FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 1, 1997
Cascade Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-25286 91-0167790
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
2828 Colby Avenue, Everett, Washington 98201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code) (425) 339-5500
Not Applicable
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(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
On August 1, 1997, Cascade Financial Corporation ("Cascade") consummated
its acquisition of AmFirst Bancorporation ("AmFirst"). The unaudited pro forma
consolidated financial information set forth herein has been prepared for
purposes of complying with Regulation S-X of the Securities and Exchange
Commission.
(a) Financial Statements of Business Acquired
AmFirst's unaudited Condensed Balance Sheet as of June 30, 1997, and
Condensed Statements of Income for the six months ended June 30, 1997 and 1996
are attached hereto as Appendix A.
(b) Pro Forma Financial Information
Unaudited pro forma condensed combined financial statements reflecting
consummation of the acquisition are attached hereto as Appendix B. The
unaudited pro forma condensed combined statement of financial condition as of
June 30, 1997 combines the historical consolidated statements of financial
condition of Cascade and AmFirst as if the merger had occurred on such date
after giving effect to certain pro forma adjustments described in the
accompanying notes. The unaudited pro forma condensed combined statements of
income are presented as if the merger had been consummated at the beginning of
each period presented. Financial information for AmFirst, which has a December
31 fiscal year end, has been adjusted to reflect a June 30 fiscal year end by
adding the subsequent six month period and subtracting the comparable preceding
year interim results from the financial data as of December 31.
The unaudited pro forma condensed combined financial statements and notes
thereto reflect the application of the pooling of interests method of
accounting. The unaudited pro forma condensed combined financial statements
included herein are not necessarily indicative of the future results of
operations or the future financial position of the combined entities or the
results of operations and financial position of the combined entities that
would have actually occurred had the transactions been in effect as of the dates
or for the periods presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
CASCADE FINANCIAL CORPORATION
DATE: October 15, 1997 By: /s/ Russell E. Rosendal
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Russell E. Rosendal
Executive Vice President
(Chief Financial Officer)
Appendix A
Item 7(a). Financial Statements of AmFirst Bancorporation
Condensed Statement of Financial Condition
June 30, 1997
(unaudited)
(In thousands)
Assets
Cash on hand and in banks. . . . . . . . . . . . . . $ 4,207
Interest earning deposits in other institutions. . . 1,625
Securities available for sale. . . . . . . . . . . . 20,192
Loans held for sale, net . . . . . . . . . . . . . . --
Securities held to maturity. . . . . . . . . . . . . 1,979
Loans, net . . . . . . . . . . . . . . . . . . . . . 35,460
Real estate owned, net . . . . . . . . . . . . . . . --
Premises and equipment, at cost, net . . . . . . . . 1,639
Accrued interest receivable and other. . . . . . . . 935
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Total assets. . . . . . . . . . . . . . . . . . . $66,037
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits . . . . . . . . . . . . . . . . . . . . . . $59,411
Federal Home Loan Bank advances. . . . . . . . . . . --
Securities sold under agreements to repurchase . . . 675
Note payable . . . . . . . . . . . . . . . . . . . . 402
Deferred income taxes. . . . . . . . . . . . . . . . 29
Accrued expenses and other liabilities . . . . . . . 763
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Total liabilities. . . . . . . . . . . . . . . . . 61,281
Stockholders' equity . . . . . . . . . . . . . . . . 4,757
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Total liabilities and stockholders' equity. . . . . $66,037
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A-1
AmFirst Bancorporation
Condensed Statement of Operations
Six Months Ended June 30, 1996 and 1997
(unaudited)
June 30, June 30,
1996 1997
(In thousands, except per share data)
Total interest income. . . . . . . . . . . . . . . . $2,606 $2,442
Total interest expense . . . . . . . . . . . . . . . 1,264 1,307
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Net interest income. . . . . . . . . . . . . . . . . 1,342 1,135
Provision for loan losses. . . . . . . . . . . . . . 47 380
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Net interest income after provision for loan losses. 1,295 755
Other income . . . . . . . . . . . . . . . . . . . . 192 429
Other expense. . . . . . . . . . . . . . . . . . . . 1,130 1,189
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Income before Federal income tax . . . . . . . . . . 357 (5)
Federal income tax . . . . . . . . . . . . . . . . . 78 (1)
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Net income . . . . . . . . . . . . . . . . . . . . . $ 279 $ (4)
====== ======
Net income per share, primary. . . . . . . . . . . . $ .85 $ (.01)
Weighted average number of shares:
Primary . . . . . . . . . . . . . . . . . . . . . . 329,889 333,120
A-2
Appendix B
Item 7(b). Pro Forma Financial Information
Pro Forma Condensed Combined Statement of Financial Condition
June 30, 1997
(unaudited)
Pro Forma
Cascade AmFirst Combined
(In thousands)
ASSETS
Cash on hand and in banks . . . . . . . . $ 4,369 $ 4,207 $ 8,576
Interest earning deposits in other institutions 4,109 1,625 5,734
Securities available for sale . . . . . . 36,054 20,192 56,246
Loans held for sale, net. . . . . . . . . 11,133 -- 11,133
Securities held to maturity . . . . . . . 6,777 1,979 8,756
Loans, net. . . . . . . . . . . . . . . . 294,687 35,460 330,147
Real estate owned, net. . . . . . . . . . 750 -- 750
Premises and equipment, at cost, net. . . 6,220 1,639 7,859
Accrued interest receivable and other . . 4,027 935 4,562
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Total assets . . . . . . . . . . . . . $368,126 $66,037 $434,163
======= ======= =======
Liabilities and Stockholders' Equity
Deposits. . . . . . . . . . . . . . . . . $244,795 $59,411 $304,206
Federal Home Loan Bank advances . . . . . 74,659 -- 74,659
Securities sold under agreements to repurchase 18,808 675 19,483
Note payable. . . . . . . . . . . . . . . -- 402 402
Deferred income taxes . . . . . . . . . . 1,507 29 1,536
Accrued expenses and other liabilities. . 5,799 763 6,562
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Total liabilities . . . . . . . . . . . 345,568 61,280 406,848
Stockholders' equity . . . . . . . . . . 22,558 4,757 27,315
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Total liabilities and stockholders' equity $368,126 $66,037 $434,163
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See accompanying Notes to Pro Forma Condensed Combined Financial Statements.
B-1
Pro Forma Condensed Combined Statement of Operations
Year Ended June 30, 1996
(unaudited)
Pro Forma
Cascade AmFirst Combined
(In thousands, except per share data)
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Total interest income. . . . . . . . . . . . . $ 24,776 $ 5,102 $29,878
Total interest expense . . . . . . . . . . . . 16,563 2,541 19,104
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Net interest income. . . . . . . . . . . . . . 8,213 2,561 10,774
Provision for loan losses. . . . . . . . . . . -- 61 61
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Net interest income after provision for loan losses 8,213 2,500 10,713
Other income . . . . . . . . . . . . . . . . . 2,226 371 2,597
Other expense. . . . . . . . . . . . . . . . . 7,004 2,220 9,224
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Income before Federal income tax . . . . . . . 3,435 651 4,086
Federal income tax . . . . . . . . . . . . . . 1,167 144 1,311
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Net income . . . . . . . . . . . . . . . . . . $ 2,268 $ 507 $ 2,775
======= ======= =======
Net income per share, primary. . . . . . . . . $ 0.80 $ 1.54 $ 0.76
Weighted average number of shares:
Primary . . . . . . . . . . . . . . . . . . . 2,846,970 329,334 3,641,324
See accompanying Notes to Pro Forma Condensed Combined Financial Statements.
B-2
Pro Forma Condensed Combined Statement of Operations
Year Ended June 30, 1997
(unaudited)
Pro Forma
Cascade AmFirst Combined
(In thousands, except per share data)
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Total interest income. . . . . . . . . . . . . $26,315 $5,098 $31,413
Total interest expense . . . . . . . . . . . . 17,388 2,557 19,945
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Net interest income. . . . . . . . . . . . . . 8,927 2,541 11,468
Provision for loan losses. . . . . . . . . . . -- 810 810
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Net interest income after provision for loan losses 8,927 1,731 10,658
Other income . . . . . . . . . . . . . . . . . 1,410 616 2,026
Other expense. . . . . . . . . . . . . . . . . 8,512 2,296 10,808
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Income before Federal income tax . . . . . . . 1,825 51 1,876
Federal income tax . . . . . . . . . . . . . . 621 11 632
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Net income . . . . . . . . . . . . . . . . . . $ 1,204 $ 40 $ 1,244
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Net income per share, primary. . . . . . . . . $0.42 $0.11 $0.33
Weighted average number of shares
Primary . . . . . . . . . . . . . . . . . . . 2,869,167 352,564 3,719,551
See accompanying Notes to Pro Forma Condensed Combined Financial Statements.
B-3
Notes to Pro Forma Condensed Combined Financial Statement of Financial Condition
and Statement of Operations
Note 1. Basis of Presentation
The pro forma condensed combined financial statements reflect the issuance
of 803,485 shares of Cascade Common Stock in exchange for 333,120 shares of
AmFirst Common Stock based on a 2.412 Exchange Ratio.
Note 2. Adjustments to Pro Forma Condensed Combined Statement of Financial
Condition and Statement of Operations
The pro forma adjustments reflected in the unaudited pro forma condensed
combined statement of financial condition and statements of operation of Cascade
including AmFirst as of June 30, 1997, and the two years ended June 30, 1997
give effect to the following adjustments:
(a) Transaction-related Expenses. Nonrecurring transaction-related expenses
recorded are included in the pro forma combined statement of financial condition
as of June 30, 1997. Material nonrecurring transaction-related expenses
recorded by Cascade, in the quarter the transaction closes, except the loan loss
reserve and an accrued pension payout which were recorded by AmFirst in the
second calendar quarter of 1997, are summarized in the following table:
(in thousands)
Professional fees $150
Information systems conversion 50
Pension payments 75
Additional loan loss reserves 650
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925
Tax benefit (314)
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Net charge $611
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During its due diligence review of AmFirst, Cascade management reviewed in
detail the credit administration and the allowance for loan loss policy of
AmFirst as compared to that used by Cascade. AmFirst's methodology is based
principally on its proprietary loss experience with less consideration given to
regional economic conditions. Cascade's reserve setting methodology combines a
formula-based approach and management's knowledge of risks inherent in
individual credits and local economic conditions. Cascade management concluded
after reviewing the processes and methodologies of the two organizations, that
upon approval of the Merger by shareholders of both companies AmFirst should
record a pre-tax $650,000 loan loss provision in order to reflect the conforming
of AmFirst's reserving policy to that of Cascade.
The effect of all of these costs have not been reflected in the pro forma
condensed combined statements of operations.
(b) Non-competition Agreement. In connection with the Merger, Thomas H.
Rainville, the Chairman, President and Chief Executive Officer of AmFirst,
entered into a non-competition agreement with Cascade pursuant to which Mr.
Rainville will receive $5,000 per month for 60 months. The total amount of the
payments will be capitalized and amortized over the term of the agreement and
are not included in the pro forma condensed combined financial statements. Mr.
Rainville is a general creditor of Cascade.
B-4
Note 3. Per Share Data
Earnings Per Share. Primary net income per share for the two years ended
June 30, 1997 were calculated based on Cascade's weighted average primary
outstanding shares combined with the outstanding AmFirst primary shares
multiplied by the Exchange Ratio of 2,412. Earnings per share figures have been
restated to take into affect the 25% stock dividend paid as of June 27, 1997.
B-5