | | | (4 | ) | | NM | |
| | Gain on sale of loans | | | 9 | | | | 36 | | | | -75 | % | | | 32 | | | | -72 | % |
| | Fair value gains | | | 25 | | | | 389 | | | | -94 | % | | | 147 | | | | -83 | % |
| | Other | | | 114 | | | | 106 | | | | 8 | % | | | 112 | | | | 2 | % |
| Total other income | | | 1,890 | | | | 2,323 | | | | -19 | % | | | 1,739 | | | | 9 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Total income | | | 10,618 | | | | 13,910 | | | | -24 | % | | | 12,556 | | | | -15 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Compensation expense | | | 3,505 | | | | 3,789 | | | | -7 | % | | | 3,571 | | | | -2 | % |
| Other operating expenses | | | 3,688 | | | | 3,373 | | | | 9 | % | | | 3,416 | | | | 8 | % |
| OTTI charge | | | - | | | | 17,338 | | | NM | | | | - | | | NM | |
| Total other expense | | | 7,193 | | | | 24,500 | | | | -71 | % | | | 6,987 | | | | 3 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Net income before provision (benefit) for income tax | | | 3,425 | | | | (10,590 | ) | | NM | | | | 5,569 | | | | -38 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Provision (benefit) for income tax | | | 964 | | | | (3,971 | ) | | NM | | | | 1,557 | | | | -38 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | 2,461 | | | $ | (6,619 | ) | | NM | | | $ | 4,012 | | | | -39 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Dividends/senior preferred stock | | $ | 216 | | | $ | - | | | NM | | | $ | - | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | |
| Income available for common stock holders | | $ | 2,245 | | | $ | (6,619 | ) | | NM | | | $ | 4,012 | | | | -44 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| EARNINGS (LOSS) PER SHARE INFORMATION | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) per share, basic | | $ | 0.19 | | | $ | (0.55 | ) | | NM | | | $ | 0.33 | | | | -44 | % |
| Earnings (loss) per share, diluted | | $ | 0.19 | | | $ | (0.55 | ) | | NM | | | $ | 0.33 | | | | -44 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding | | | | | | | | | | | | | | | | | | | | |
| Basic | | | | 12,071,032 | | | | 12,059,480 | | | | | | | | 12,023,685 | | | | | |
| Diluted | | | | 12,119,401 | | | | 12,140,168 | | | | | | | | 12,218,248 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | Quarter Ended | | | Quarter Ended | | | | | | | Quarter Ended | | | | | |
| PERFORMANCE MEASURES AND RATIOS | | December 31, 2008 | | | September 30, 2008 | | | | | | | December 31, 2007 | | | | | |
| Return on average common equity | | | 7.33 | % | | | -20.58 | % | | | | | | | 13.11 | % | | | | |
| Return on average tangible common equity | | | 9.22 | % | | | -25.75 | % | | | | | | | 16.70 | % | | | | |
| Return on average assets | | | 0.62 | % | | | -1.69 | % | | | | | | | 1.14 | % | | | | |
Efficiency ratio* | | | 55.25 | % | | | 47.24 | % | | | | | | | 53.52 | % | | | | |
| Net interest margin | | | 3.01 | % | | | 3.52 | % | | | | | | | 3.38 | % | | | | |
| *Excludes OTTI charge | | | | | | | | | | | | | | | | | | | | |
(more)
Cascade Financial – 4Q08 Results
January 27, 2009
Page 8
| INCOME STATEMENT | | Year Ended | | | One Year | |
| (Dollars in thousands except per share amounts) | | December 31, 2008 | | | December 31, 2007 | | | Change | |
| (Unaudited) | | | | | | | | | |
| Interest income | | $ | 92,571 | | | $ | 93,935 | | | | -1 | % |
| Interest expense | | | 46,686 | | | | 50,540 | | | | -8 | % |
| Net interest income | | | 45,885 | | | | 43,395 | | | | 6 | % |
| Provision for loan losses | | | 7,240 | | | | 1,350 | | | | 436 | % |
| Net interest income after provision for loan losses | | | 38,645 | | | | 42,045 | | | | -8 | % |
| Other income | | | | | | | | | | | | |
| | Checking fees | | | 4,848 | | | | 3,820 | | | | 27 | % |
| | Service fees | | | 1,092 | | | | 1,059 | | | | 3 | % |
| | Bank owned life insurance | | | 1,056 | | | | 803 | | | | 32 | % |
| | Gain/(loss) on sale of securities | | | 398 | | | | (435 | ) | | NM | |
| | Gain on sale of loans | | | 128 | | | | 199 | | | | -36 | % |
| | Fair value gains | | | 912 | | | | 1,081 | | | | -16 | % |
| | Gain on FHLB advances | | | - | | | | 569 | | | NM | |
| | (Loss)gain on sale of real estate | | | (3 | ) | | | - | | | NM | |
| | Other | | | 453 | | | | 470 | | | | -4 | % |
| Total other income | | | 8,884 | | | | 7,566 | | | | 17 | % |
| | | | | | | | | | | | | | |
| Total income | | | 47,529 | | | | 49,611 | | | | -4 | % |
| | | | | | | | | | | | | | |
| Compensation expense | | | 14,544 | | | | 13,817 | | | | 5 | % |
| Other operating expenses | | | 13,996 | | | | 12,865 | | | | 9 | % |
| OTTI charge | | | 17,338 | | | | - | | | NM | |
| Total other expense | | | 45,878 | | | | 26,682 | | | | 72 | % |
| | | | | | | | | | | | | | |
| Net income before (benefit) provision for income tax | | | 1,651 | | | | 22,929 | | | | -93 | % |
| | | | | | | | | | | | | | |
| (Benefit) provision for income tax | | | (439 | ) | | | 7,383 | | | NM | |
| | | | | | | | | | | | | | |
| Net income | | $ | 2,090 | | | $ | 15,546 | | | | -87 | % |
| | | | | | | | | | | | | | |
| Dividends/senior preferred stock | | $ | 216 | | | $ | - | | | NM | |
| | | | | | | | | | | | | | |
| Income available for common stock holders | | $ | 1,874 | | | $ | 15,546 | | | | -88 | % |
| | | | | | | | | | | | | | |
| EARNINGS PER SHARE INFORMATION | | | | | | | | | | | | |
| Earnings per share, basic | | $ | 0.16 | | | $ | 1.29 | | | | -88 | % |
| Earnings per share, diluted | | $ | 0.15 | | | $ | 1.27 | | | | -88 | % |
| | | | | | | | | | | | | | |
| Weighted average number of shares outstanding | | | | | | | | | | | | |
| Basic | | | | 12,053,084 | | | | 12,047,792 | | | | | |
| Diluted | | | | 12,159,174 | | | | 12,284,854 | | | | | |
| | | | | | | | | | | | | | |
| | | | Year Ended | | | | | |
| PERFORMANCE MEASURES AND RATIOS | | December 31, 2008 | | | December 31, 2007 | | | | | |
| Return on average common equity | | | 1.49 | % | | | 13.23 | % | | | | |
| Return on average tangible common equity | | | 1.87 | % | | | 16.88 | % | | | | |
| Return on average assets | | | 0.14 | % | | | 1.13 | % | | | | |
Efficiency ratio* | | | 52.11 | % | | | 52.36 | % | | | | |
| Net interest margin | | | 3.20 | % | | | 3.34 | % | | | | |
| *Excludes OTTI charge | | | | | | | | | | | | |
(more)
Cascade Financial – 4Q08 Results
January 27, 2009
Page 9
| (Dollars in thousands except per share amounts)(Unaudited) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Year Ended | |
| AVERAGE BALANCES | | Dec. 31, 2008 | | | Sept. 30, 2008 | | | Dec. 31, 2007 | | | Dec. 31, 2008 | | | Dec. 31, 2007 | |
| Average assets | | $ | 1,580,279 | | | $ | 1,556,771 | | | $ | 1,401,036 | | | $ | 1,534,458 | | | $ | 1,370,309 | |
| Average earning assets | | | 1,469,312 | | | | 1,452,526 | | | | 1,330,129 | | | | 1,435,055 | | | | 1,297,462 | |
| Average total loans | | | 1,226,143 | | | | 1,201,676 | | | | 1,095,490 | | | | 1,183,072 | | | | 1,046,093 | |
| Average deposits | | | 979,591 | | | | 988,905 | | | | 896,043 | | | | 966,316 | | | | 881,136 | |
| Average equity (including sr preferred stock) | | | 137,164 | | | | 127,936 | | | | 121,359 | | | | 129,083 | | | | 117,534 | |
| Average common equity (excluding sr preferred stock) | | | 122,513 | | | | 127,936 | | | | 121,359 | | | | 125,400 | | | | 117,534 | |
| Average tangible common equity (excluding sr preferred stock) | | | 97,416 | | | | 102,804 | | | | 96,122 | | | | 100,251 | | | | 92,095 | |
| | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | | Dec. 31, 2008 | | | Sept. 30, 2008 | | | Dec. 31, 2007 | | | | | | | | | |
| Nonperforming loans (NPLs) | | $ | 40,278 | | | $ | 15,697 | | | $ | 1,523 | | | | | | | | | |
| Nonperforming loans/total loans | | | 3.20 | % | | | 1.29 | % | | | 0.14 | % | | | | | | | | |
| Real estate/repossessed assets owned | | $ | 1,446 | | | $ | 1,446 | | | $ | - | | | | | | | | | |
| Nonperforming assets | | $ | 41,724 | | | $ | 17,143 | | | $ | 1,523 | | | | | | | | | |
| Nonperforming assets/total assets | | | 2.55 | % | | | 1.10 | % | | | 0.11 | % | | | | | | | | |
| Net loan charge-offs in the quarter | | $ | 506 | | | $ | 43 | | | $ | 99 | | | | | | | | | |
| Net charge-offs in the quarter/total loans | | | 0.04 | % | | | 0.00 | % | | | 0.01 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | $ | 16,439 | | | $ | 14,531 | | | $ | 11,653 | | | | | | | | | |
| Plus: Allowance for off-balance sheet commitments | | | 93 | | | | 107 | | | | 142 | | | | | | | | | |
| Total allowance for loan losses | | $ | 16,532 | | | $ | 14,638 | | | $ | 11,795 | | | | | | | | | |
| Total allowance for loan losses/total loans | | | 1.31 | % | | | 1.21 | % | | | 1.06 | % | | | | | | | | |
| Total allowance for loan losses/nonperforming loans | | | 41 | % | | | 93 | % | | | 774 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| EQUITY ANALYSIS | | Dec. 31, 2008 | | | Sept. 30, 2008 | | | Dec. 31, 2007 | | | | | | | | | |
| Total equity | | $ | 160,122 | | | $ | 119,100 | | | $ | 122,096 | | | | | | | | | |
| Less: senior preferred stock | | | 36,616 | | | | - | | | | - | | | | | | | | | |
| Total common equity | | | 123,506 | | | | 119,100 | | | | 122,096 | | | | | | | | | |
| Less: goodwill and intangibles | | | 25,078 | | | | 25,114 | | | | 25,219 | | | | | | | | | |
| Tangible common equity | | $ | 98,428 | | | $ | 93,986 | | | $ | 96,877 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Common stock outstanding | | | 12,071,032 | | | | 12,071,032 | | | | 12,023,685 | | | | | | | | | |
| Book value per common share | | $ | 10.23 | | | $ | 9.87 | | | $ | 10.15 | | | | | | | | | |
| Tangible book value per common share | | $ | 8.15 | | | $ | 7.79 | | | $ | 8.06 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital/asset ratio (inc. jr. sub deb) | | | 11.31 | % | | | 9.29 | % | | | 10.38 | % | | | | | | | | |
| Capital/asset ratio (Tier 1, inc. jr. sub deb) | | | 10.30 | % | | | 7.87 | % | | | 8.90 | % | | | | | | | | |
| Tangible cap/asset ratio (ex. jr. sub deb and pref. stock) | | | 6.01 | % | | | 6.16 | % | | | 7.04 | % | | | | | | | | |
| Risk based capital/risk weighted asset ratio | | | 13.26 | % | | | 10.40 | % | | | 10.80 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Year Ended | |
| INTEREST SPREAD ANALYSIS | | Dec. 31, 2008 | | | Sept. 30, 2008 | | | Dec. 31, 2007 | | | Dec. 31, 2008 | | | Dec. 31, 2007 | |
| Yield on total loans | | | 6.16 | % | | | 6.82 | % | | | 7.64 | % | | | 6.59 | % | | | 7.80 | % |
| Yield on investments | | | 5.35 | % | | | 5.38 | % | | | 5.15 | % | | | 5.51 | % | | | 4.89 | % |
| Yield on earning assets | | | 6.07 | % | | | 6.67 | % | | | 7.20 | % | | | 6.45 | % | | | 7.24 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Cost of deposits | | | 2.53 | % | | | 2.59 | % | | | 3.91 | % | | | 2.82 | % | | | 4.00 | % |
| Cost of FHLB advances | | | 4.18 | % | | | 4.30 | % | | | 4.38 | % | | | 4.26 | % | | | 4.53 | % |
| Cost of Federal Reserve borrowings | | | 1.08 | % | | | 2.37 | % | | | 0.00 | % | | | 1.92 | % | | | 0.00 | % |
| Cost of securities sold under agreement to repurchase | | | 5.01 | % | | | 5.32 | % | | | 3.25 | % | | | 4.80 | % | | | 2.75 | % |
| Cost of jr. sub. debentures | | | 8.12 | % | | | 8.00 | % | | | 7.80 | % | | | 8.02 | % | | | 7.77 | % |
| Cost of interest-bearing liabilities | | | 3.33 | % | | | 3.44 | % | | | 4.32 | % | | | 3.57 | % | | | 4.38 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest spread | | | 2.74 | % | | | 3.23 | % | | | 2.88 | % | | | 2.88 | % | | | 2.86 | % |
| Net interest margin | | | 3.01 | % | | | 3.52 | % | | | 3.38 | % | | | 3.20 | % | | | 3.34 | % |
Note: Transmitted on Globe Newswire at 1:00 p.m. PST on January 27, 2009.
