Exhibit 99
Cascade Financial Corporation The Cereghino Group
Contacts: Lars Johnson Corporate Investor Relations
Chief Financial Officer Becky Pendleton Reid
425.339.5500 206.762.0993
www.cascadebank.com www.stockvalues.com
CASCADE FINANCIAL FIRST QUARTER PROFITS INCREASE 25%
----------------------------------------------------
ASSET QUALITY REMAINS STRONG AS BUSINESS PORTFOLIO EXPANDS
----------------------------------------------------------
Everett, WA - April 22, 2003 - Cascade Financial Corporation (Nasdaq: CASB),
parent company of Cascade Bank, today reported record profits for the first
quarter of 2003, as business lending expanded 22% and revenues grew 12%. Net
income rose 25% to $2.3 million, or $0.34 per diluted share, compared to $1.8
million, or $0.28 per diluted share for the same quarter last year.
"We launched 2003 with our tenth consecutive quarter of record earnings, fueled
by strong commercial business growth and continuing solid asset quality," said
Carol K. Nelson, President and CEO. "We have built a first-class commercial
banking team, and our branch and service expansion activities are helping us
gain market share and generate strong profits. Our strong first quarter
performance puts us well on the way to achieving our stated goals of growing
earnings per share by 10% to15% annually."
The Puget Sound economy continues to underperform the nation, impacted by the
residual affects of the recession, deployment of approximately 20,000 troops
and layoffs in the aerospace and high-tech sectors. "We anticipate the local
economy will continue to present a challenge through the balance of 2003. While
the local business lending climate is growing increasingly competitive, we
believe our strong business banking team and enhanced service delivery is the
reason for our continuing success in the local market," Nelson noted.
Cascade Financial Corporation will review 2002 results and 2003 initiatives
at its Annual Shareholders' Meeting on Tuesday, May 6, at 6:30 p.m. at the
Everett Golf & Country Club. All current shareholders and interested investors
are invited to meet members of the Cascade Bank team and learn more about the
company.
First Quarter 2003 Financial Highlights
- ---------------------------------------
(Quarter ended 3/31/03 compared to 3/31/02)
* Net income increased 25% to $2.3 million, or $0.34 per diluted share.
* Return on average equity increased to 16.2%, compared to 15.3% in 1Q02.
* Return on average assets grew to 1.13% from 0.98% in the first quarter a year
ago.
* Deposits grew 22% to $536 million at March 31, 2003.
* Business loans accounted for 27% of the total loan portfolio compared to 22%
a year ago.
* Allowance for loan losses grew to 1.28% of total loans from 1.15% a year ago.
* Asset quality remained strong with nonperforming loans just 0.23% of total
loans.
March 31 Quarterly Operating Results
- ------------------------------------
Revenues (net interest income before provision for loan losses plus non-
interest income) grew 12% to $8.3 million, compared to $7.4 million in the
first quarter of 2002. Net interest income grew 4% to $6.7 million from $6.5
million in the first quarter a year ago. The provision for loan losses
decreased to $375,000 from $700,000 in the March quarter a year ago due to the
continuing strong performance of the loan portfolio. Net interest income after
loan loss provision increased 10% to $6.4 million in the first quarter,
compared to $5.8 million a year ago.
(MORE)
Cascade Financial Reports Record 1Q03 Profits
April 22, 2003
Page Two
The current low interest rate environment led to loan refinancing and
modifications, as well as calls on investment securities and accelerated
repayments, and resulted in a 78 basis points (bp) drop in the yield on earning
assets. That drop was partially offset by a 65 bp drop in the bank's cost of
funds. The lower spread combined with the purchase of $10 million of bank
owned life insurance (BOLI), which replaces interest income with non-interest
income, resulted in a small decline in our net interest margin (NIM). NIM was
3.38% during the quarter compared to 3.46% in the first quarter of 2002.
Other (non-interest) income in the first quarter of 2003 increased 66% to $1.6
million from $1.0 million in the first quarter last year, while operating (non-
interest) expenses increased 16% to $4.6 million from $4.0 million in the first
quarter of 2002. The largest increase in operating expenses was a net increase
in advance prepayment fees of $337,000. Salaries and employee benefits
increased 16%, reflecting the new branch opened last November and the new
service center launched in January. "We continue to invest in our branch
network and our service delivery capacity to provide a differentiated service
level and foster customer loyalty," Nelson noted. "Our customers love our
centralized service center that is intended to ensure every call is answered by
an individual and that no one is ever trapped in endless voicemail loops."
Cascade's first quarter efficiency ratio was 55.1% compared to 53.5% in the
first quarter a year ago. Federal Home Loan Bank (FHLB) prepayment fees
increased expenses during the quarter and also added about five percentage
points to the efficiency ratio. Cascade's first quarter return on equity rose
to 16.16% from 15.33% in the first quarter a year ago and its return on average
assets improved to 1.13% from 0.98% a year ago.
Credit Quality
- --------------
"The loan portfolio continues to show solid credit quality, with nonperforming
loans to total loans remaining at a very modest 23 basis points and
nonperforming assets to total assets at an even more modest 19 bp," Johnson
noted. With $14,000 in net recoveries in the quarter, the allowance for loan
losses increased to $7.3 million, or 1.28% of total loans and 551% of
nonperforming loans at the end of the quarter. At March 31, 2002, the
allowance for loan losses totaled $6.5 million, or 1.15% of total loans and
234% of nonperforming loans.
Asset Management
- ----------------
Total assets increased 9% to $832 million at March 31, 2003, compared to $764
million a year ago. Investment securities increased to $236 million from $167
million a year ago. The growth in the investment portfolio, which consists of
Government Agency bonds and mortgage-backed securities, continued to offset
reductions in the residential loan portfolio.
"At the end of 2002, we invested $10 million in BOLI, a universal life
insurance program that provides tax deferred income and employee benefits,"
Johnson said. "The insurance products are highly rated, provide very
competitive yields for the bank, and offer an attractive benefit for senior
managers and key employees."
"The resources we've devoted to building our commercial banking team continue
to generate strong growth in total commercial lending," Nelson stated. At
March 31, 2003, commercial lending, including commercial real estate, business
lending and real estate construction, grew 19% to $309 million or 55% of total
loans, compared to $260 million or 46% of the total loan portfolio a year ago.
While residential loan originations were up over 80%, we chose to sell most of
these loans into the secondary market, which contributed to non-interest
income. In keeping with our strategy of selling 15 and 30 year (fixed-rate)
originations, residential loans declined to $120 million, or 21% of total loans
at quarter end, compared to $143 million or 25% of total loans a year ago."
(MORE)
Cascade Financial Reports Record 1Q03 Profits
April 22, 2003
Page Three
Percent of Portfolio
Types of Loans March 31, December 31, March 31,
2003 2002 2002
----------------------------------------
Business 27.1% 25.6% 22.3%
Real Estate Construction (net) 15.6% 15.1% 12.7%
Commercial Real Estate 11.8% 11.4% 11.0%
----------------------------------------
Total Commercial 54.5% 52.1% 46.0%
Home Equity and Consumer 7.8% 8.9% 9.8%
Residential 21.1% 22.0% 25.3%
Multifamily 16.6% 17.0% 18.9%
----------------------------------------
Total Loans 100.0% 100.0% 100.0%
Liabilities and Capital Management
- ----------------------------------
Cascade's deposits at the end of the first quarter increased 22% from a year
ago to $536 million, as the bank's very effective branch network continued to
bring in deposits from new and existing customers. Low-cost deposit growth led
to a 12% reduction in FHLB advances, which were $192 million at March 31, 2003
compared to $219 million a year ago.
Stockholders' equity was $58 million, or $8.97 per share, at March 31, 2003, up
19% from $49 million, or $7.82 per share, at March 31, 2002. Capital ratios
continue to be above the well-capitalized guidelines established by regulatory
agencies. The corporation's Tier 1 capital/asset ratio, which includes trust
preferred securities, at quarter-end was 8.15% compared to 7.79% a year ago.
About Cascade Financial
- -----------------------
Established in 1916, Cascade Bank, the only operating subsidiary of Cascade
Financial Corporation, is a state chartered commercial bank headquartered in
Snohomish County, Washington. Cascade's vision is to be the preferred
community bank whose employees build relationships to deliver financial
solutions with exceptional service. The bank has been locally managed for more
than 87 years and has an "Outstanding" Community Reinvestment Act rating for
serving the credit needs of the local community. Cascade Bank operates 15 full
service offices, located in Everett, Lynnwood, Marysville, Mukilteo, Smokey
Point, Issaquah, Clearview, Woodinville, Lake Stevens, and Bellevue.
The company will host a conference call on April 23, 2003, at 10:00 a.m. PDT,
(1:00 p.m. EDT). To access the call, please visit www.cascadebank.com.
This document may contain forward-looking statements that are subject to risks
and uncertainties that could cause actual results to differ materially from
those projected. Those factors include, but are not limited to, impact of the
current national and regional economic recession on small business loan demand
in the Puget Sound area, loan delinquency rates, the bank's ability to continue
to attract quality commercial business, interest rate movements, changes in the
demographic make-up of the Company's market, fluctuation in demand for the
Company's products and services, the Company's ability to attract and retain
qualified people, and other factors. For a discussion of factors that could
cause actual results to differ, please see the Company's publicly available
Securities and Exchange Commission filings, including its Annual Report on Form
10-K for the fiscal year ended December 31, 2002.
(MORE)
Cascade Financial Reports Record 1Q03 Profits
April 22, 2003
Page Four
CASCADE FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
Three Months Ended
INCOME STATEMENT March 31, December 31, March 31,
2003 2002 2002
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
($ in thousands, except per share amounts)
Total interest income $ 12,748 $ 13,051 $ 13,373
Total interest expense 6,018 6,352 6,919
--------- --------- ---------
Net interest income before
provision for loan losses 6,730 6,699 6,454
Provision for loan losses 375 400 700
--------- --------- ---------
Net interest income after
provision for losses 6,355 6,299 5,754
Non-interest income
Gain on sale of loans 205 310 118
Gain on sale of securities 765 157 33
Service fees 425 389 402
Gain on sale of real estate 41 76 376
Bank owned life insurance 148 86 8
Other 31 10 35
--------- --------- ---------
Total non-interest income 1,615 1,028 972
Non-interest expense
Salary and employee benefits 2,485 2,160 2,141
Occupancy 613 593 602
Data processing 71 69 60
Marketing 111 156 80
Other non-interest expenses 872 1,057 987
Debt prepayment fees 442 79 105
--------- --------- ---------
Total non-interest expense 4,594 4,114 3,975
Income before Federal income taxes 3,376 3,213 2,751
Federal income taxes 1,072 1,058 903
--------- --------- ---------
Net earnings $ 2,304 $ 2,155 $ 1,848
========= ========= =========
Earnings per share, basic $ 0.35 $ 0.33 $ 0.29
Earnings per share, diluted $ 0.34 $ 0.32 $ 0.28
Weighted average basic shares
outstanding 6,499,663 6,473,519 6,296,989
Weighted average diluted shares
Outstanding 6,701,693 6,656,623 6,529,829
PERFORMANCE MEASURES
Return on equity 16.16% 15.47% 15.33%
Return on average assets 1.13% 1.07% 0.98%
Efficiency ratio 55.05% 53.24% 53.53%
Net interest margin 3.38% 3.41% 3.46%
Total yield on earning assets 6.44% 6.62% 7.22%
Total cost of funds 3.36% 3.56% 4.01%
Net interest spread 3.08% 3.06% 3.21%
(MORE)
Cascade Financial Reports Record 1Q03 Profits
April 22, 2003
Page Five
CASCADE FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
BALANCE SHEET March 31, December 31, March 31,
2003 2002 2002
----------- ----------- -----------
(Unaudited) (Audited) (Unaudited)
Cash and due from banks $ 10,154 $ 9,640 $ 8,384
Interest bearing deposits 969 10,955 14,990
Investment securities 235,927 208,975 166,719
Total Loans
Business 153,615 142,273 125,970
R/E Construction 88,402 84,229 72,119
Home Equity and Consumer Loans 44,416 49,331 55,667
Commercial Real Estate 67,028 63,108 62,239
Residential 119,701 122,561 142,902
Multifamily 94,341 94,245 106,900
------- ------- -------
Total loans 567,503 555,747 565,797
Deferred loan fees (2,257) (2,198) (2,387)
Allowance for loan losses (7,261) (6,872) (6,533)
------- ------- -------
Loans, net 557,985 546,677 556,877
Premises and equipment 9,014 9,261 8,378
Bank Owned Life Insurance 10,754 10,619 546
Other assets 6,827 8,026 7,990
------- ------- -------
Total assets $831,630 $804,153 $763,884
======= ======= =======
Liabilities
Deposits
Checking accounts $ 54,092 $ 54,570 $ 49,316
Savings & money market accounts 118,174 113,951 117,074
Certificates of deposit 363,340 341,329 274,316
------- ------- -------
Total Deposits 535,606 509,850 440,706
FHLB advances 192,000 197,500 218,500
Securities sold under
agreement to repurchase 25,906 20,569 36,635
Accrued expenses and other liabilities 9,823 9,594 8,940
------- ------- -------
Total liabilities 763,335 737,513 704,781
------- ------- -------
Trust preferred securities 10,000 10,000 10,000
Stockholders' equity
Common stock & paid-in capital 11,750 11,548 10,872
Retained earnings 47,416 45,438 39,862
Treasury Stock (1,355) (1,347) (1,225)
Accumulated comprehensive gain (loss) 484 1,001 (406)
------- ------- -------
Total stockholders' equity 58,295 56,640 49,103
------- ------- -------
Total Liabilities and equity $831,630 $804,153 $763,884
======= ======= =======
(MORE)
Cascade Financial Reports Record 1Q03 Profits
April 22, 2003
Page Six
CASCADE FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
OTHER FINANCIAL HIGHLIGHTS
At or for the three months ended
March 31, December 31, March 31,
2003 2002 2002
----------- ----------- -----------
($ in thousands, except per share amounts)
Book value per common share $ 8.97 $ 8.74 $ 7.82
Capital/asset ratio (Tier 1) 8.15% 8.16% 7.79%
Average assets 824,425 803,382 763,385
Average earning assets 798,937 783,950 747,341
Average equity 57,756 55,313 48,688
ASSET QUALITY
Non-performing loans $ 1,317 $ 956 $ 2,793
Allowance for loan losses 7,261 6,872 6,532
Net quarterly charge-offs (recoveries) (14) 387 472
Non-performing loans/total loans 0.23% 0.17% 0.49%
Allowance for loan losses/total loans 1.28% 1.24% 1.15%
Allowance for loan losses/
non-performing loans 551% 719% 234%
Real estate owned 231 461 854
Non-performing assets/total assets 0.19% 0.18% 0.48%
Net loan charge offs/average loans - 0.07% 0.08%
Note: Transmitted on Business Wire on April 22, 2003 at 1:05 p.m. PDT.