Exhibit 99
Cascade Financial Corporation The Cereghino Group
Contacts: Carol K. Nelson, CEO Corporate Investor Relations
Lars Johnson, CFO www.stockvalues.com
425.339.5500 206.762.0993
www.cascadebank.com
NEWS RELEASE
===============================================================================
CASCADE FINANCIAL'S FIRST QUARTER PROFITS UP 19%;
STRONG LOAN GROWTH CONTINUES
Everett, WA - April 19, 2005 - Cascade Financial Corporation (Nasdaq: CASB),
parent company of Cascade Bank, today reported that net income grew 19% in the
first quarter of 2005. Revenues increased 23% from a year ago, while loan and
deposit generation remained strong. Net income was $3.1 million in the quarter
ended March 31, 2005, with earnings growing to $0.31 per diluted share,
compared to $2.6 million, or $0.30 per diluted share in the first quarter of
2004.
Earnings per share are adjusted to reflect the issuance of 1.26 million shares
of common stock as part of the consideration for acquiring Issaquah Bancshares,
the parent company of Issaquah Bank, in June of last year. While the
acquisition added $101 million in loans and $106 million in deposits, organic
growth has also been very strong. In the first quarter of 2005, Cascade
generated $39 million in new loans, reflecting a 40% increase since March 31,
2004, and 19% annualized growth.
First Quarter Highlights
- ------------------------
* Net income increased 19% over first quarter 2004.
* Net interest income grew 20%, other income increased 39%.
* Revenues advanced 23% to $10.4 million.
* Return on tangible equity improved to 17.6% and return on equity was 12.8%.
* Total loans grew 40% from a year ago and 19% on an annualized basis, with a
focus on higher-yielding commercial credits.
* Total assets increased 28% to $1.1 billion compared to $897 million a year
ago.
* Credit quality remained strong, with nonperforming loans dropping to 0.09% of
total loans at quarter-end.
* Total deposits increased 34% with checking deposits growing 73%.
* Checking service fees grew considerably, while gains on the sale of loans and
securities dropped substantially.
"Loan demand remains strong, particularly business, commercial real estate and
construction lending," stated Carol K. Nelson, President and CEO. "Loans have
grown 40% in the last year, with the large majority being generated internally.
Growing checking deposits by 73% has helped fund our growth, as well as
mitigate the impact of rising short-term rates. We are carrying that momentum
forward. Our higher-yielding, largely adjustable-rate loan portfolio and focus
on gathering core deposits positions us for continued success as interest rates
continue to rise."
Operating Results
- -----------------
"A continued focus on fundamentals contributed to our top-line growth," Nelson
said. "Net interest income increased by $1.5 million, reflecting our larger
asset base and the on-going shift to higher-yielding credits in our loan
portfolio. We also posted 39% noninterest income growth with minimal asset
sales due to growth in checking fees. Gains on sale of loans, securities and
real estate were just $75,000 in the quarter, compared to $407,000 a year ago.
Checking fees, meanwhile, grew to $776,000, from $440,000 in the first quarter
last year. Growing core deposits, and the fees associated with them, remain a
key part of our strategy."
Revenues grew 23% in the first quarter to $10.4 million, from $8.5 million a
year ago, with net interest income and noninterest income, the two components
of revenue, both growing significantly. Net interest income grew 20% to $8.8
million, compared to $7.3 million in the first quarter of 2004, while other
income increased to $1.6 million, from $1.2 million last year.
Largely due to the additional costs associated with operating the two Issaquah
Bank branches and Cascade's new Snohomish branch, other operating expenses
increased 24% to $5.6 million in the quarter, compared to $4.5 million in the
first quarter of last year. "Operating expenses for the balance of 2005 will
also be impacted by higher marketing expenses as we roll out a new sales
campaign designed to increase checking accounts," Nelson said.
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Cascade Financial - 1Q05 Profits Up 19%
April 19, 2005
Page Two
Balance Sheet Management
Total loans increased 40% in the last year to $845 million, compared to $605
million at March 31, 2004, and $807 million at year-end 2004. The three
components of the commercial loan portfolio showed dramatic growth in the last
year. Commercial real estate loans more than doubled, real estate construction
loans grew 67%, and business loans grew 40%. As a result, total commercial
loans grew by 64% to $616 million, and now represent 73% of total loans,
compared to 62% a year ago. Multifamily loans showed minimal growth, while
consumer and residential loans both declined slightly.
"The majority of our growth has been internally generated, although the
acquisition of Issaquah contributed to our increase in total loans and the
shift in our portfolio mix," Nelson said. "The same can be said of our funding
sources, as we have continued to gather core deposits in addition to the $106
million acquired in the Issaquah transaction. In the first quarter of 2005
alone, total deposits increased by $60 million, although roughly half of those
deposits are from one trust account, and will likely be in the bank for only a
short while."
Over the last year, deposits grew 34% to $782 million, compared to $584 million
at the end of March 2004. Checking balances have grown by 73% and savings and
money market accounts have grown by 37%. Although time deposits have grown by
$95 million in the past twelve months, they now represent 60% of total
deposits, down from 64% at the end of the first quarter last year.
"Our ongoing efforts to shift our asset mix toward commercial loans have given
us the portfolio of a profitable community commercial bank," Nelson said. "We
remain focused on minimizing our reliance on time deposits, and our new High
Performance Checking Program is a key component of that strategy."
Stockholders' equity has increased by 45% to $97 million, compared to $67
million at the end of the first quarter last year, largely due to the issuance
of stock associated with the Issaquah Bancshares acquisition. Book value per
share was $10.12 at quarter-end, compared to $8.05 at March 31, 2004. Due to
the creation of intangible assets in connection with the acquisition, tangible
book value was $7.38 at the end of the first quarter, compared to $8.05 a year
ago. During the quarter, the corporation repurchased 42,000 shares of its
stock to offset the exercise of stock options.
Net Interest Margin & Interest Rate Risk
- ----------------------------------------
The net interest margin declined to 3.34%, versus 3.40% a year ago. On a
linked-quarter basis, the yield on earning assets increased 8 basis points to
5.97% for the quarter ended March 31, 2005, while the cost of interest-bearing
liabilities rose 18 basis points to 2.94%.
"Pricing competition remains fierce on both sides of the balance sheet against
the backdrop of rising short-term rates," said Lars Johnson, EVP and CFO. "The
purchase of $5 million of Bank Owned Life Insurance reduced the margin by 2
basis points. The net interest margin was also impacted by the termination of
two interest rates swaps totaling $50 million. We entered into the swaps in
the third quarter last year to mitigate our exposure to rising rates, and in
March, our overall risk exposure had declined to a point where we could
terminate these hedges." The rates paid on the swaps exceeded the rate
received by an average of 140 basis points as of March 2, 2005.
"In the second quarter, the benefits of terminating the interest rate swaps,
growing checking deposits, and the maturity of high-coupon FHLB advances should
enhance our margin," Johnson added. "However those enhancements may be offset
by the increased competition for deposits as short term rates continue to rise.
We anticipate the net interest margin will be in the range of 3.30% - 3.50%."
Asset Quality
- -------------
"We have done an excellent job of managing credit risk while growing the
commercial loan portfolio significantly and shifting our loan mix," Nelson
said. "Credit quality remains strong, with nonperforming loans improving from
a year ago, when the numbers were still very good."
At quarter-end, nonperforming loans (NPLs) were $767,000, down from $1.5
million a year ago. NPLs were 0.09% of total loans at March 31, 2005, compared
to 0.25% of loans a year prior. Net charge-offs were $127,000 in the quarter,
compared to $14,000 in the first quarter last year.
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Cascade Financial - 1Q05 Profits Up 19%
April 19, 2005
Page Three
"Our provision for loan losses was $245,000 in the quarter, nearly double net
charge-offs," Johnson said. "Although our credit quality remains strong, our
portfolio has grown considerably in the past year. We will continue to
evaluate the allowance for loan losses on a quarter-by-quarter basis, but we
are comfortable with our coverage at this time." Cascade's allowance for loan
losses was $9.7 million at quarter-end, or 1.15% of total loans and well in
excess of nonperforming loans.
Performance Measures
- --------------------
Cascade's return on tangible equity (ROTE) improved to 17.6% in the first
quarter, compared to 15.8% a year ago. Management uses ROTE, a non-GAAP
performance measure, to eliminate the goodwill created by the merger, and
believes that this provides a more consistent comparison with pre-merger
performance. Return on GAAP equity (ROE) was 12.8% in the quarter, compared
to 15.8% a year ago. Return on assets (ROA) was 1.10%, compared to 1.16% in
the first quarter of 2004. The efficiency ratio was 53.5% in the quarter ended
March 31, 2005, versus 52.8% a year earlier.
Conference Call
- ---------------
Carol Nelson and Lars Johnson will host a conference call on Wednesday, April
20, at 10:00 am PDT (1:00 pm EDT). Interested investors may listen to the call
live or via replay at www.cascadebank.com. Investment professionals are
invited to dial (303) 262-2140 to participate in the live call. A telephone
replay of the call will be available for three weeks at (303) 590-3000, using
passcode 11027152#.
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 Bank operates 16 full service offices,
located in Everett, Lynnwood, Marysville, Mukilteo, Smokey Point, Issaquah,
Clearview, Woodinville, Lake Stevens, Bellevue and Snohomish. Issaquah Bank,
a division of Cascade Bank, operates offices in Issaquah and North Bend.
Cascade will open its newest branch in the Silver Lake neighborhood of Everett
in May 2005.
In July 2004, US Banker magazine ranked Cascade #39 out of the Top 200 Publicly
Traded Community Banks with less than $1 billion in assets, based on three-year
average return on equity. In October, the same publication named President and
CEO Carol Nelson one of the 25 Most Powerful Women in Banking. In March 2005,
The Snohomish County Business Journal named Nelson the 2005 Executive of the
Year.
This press release contains supplemental financial information determined by
methods other than in accordance with Accounting Principles Generally Accepted
in the United States of America ("GAAP"). These measures include return on
tangible equity, tangible book value per share and tangible capital to asset
ratio. Cascade's management uses these non-GAAP measures in its analysis of
the company's performance. These measures exclude the average and ending
balances of acquisition-related goodwill and intangibles in determining average
tangible shareholders' equity. Banking and financial institution regulators
also exclude goodwill and intangibles from shareholders' equity when assessing
the capital adequacy of a financial institution. Management believes the
presentation of the financial measure excluding the impact of these items
provides useful supplemental information that is essential for a proper
understanding of the financial results of Cascade Financial Corporation, as
they provide a method to assess management's success in utilizing the company's
tangible capital. This disclosure should not be viewed as a substitute for
results determined to be in accordance with GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented by other
companies.
Safe Harbor Statement
- ---------------------
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: continued strong
demand for Cascade's products and services, including the ability to attract
low-cost deposits and commercial loans, the continued successful integration of
Issaquah Bank, maintaining asset quality, management's ability to minimize
interest rate exposure and the impact of interest rate movements on the net
interest margin, the 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, 2004.
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Cascade Financial - 1Q05 Profits Up 19%
April 19, 2005
Page Four
CONSOLIDATED FINANCIAL HIGHLIGHTS
- ---------------------------------
INCOME STATEMENT Three Months Ended
(Dollars in thousands except March 31, December 31, March 31, Annual
per share amounts) 2005 2004 2004 Change
--------- ------------------ --------- ------
(Unaudited) (Unaudited) (Unaudited)
Interest income $ 15,600 $ 15,093 $ 12,609 23.7%
Interest expense 6,826 6,395 5,307 28.6%
--------- --------- ---------
Net interest income 8,774 8,698 7,302 20.2%
Provision for loan losses 245 150 225 8.9%
--------- --------- ---------
Net interest income after provision 8,529 8,548 7,077 20.5%
Other income
Gain on sale of loans 30 29 62 -51.6%
Gain on sale of securities 12 - 269 -95.5%
Checking fees 776 555 440 76.4%
Other service fees 212 197 142 49.3%
BOLI 188 165 134 40.3%
Gain/(loss) on sale of real estate 33 (17) 76 -56.6%
Other non-interest income 349 239 30 1063.3%
--------- --------- ---------
Total other income 1,600 1,168 1,153 38.8%
Total income 10,129 9,716 8,230 23.1%
Compensation expense 3,159 3,094 2,632 20.0%
Other operating expenses 2,394 2,451 1,809 32.3%
FHLB advance prepayment fees - - 26 -100.0%
--------- --------- ---------
Total other expense 5,553 5,545 4,467 24.3%
--------- --------- ---------
Net income before tax 4,576 4,171 3,763 21.6%
Income tax expense 1,505 1,347 1,189 26.6%
--------- --------- ---------
Net earnings $ 3,071 $ 2,824 $ 2,574 19.3%
========= ========= =========
EARNINGS PER SHARE INFORMATION
- ------------------------------
Earnings per share, basic $ 0.32 $ 0.30 $ 0.31 2.8%
Earnings per share, diluted 0.31 0.29 0.30 4.1%
Weighted average number of
shares outstanding:
Basic 9,574,296 9,560,593 8,250,880
Diluted 9,874,799 9,869,402 8,619,193
PERFORMANCE MEASURES
- --------------------
Return on equity 12.82% 11.90% 15.79%
Return on tangible equity 17.58% 16.40% 15.79%
Return on average assets 1.10% 1.04% 1.16%
Efficiency ratio 53.53% 56.20% 52.83%
Net interest margin 3.34% 3.41% 3.40%
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Cascade Financial - 1Q05 Profits Up 19%
April 19, 2005
Page Five
BALANCE SHEET March 31, 2005 December 31, 2004 March 31, 2004 Annual
- ------------- (Unaudited) (Unaudited) (Unaudited) Change
(Dollars in thousands except -------------- ----------------- -------------- ------
per share amounts)
Cash and due from banks $ 15,962 $ 11,692 $ 8,076 97.6%
Interest bearing deposits 44 1,337 9,008 -99.5%
Securities
Securities held-to-maturity 95,311 91,339 87,267 9.2%
Securities available-for-sale 135,401 124,276 169,393 -20.1%
--------- --------- ---------
Total securities 230,712 215,615 256,660 -10.1%
Loans
Business 301,085 292,117 214,816 40.2%
Real estate construction 125,275 107,431 75,070 66.9%
Commercial real estate 189,218 178,704 85,534 121.2%
Multifamily 94,623 92,372 92,380 2.4%
Home equity/consumer 30,133 30,125 31,250 -3.6%
Residential 105,009 105,975 106,355 -1.3%
--------- --------- ---------
Total loans 845,343 806,724 605,405 39.6%
Deferred loan fees (2,873) (2,695) (2,123) 35.3%
Loan loss reserve (9,681) (9,563) (7,922) 22.2%
--------- --------- ---------
Loans, net 832,789 794,466 595,360 39.9%
Premises and equipment, net 12,720 12,824 8,649 47.1%
Real estate owned 256 868 1,000 -74.4%
Bank owned life insurance 16,814 16,650 11,277 49.1%
Other assets 8,672 9,211 7,323 18.4%
Goodwill and intangibles 26,217 26,292 - NA
--------- --------- ---------
Total assets $1,144,186 $1,088,955 $ 897,353 27.5%
========= ========= =========
Deposits
Checking accounts 115,577 112,564 66,953 72.6%
Money market and savings accounts 200,382 172,584 146,167 37.1%
Certificates of deposit 465,838 436,760 370,869 25.6%
--------- --------- ---------
Total deposits 781,797 721,908 583,989 33.9%
FHLB advances 221,000 228,000 190,000 16.3%
Securities sold under repurchase agreement 20,869 20,902 38,034 -45.1%
Jr. subordinated deb. (TPS) 15,302 15,454 10,213 49.8%
Accrued interest and other liabilities 8,422 6,441 8,545 -1.4%
--------- --------- ---------
Total liabilities 1,047,390 992,705 830,781 26.1%
Stockholders' equity
Common stock & paid in capital 37,677 37,422 12,155 210.0%
Retained earnings 61,464 59,975 54,104 13.6%
Accumulated other comprehensive income (loss) (2,345) (1,147) 313 -849.2%
--------- --------- ---------
Total stockholders' equity 96,796 96,250 66,572 45.4%
Total liabilities and equity $1,144,186 $1,088,955 $ 897,353 27.5%
========= ========= =========
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Cascade Financial - 1Q05 Profits Up 19%
April 19, 2005
Page Six
ADDITIONAL INFORMATION March 31, 2005 December 31, 2004 March 31, 2004
- ---------------------- (Unaudited) (Unaudited) (Unaudited)
(Dollars in thousands except -------------- ----------------- --------------
per share amounts)
Book value per common share $ 10.12 $ 10.07 $ 8.05
Common stock outstanding 9,566,844 9,559,822 8,266,432
Capital/asset ratio (Tier 1, inc.
Jr. subordinated deb.) 7.68% 8.04% 8.56%
Average assets $1,117,880 $1,083,470 $ 883,796
Average earning assets 1,052,860 1,020,513 858,792
Average equity 96,148 94,806 65,217
Average tangible equity 69,913 68,896 65,217
Cash dividend per share $ 0.08 $ 0.08 $ 0.07
Total equity $ 96,796 $ 96,250 $ 66,572
Less: goodwill and intangibles 26,217 26,252 -
Tangible equity $ 70,579 $ 69,998 $ 66,572
Tangible book value per share $ 7.38 $ 7.32 $ 8.05
Tangible cap/asset ratio (ex. Jr.
subordinated deb.) 6.31% 6.59% 7.42%
March 31, 2005 December 31, 2004 March 31, 2004
(Unaudited) (Unaudited) (Unaudited)
ASSET QUALITY -------------- ----------------- --------------
- -------------
Nonperforming loans $ 767 $ 532 $ 1,521
Nonperforming loans/total loans 0.09% 0.07% 0.25%
Net loan charge-offs (ytd) $ 127 $ 218 $ 14
Net loan charge-offs/total loans 0.02% 0.03% 0.00%
Allowance for loan losses $ 9,681 $ 9,563 $ 7,922
Allowance for loan losses/NPLs 1262% 1798% 521%
Allowance for loan losses/total loans 1.15% 1.19% 1.31%
Real estate owned $ 256 $ 868 $ 1,000
Nonperforming asset/total assets 0.09% 0.13% 0.28%
-0-
Note: Transmitted on Business Wire on April 19, 2005 at 1:00 p.m. PDT.