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
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CASCADE FINANCIAL FIRST QUARTER PROFITS INCREASE 12%
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COMMERCIAL EXPANSION BRINGS 40% GROWTH IN BUSINESS LOANS,
24% RISE IN DEMAND DEPOSITS
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Everett, WA - April 20, 2004 - Cascade Financial Corporation (Nasdaq: CASB),
parent company of Cascade Bank, today reported record profits for the first
quarter of 2004, which were fueled by the expansion of its commercial banking
enterprise. Business loans increased 40%, commercial real estate loans grew
28% and demand deposits increased 24% from year ago levels. Net income rose
12% to $2.6 million, or $0.30 per diluted share, compared to $2.3 million, or
$0.28 per diluted share for the same quarter last year. All per share results
reflect the 5-for-4 stock split paid December 19, 2003.
"The highlight for the quarter, in addition to another record for earnings, was
our agreement to acquire Issaquah Bancshares," said Carol K. Nelson, President
and CEO. "Acquiring Issaquah Bancshares enhances our commercial banking
franchise and establishes us as the #1 independent bank in the Issaquah market,
one of the fastest growing communities in the greater Seattle area. Issaquah
Bank brings a substantial commercial loan portfolio, which has been assembled
by a skilled team of commercial lenders, a strong deposit base, historically
attractive margins, and a healthy share of a robust market to our business
mix."
On February 11, Cascade announced the signing of a definitive agreement to
acquire closely-held Issaquah Bancshares Inc., a $128 million asset institution
and parent of Issaquah Bank, in a stock and cash transaction valued at
approximately $32 million. In addition to increasing Cascade's assets to over
$1.0 billion, it will add two banking offices in the fast-growing Eastside
market of King County.
First Quarter 2004 Financial Highlights
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(quarter ended 3/31/04 compared to 3/31/03)
* Net income increased 12% to $2.6 million.
* EPS grew 9% to $0.30 per diluted share.
* The bank's efficiency ratio improved to 52.83% from 55.05%.
* Revenue from checking account fees grew 55%.
* Book value per share increased 16% to $8.05.
* Deposits grew 9% to $584 million, while demand deposits increased 24%.
* Business loans accounted for 35% of the total loan portfolio compared to 27%.
* Allowance for loan losses grew to 1.36% of average total loans from 1.29%.
* Asset quality remained strong with nonperforming loans just 0.26% of average
total loans.
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Cascade Financial Reports Record 1Q04 Profits
April 20, 2004
Page Two
March 31 Quarterly Operating Results
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First quarter revenues (net interest income before provision for loan losses
plus noninterest income) increased to $8.5 million compared to $8.3 million in
the first quarter of 2003. Net interest income grew 9% to $7.3 million from
$6.7 million in the first quarter a year ago, with a 12% decline in interest
expense more than offsetting a 1% drop in interest income. Net interest
margin was 3.40% in the first quarter of 2004 compared to 3.38% for the same
quarter a year ago. The provision for loan losses decreased to $225,000 from
$375,000 in the March quarter a year ago due to the continuing strong credit
performance of the loan portfolio. Net interest income after loan loss
provision increased 11% to $7.1 million in the first quarter compared to $6.4
million a year ago.
With significantly lower levels of gains from loan and securities sales,
noninterest income declined 29% to $1.2 million from $1.6 million. Gains
from sale of loans and securities totaled $331,000 in the first quarter
compared to $970,000 in the first quarter of 2003. Service fees on checking
accounts, however, increased 55% to $440,000 from $284,000 a year ago, as new
services were introduced and the number of accounts grew.
First quarter operating (noninterest) expenses dropped 3% to $4.5 million from
$4.6 million in the first quarter of 2003, with a sharp drop in debt prepayment
fees more than offsetting higher compensation and overhead costs. "Last year,
we took advantage of the sharp drop in interest rates to prepay some of our
higher coupon Federal Home Loan Bank (FHLB) advances, incurring $442,000
in debt prepayment fees. In the first quarter of 2004 prepayment fees were
only $26,000," said Lars Johnson, CFO. Salaries and employee benefits
increased 6% and other overhead expenses increased 9%, reflecting additions to
the lending staff.
Cascade's first quarter efficiency ratio improved to 52.83% compared to 55.05%
in the first quarter a year ago, primarily due to lower FHLB prepayment fees
this quarter. Cascade's first quarter return on equity was 15.79% compared to
16.16% in the first quarter a year ago and its return on average assets
improved to 1.16% from 1.13% a year ago.
Credit Quality
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"The loan portfolio continues to show solid credit quality, with nonperforming
loans to average total loans remaining at a very modest 26 basis points and
nonperforming assets to total assets at 28 basis points," Johnson noted. With
only $14,000 in net charge-offs in the quarter, the allowance for loan losses
increased to $7.9 million, or 1.36% of average total loans and 521% of
nonperforming loans at the end of the quarter. At March 31, 2003, the
allowance for loan losses totaled $7.3 million, or 1.29% of average total loans
and 551% of nonperforming loans.
Balance Sheet Management
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Total assets increased 8% to $897 million at March 31, 2004, compared to $832
million a year ago. Investment securities increased 9% to $257 million from
$236 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 March 31, 2004, commercial lending, including commercial real estate,
business lending and real estate construction, grew 22% to $375 million or 62%
of total loans, compared to $309 million or 54% of the total loan portfolio a
year ago. Residential and other consumer loans dropped 16% and accounted for
23% of the total portfolio compared to 29% as of March 31,2003.
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Cascade Financial Reports Record 1Q04 Profits
April 20, 2004
Page Three
Liabilities and Capital Management
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Cascade's deposits at the end of the first quarter increased 9% from a year ago
to $584 million, with checking deposits, money market and savings accounts
increasing 24%. "This year, we introduced a strong relationship pricing
structure designed to reward our top-tier customers with attractive rates on
their liquid savings dollars. The popularity of this program is helping our
branch network continue to build low-cost deposits," said Nelson.
Stockholders' equity was $67 million, or $8.05 per share, at March 31, 2004, up
14% from $58 million, or $6.96 per share, at March 31, 2003. Capital ratios
continue to be above the well-capitalized guidelines established by regulatory
agencies. The corporation's Tier 1 capital/asset ratio, which includes junior
subordinated debentures, at quarter-end was 8.75% compared to 8.25% a year ago.
Issaquah Bancshares Acquisition Update
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"We remain on track to complete the acquistion of Issaquah Bancshares and close
the transaction at the end of June, pending regulatoty approval and approval of
the shareholders of Issaquah Bancshares," said Nelson. "We expect to take a
one-time merger charge of approximately $925,000, which is slightly higher than
originally estimated due to higher legal and accounting fees than initially
projected. This merger charge will affect our second quarter reported net
income. We estimate that annual costs savings and revenue enhancements will be
approximately $960,000 in 2005." Issaquah Bancshares has scheduled a special
meeting for its stockholders to vote on the transaction on May 24, 2004.
Conference Call and Annual Meeting
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The company will host a conference call on April 21, 2004, at 10:00 a.m. PDT,
(1:00 p.m. EDT). Interested investors may listen to the call live at
www.cascadebank.com, or www.fulldisclosure.com. Institutional investors can
access the call via CCBN's password-protected event management site,
StreetEvents (www.streetevents.com), or by dialing 617-847-8708 and requesting
the Cascade Financial conference call. Replay of the call will be available
through Wednesday, April 28, 2004, at 617-801-6888, passcode 88461496. The
call will also be archived on the web at www.cascadebank.com.
Cascade Financial Corporation will hold its Annual Shareholders' Meeting on
Tuesday, May 4, at 6:30 p.m. at the Everett Golf & Country Club. All current
shareholders and interested investors are invited to attend and meet members of
the Cascade Bank team and learn more about the company.
About Cascade Financial
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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 Bank operates 15 full service offices,
located in Everett, Lynnwood, Marysville, Mukilteo, Smokey Point, Issaquah,
Clearview, Woodinville, Lake Stevens and Bellevue. Cascade's newest branch is
scheduled to open in Snohomish in June 2004. In June 2003, Washington CEO
magazine ranked Cascade Bank the number one medium sized "Best Companies to
Work For" in Washington State.
This document contains 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, the consummation of the pending merger with Issaquah
Bancshares and the company's ability to successfully integrate the acquired
bank into its operations, 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, 2003.
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Cascade Financial Reports Record 1Q04 Profits
April 20, 2004
Page Four
CONSOLIDATED FINANCIAL HIGHLIGHTS
INCOME STATEMENT
(Dollars in thousands
except per share amounts) Three Months Ended Annual
(Unaudited) March 31,2004 Dec. 31, 2003 March 31,2003 Change
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Interest income $ 12,609 $ 12,577 $ 12,748 -1.1%
Interest expense 5,307 5,254 6,018 -11.8%
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Net interest income 7,302 7,323 6,730 8.5%
Provision for loan losses 225 300 375 -40.0%
Net interest income ---------- ----------- -----------
after provision for losses 7,077 7,023 6,355 11.4%
Noninterest income
Gain on sale of loans 62 107 205 -69.8%
Gain on sale of securities 269 46 765 -64.8%
Checking service fees 440 439 284 54.9%
Other service fees 142 117 141 0.7%
Gain on sale of real estate 76 - 41 85.4%
Bank owned life insurance 134 149 148 -9.5%
Other 30 29 31 -3.2%
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Total noninterest income 1,153 887 1,615 -28.6%
Noninterest expense
Salary and employee benefits 2,632 2,471 2,485 5.9%
Other non-interest expenses 1,809 1,938 1,667 8.5%
Debt prepayment fees 26 - 442 -94.1%
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Total noninterest expense 4,467 4,409 4,594 -2.8%
Income before Federal income taxes 3,763 3,501 3,376 11.5%
Federal income taxes 1,189 999 1,072 10.9%
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Net earnings $ 2,574 $ 2,502 $ 2,304 11.7%
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EARNINGS PER SHARE INFORMATION
Earnings per share, basic $ 0.31 $ 0.30 $ 0.28 10.0%
Earnings per share, diluted 0.30 0.29 0.28 8.6%
Dividends per Share 0.07 0.07 0.04 75.0%
Weighted average number of
shares outstanding:
Basic 8,250,880 8,236,650 8,124,579
Diluted 8,619,193 8,561,834 8,377,116
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Cascade Financial Reports Record 1Q04 Profits
April 20 2004
Page Five
BALANCE SHEET
Annual
(Dollars in thousands except per share amounts) March 31,2004 Dec. 31, 2003 March 31,2003 Change
(Unaudited) -------------- ------------- ------------- ------
Cash and due from banks $ 8,076 $ 13,011 $ 10,154 -20.5%
Interest bearing deposits 9,008 1,060 969 829.6%
Securities held to maturity 87,267 86,719 31,554 176.6%
Securities available for sale 169,393 189,747 204,373 -17.1%
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Total securities 256,660 276,466 235,927 8.8%
Loans
Business 214,816 204,446 153,615 39.8%
R/E construction 75,070 62,742 88,402 -15.1%
Commercial real estate 85,534 83,856 67,028 27.6%
Multifamily 92,380 87,212 94,341 -2.1%
Home equity and consumer 31,250 33,163 44,416 -29.6%
Residential 106,355 105,565 119,701 -11.1%
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Total loans 605,405 576,984 567,503 6.7%
Deferred loan fees (2,123) (2,179) (2,257) -5.9%
Allowance for loan losses (7,922) (7,711) (7,261) 9.1%
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Loans, net 595,360 567,094 557,985 6.7%
Premises and equipment, net 8,649 8,587 9,014 -4.0%
BOLI 11,277 11,162 10,754 4.9%
Other assets 8,323 7,840 6,827 21.9%
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Total assets $ 897,353 $ 885,220 $ 831,630 7.9%
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Deposits
Checking accounts $ 66,953 $ 62,927 $ 54,092 23.8%
Money market and savings accounts 146,167 132,986 118,174 23.7%
Certificates of deposit 370,869 368,401 363,340 2.1%
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Total deposits 583,989 564,314 535,606 9.0%
FHLB advances 190,000 200,000 192,000 -1.0%
Securities sold under
agreement to repurchase 38,034 39,911 25,906 46.8%
Junior subordinated debentures payable 10,213 10,212 10,000 2.1%
Accrued expenses and other liabilities 8,545 6,826 9,823 -13.0%
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Total liabilities 830,781 821,263 773,335 7.4%
Stockholders' equity
Common stock & paid-in capital 12,155 12,003 11,550 5.2%
Retained earnings 54,104 52,109 46,261 17.0%
Acc. other comprehensive gain (loss) 313 (155) 484 -35.3%
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Total stockholders' equity 66,572 63,957 58,295 14.2%
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Total liabilities and equity $ 897,353 $ 885,220 $ 831,630 7.9%
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(more)
Cascade Financial Reports Record 1Q04 Profits
April 20 2004
Page Six
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per
share amounts) Three Months Ended Annual
(Unaudited) March 31,2004 Dec. 31, 2003 March 31,2003 Change
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PERFORMANCE MEASURES
Return on average equity 15.79% 15.77% 16.16%
Return on average assets 1.16% 1.14% 1.13%
Efficiency ratio 52.83% 53.70% 55.05%
Net interest margin 3.40% 3.45% 3.38%
ADDITIONAL INFORMATION
Book value per common share $ 8.05 $ 7.76 $ 6.96 15.7%
Capital/Asset Ratio (including Jr.
Sub. Deb.) 8.75% 8.49% 8.25% 6.1%
Average assets 883,796 876,262 824,425 7.2%
Average earning assets 858,792 850,520 798,937 7.5%
Average equity 65,217 63,627 57,756 12.9%
Shares outstanding at period end 8,266,432 8,241,288 8,373,551 -1.3%
Mar. 31, 2004 Dec. 31, 2003 Mar. 31, 2003
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ASSET QUALITY
Nonperforming loans $ 1,521 $ 1,921 $ 1,317 15.5%
Nonperforming loans/average total loans 0.26% 0.34% 0.23%
Net loan charge-offs (recoveries) $ 14 $ 231 $ (14)
Net loan charge-offs/total loans 0.00% 0.04% 0.00%
Allowance for loan losses $ 7,922 $ 7,711 $ 7,261 9.1%
Allowance for loan losses/NPLs 521% 401% 551%
Allowance for loan losses/average
total loans 1.36% 1.36% 1.29%
Real estate owned $ 1,000 $ 474 $ 231
Nonperforming asset/total assets 0.28% 0.27% 0.19%
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Note: Transmitted on Business Wire on April 20, 2004 at 1:00 p.m. PDT.