Exhibit 99.1
CASCADE BANCORP (OREGON) ANNOUNCES SECOND QUARTER EARNINGS ABOVE CONSENSUS AT
$0.41 PER SHARE; STRONG ORGANIC LOAN GROWTH IN BOTH OREGON AND IDAHO REGIONS;
Highlights for the Second Quarter 2006 (including acquisition of F&M
(Idaho) as of April 20, 2006)
- Earnings Per Share: $.41 up 46.0% vs. year ago quarter
- Loan Growth: up 83.1% vs. year ago quarter
- Deposit Growth: up 69.7% vs. year ago quarter
- Net interest margin: 5.85% vs. 5.67% year ago quarter
- Strong Credit Quality: Delinquencies .20% of total loans;
net charge-offs at .04% (annualized)
BEND, Ore., July 13 /PRNewswire-FirstCall/ --
FINANCIAL PERFORMANCE:
Cascade Bancorp ("Cascade") (Nasdaq: CACB) announced a 46.0% increase in
second quarter earnings per share with a 84.9% increase in total assets arising
from strong organic loan growth and the April 20, 2006 completion of the Farmers
and Merchants State Bank (F&M) acquisition in the greater Boise area of Idaho.
Cascade's diluted earnings per share were up 46.0% to $.41 as compared to $.28
for the year ago quarter. Net income for the second quarter of 2006 was up 83.0%
to $9.0 million as compared to $4.9 million for the year ago quarter. Return on
equity was 17.1% for the second quarter compared to 21.7% for the year ago
quarter as a result of higher average equity account balances arising from the
issuance of stock to acquire F&M. Return on tangible equity (equity net of
goodwill and intangible assets) was 32.0% for the quarter. Meanwhile return on
assets for the current quarter was 1.84% compared to 1.81% in the year ago
quarter. The net interest margin was 5.85%, the same as the preceding quarter
and compared to 5.67% a year ago (see net interest margin discussion below).
"I am very pleased with this initial quarterly report combining the
financial results of Cascade and F&M," said Patricia L. Moss, president and CEO.
"The organic loan growth achieved during the second quarter was strong, and this
report shows that we have already exceeded several of our merger related
financial goals. The tireless efforts, dedication and cooperation among our
banking teams as they executed the systems conversion necessary to effect the
combination were truly exceptional."
Looking forward, Cascade expects a slowing in the very strong rate of loan
growth recorded in the second quarter as higher market interest rates moderate
real estate markets. At the same time non-interest expense levels are expected
to gradually increase as Cascade fills infrastructure positions reflective of
its larger size and geographic footprint. In addition, management expects the
net interest margin to ease as a result of ongoing market and competitive
pricing pressures.
F&M MERGER RELATED INFORMATION:
F&M financial condition and results of operations are included in Cascade's
June 30, 2006 financial statements effective with the closing of the transaction
April 20, 2006. Customer banking systems and processes were converted in late
May. F&M is the largest deposit market share community bank in the greater
Boise, Idaho area with eleven existing branches a twelfth scheduled to open
during the third quarter of 2006.
F&M loan volumes increased at a 52.6% (annualized) pace between March 31 and
June 30, 2006 reflecting the underlying strength of the Boise economy, as well
as the potential benefit of higher lending limits arising from the transaction.
While non-interest bearing deposits at F&M increased from the preceding quarter,
total Idaho deposits at June 30, 2006 were down 2.3% (annualized) as a result of
the expected runoff in relatively higher priced time deposits during the period.
Cascade replaced this runoff with a combination of brokered CDs and borrowings
as an interim strategy until anticipated gains in customer relationship deposits
comes to fruition. Management expects these funding trends will remain in place
for the several quarters.
Updating other merger related activities, Cascade sold approximately $31
million of F&M investment securities at closing as part of a strategy to replace
investment securities with higher yielding loans. Cascade had estimated a 10%
annualized cost savings mainly from elimination of duplicate back office
functions. Management has increased its estimate of cost savings and synergies
to nearly 20% of F&M's 2006 projected annualized non-interest expense. A
significant portion of these savings are reflected in second quarter results and
management estimates additional savings of $.01 to $.02 per share will be
realized in the 3rd quarter non-interest expense run-rate. Offsetting some of
these cost savings going forward are planned additions to staff appropriate to
support Cascade's infrastructure and ongoing growth goals. Note June 30, 2006
operating results include approximately $.01 per share of one-time costs arising
from the transaction, while total capitalized merger costs appear to be
approximately $2 million less than the $6.5 million estimated at the time the
deal was announced.
PERFORMANCE OF COMBINED BANK
The following table provides information to identify growth contributions
from the existing Cascade Oregon region, as well as Cascade's new Idaho region
(F&M) between March 30 and June 30, 2006. The actual closing of the F&M
transaction was April 20, 2006.
% Change Vs 3/31/06
Unaudited June 30, 2006 Balance (annualized)
------------------------ --------------------- -------------------
Cascade - Oregon
Total Loans $1,209 million 27.1%
Total Deposits $1,161 million 16.0%
F & M - Idaho
Total Loans $559 million 52.6%
Total Deposits $480 million (2.3)%
Combined Cascade
Total Loans $1,768 million 34.8%
Total Deposits $1,641 million 10.4%
LOAN GROWTH AND CREDIT QUALITY:
Total loans outstanding at June 30, 2006 for the combined Cascade were $1.8
billion or 83.1% higher than a year ago. Importantly, this overall increase
includes very strong organic growth in both the Oregon and Idaho (F&M) regions
during the second quarter. As shown in the above table, between March 31 and
June 30, 2006 Idaho (F&M) loans were up $64.8 million or a 52.6% (annualized)
pace, while Oregon loan balances increased approximately $76.5 million or 27.1%
(annualized) during this same period. A majority of the quarter's loan growth
was construction and development loans, reflecting the continued economic
vitality of the markets served by Cascade.
Cascades combined loan credit quality profile remained very positive with
delinquent loans greater than 30 days past due at only .20% of total loans,
while net loan charge-offs for the quarter were only .04% (annualized) of total
loans. The allowance for losses on loans and loan commitments stood at a prudent
1.37% of outstanding loans at quarter end, compared to 1.40% for the preceding
quarter and a 1.45% year ago level due to improving credit metrics over the
course of the past 12 months. The current quarter loan loss provision expense
was $1.2 million, comparable to the preceding quarter and $1.0 million in the
year ago period. Management believes the reserve is at an appropriate level
under current circumstances and prevailing economic conditions.
DEPOSIT GROWTH:
Combined total deposits stood at $1.6 billion as of June 30, 2006, up 69.7%
from the year ago period largely due to the combination with F&M. Cascades
Oregon banking regions continued to experience deposit growth, up 16%
(annualized) at June 30, 2006 compared to balances held at March 31, 2006,
however a majority of this increase resulted from higher brokered and municipal
time deposits. On a linked quarter basis, Idaho (F&M) deposits at June 30, 2006
were modestly below March 31, 2006 levels due to the expected runoff of rate
sensitive time deposits. Combined non-interest bearing balances averaged
approximately 35.2% of total deposits during the second quarter.
NET INTEREST MARGIN AND INTEREST RATE RISK:
Cascade reported a 5.85% net interest margin (NIM) for the second quarter of
2006, the same as reported in the preceding quarter and compared to 5.67% for
the year ago quarter. Management had anticipated the acquisition of F&M would
result in a lower combined NIM because of F&M's lower margin as compared to
Cascade. The combined Cascade maintained its NIM for several reasons. First,
yields on combined earning assets continued to increase in response to the
Federal Reserves actions to raise market interest rates. Second, as discussed
above, Cascade sold $31 million in lower yielding investment securities and
replaced them with higher yielding loans. Third, Cascade's overall cost of funds
increased only moderately during the period in part due to F&M's early adoption
of Cascade's deposit pricing strategies.
Yields on earning assets during the second quarter of 2006 improved to 7.95%
as compared to 7.49% in the immediately preceding quarter and 6.83% in the year
ago quarter. The average cost of funds paid on interest-bearing liabilities for
the first quarter of 2006 was 3.05% as compared to 2.71% in the preceding
quarter and 1.92% a year ago. Looking forward, management expects the net
interest margin to ease as a result of ongoing market and competitive pricing
pressures.
The margin can also be affected by factors beyond market interest rates,
including loan or deposit volume shifts and/or aggressive rate offerings by
competitor institutions. Cascade's financial model indicates a relatively stable
interest rate risk profile within a reasonable range of rate movements around
the forward rates currently predicted by financial markets. See cautionary
"Forward Looking Statements" below and Cascade's Form 10-K report for further
information on risk factors including interest rate risk.
NON-INTEREST INCOME AND EXPENSE:
With the inclusion of F&M in the second quarter of 2006 combined
non-interest income was up 33.2% compared to the year ago quarter and up 35.2%
compared to the immediately preceding quarter.
Including F&M residential mortgage production, originations during the
quarter ended June 30, 2006 totaled $53.8 million, up from $39.2 million in the
immediately preceding quarter and up from the $38.0 million originated in the
year ago quarter. At June 30, 2006 Cascade serviced approximately $500 million
in mortgage loans for customers. The related carrying value of mortgage
servicing rights was at 0.86% of serviced loans, compared to a fair value
estimate of 1.17% of serviced loans.
Also reflecting the F&M acquisition, non-interest expense for the second
quarter of 2006 was 61.5% above the same quarter in 2005 and 43.1% above the
immediately preceding quarter. Higher levels of non-interest expense are
predominately a result of the human resource expense of the F&M banking team.
Second quarter expenses included approximately $.01 per share of one-time
charges related to F&M transaction.
ABOUT CASCADE BANCORP:
Cascade Bancorp (headquartered in Bend, Oregon) and its wholly-owned
subsidiary, Bank of the Cascades, operates in Oregon and Idaho markets. In terms
of banking strong growth markets, Cascade ranks as the top community bank
footprint in the Northwest and among the top three banks in the nation*. Cascade
has a business strategy that focuses on delivering the best in community banking
for the financial well-being of customers and shareholders. The Bank implements
its strategy by combining outstanding service, competitive financial products,
local expertise and advanced technology applied for the convenience of
customers.
Founded in 1977, Bank of the Cascades offers full-service community banking
through 32 branches in Central Oregon, Southern Oregon, Portland/Salem and
Boise/Treasure Valley. The Bank has been rated among the top performing banks in
the nation for the eighth consecutive year by Independent Community Bankers of
America, as well as in rankings by US Banker Magazine. The Bank was among the
top 20 "Best Companies to Work For" in the March 2006 Oregon Business Magazine.
For further information on Cascade, please visit our web site at
http://www.botc.com .
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements that are subject to risks
and uncertainties. Such risks and uncertainties may include but are not
necessarily limited to fluctuations in interest rates, inflation, government
regulations and general economic conditions, and competition within the business
areas in which Cascade is conducting its operations. For a discussion of
factors, which could cause results to differ, please see Cascade's reports on
Forms 10-K and 10-Q as filed with the Securities and Exchange Commission and
Cascade's press releases. When used in this release, the words or phrases such
as "will likely result in," "management expects that," "will continue," "is
anticipated," "estimate," "projected," or similar expressions, are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 ("PSLRA"). Readers should not place
undue reliance on the forward-looking statements, which reflect management's
view only as of the date hereof. Cascade undertakes no obligation to publicly
revise these forward-looking statements to reflect subsequent events or
circumstances. This statement is included for the express purpose of protecting
Cascade Bancorp and PSLRA's safe harbor provisions.
This release also contains forward-looking statements with respect to the
merger with F&M Holding's, parent of Farmers and Merchants State Bank of Boise,
Idaho. These statements are not facts and are subject to risks and uncertainties
including but are not limited to: the benefits of the proposed merger, including
current and projected future financial and operating results and accretion to
Cascade's projected earnings that may be realized from the merger; the plans,
objectives and expectations of Cascade; and projected growth in particular
markets. The ability of Cascade to predict results or the actual effect of
future plans and strategies is uncertain, and actual results may differ. You can
obtain documents filed by Cascade free of charge at the website maintained by
the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC
by Cascade Bancorp free of charge by contacting: Investor Relations, Cascade
Bancorp, 1100 NW Wall St., PO Box 369, Bend, OR 97701 541-385-6205.
* Projected MSA population growth 2005-2010, weighted by bank deposits;
Includes all public banks with assets $2B - $10B (ex-M&A targets); Source SNL
Financial LC / ESRI
CASCADE BANCORP
Selected Consolidated Financial Highlights
(In thousands, except per share data and ratios; unaudited)
Year over Year
2nd Qtr 2nd Qtr %
2006 2005 Change
---------- -------------- ---------
Balance Sheet Data (at period end)
Investment securities $ 130,771 $ 49,453 164.4%
Loans, gross 1,767,955 965,699 83.1%
Total assets 2,147,038 1,161,228 84.9%
Total deposits 1,640,593 966,509 69.7%
Non-interest bearing deposits 649,114 420,028 54.5%
Core Deposits (1) 1,517,036 927,107 63.6%
Total shareholders' equity 242,478 93,755 158.6%
Income Statement Data
Interest income $ 34,493 $ 17,049 102.3%
Interest expense 9,180 2,922 214.2%
Net interest income 25,313 14,127 79.2%
Loan loss provision 1,200 1,000 20.0%
Net interest income after loan
loss provision 24,113 13,127 83.7%
Noninterest income 4,359 3,272 33.2%
Noninterest expense 13,594 8,416 61.5%
Income before income taxes 14,878 7,983 86.4%
Provision for income taxes 5,872 3,063 91.7%
Net income $ 9,006 $ 4,920 83.0%
Share Data
Basic earnings per common share $ 0.42 $ 0.29 44.6%
Diluted earnings per common share $ 0.41 $ 0.28 46.0%
Book value per common share $ 10.76 $ 5.56 93.6%
Tangible book value per common share $ 5.59 $ 5.16 8.3%
Cash dividends declared per common
share $ 0.09 $ 0.08 12.5%
Ratio of dividends declared to net
income 21.30% 27.39% -22.2%
Basic Average shares outstanding 21,316 16,842 26.6%
Fully Diluted average shares
outstanding 21,815 17,404 25.3%
Key Ratios
Return on average total
shareholders' equity (book) 17.14% 21.73% -21.1%
Return on average total
shareholders' equity (tangible) (2) 32.01% 23.49% 36.3%
Return on average total assets 1.84% 1.81% 1.7%
Net interest spread 4.90% 4.91% -0.2%
Net interest margin 5.85% 5.67% 3.2%
Total revenue (net int inc + non
int inc) $ 29,672 $ 17,399 70.5%
Efficiency ratio (3) 45.81% 48.37% -5.3%
Asset Quality Ratios
Loan loss reserve on loans and
loan commitments 24,253 14,020 73.0%
Reserve to ending total loans 1.37% 1.45% -5.5%
Non-performing assets (4) 548 1,169 -53.1%
Non-performing assets to total
assets 0.03% 0.10% -74.6%
Delinquent >30 days to total loans 0.20% 0.04% 387.1%
Net Charge off's 161 122 32.0%
Net loan charge-offs (annualized) 0.04% 0.05% -23.2%
Mortgage Activity
Mortgage Originations $ 53,793 $ 39,155 37.4%
Total Servicing Portfolio (sold
loans) $ 499,666 $ 499,728 0.0%
Capitalized Mortgage Servicing
Rights (MSR's) $ 4,295 $ 4,515 -4.9%
Capital Ratios
Average shareholders' equity to
average assets 10.74% 8.35% 28.7%
Leverage ratio (5) (Est Q2-06) 10.39% 9.79% 6.1%
Total risk-based capital ratio (5)
(Est Q2-06) 11.53% 11.08% 4.1%
Linked Quarter
2nd Qtr 1st Qtr %
2006 2006 Change
---------- -------------- ---------
Balance Sheet Data (at period end)
Investment securities $ 130,771 $ 63,952 104.5%
Loans, gross $1,767,955 1,132,369 56.1%
Total assets $2,147,038 1,350,664 59.0%
Total deposits $1,640,593 1,116,183 47.0%
Non-interest bearing deposits $ 649,114 458,406 41.6%
Core Deposits (1) $1,517,036 1,080,360 40.4%
Total shareholders' equity $ 242,478 110,410 119.6%
Income Statement Data
Interest income $ 34,493 $ 21,727 58.8%
Interest expense 9,180 4,821 90.4%
Net interest income 25,313 16,906 49.7%
Loan loss provision 1,200 1,100 100.0%
Net interest income after loan
loss provision 24,113 15,806 52.6%
Noninterest income 4,359 3,225 35.2%
Noninterest expense 13,594 9,500 43.1%
Income before income taxes 14,878 9,531 56.1%
Provision for income taxes 5,872 3,603 63.0%
Net income $ 9,006 $ 5,928 51.9%
Share Data
Basic earnings per common share $ 0.42 $ 0.35 21.3%
Diluted earnings per common share $ 0.41 $ 0.34 22.4%
Book value per common share $ 10.76 $ 4.90 119.6%
Tangible book value per common share $ 5.59 $ 4.60 21.4%
Cash dividends declared per
common share $ 0.09 $ 0.09 0.0%
Ratio of dividends declared to
net income 21.30% 25.85% -17.6%
Basic Average shares outstanding 21,316 17,024 25.2%
Fully Diluted average shares
outstanding 21,815 17,576 24.1%
Key Ratios
Return on average total
shareholders' equity (book) 17.14% 22.67% -24.4%
Return on average total
shareholders' equity (tangible) (2) 32.01% 24.20% 32.3%
Return on average total assets 1.84% 1.90% -3.2%
Net interest spread 4.90% 4.78% 2.5%
Net interest margin 5.85% 5.85% 0.0%
Total revenue (net int inc + non
int inc) $ 29,672 $ 20,131 47.4%
Efficiency ratio (3) 45.81% 47.19% -2.9%
Asset Quality Ratios
Loan loss reserve on loans and
loan commitments 24,253 15,822 53.3%
Reserve to ending total loans 1.37% 1.40% -1.8%
Non-performing assets (4) 548 -- nm
Non-performing assets to total
assets 0.03% 0.00% nm
Delinquent >30 days to total
loans 0.20% 0.01% 2424.9%
Net Charge off's 161 (35) -560.0%
Net loan charge-offs (annualized) 0.04% -0.01% -410.8%
Mortgage Activity
Mortgage Originations $ 53,793 $ 38,004 41.5%
Total Servicing Portfolio (sold
loans) $ 499,666 $ 498,843 0.2%
Capitalized Mortgage Servicing
Rights (MSR's) $ 4,295 $ 4,359 -1.5%
Capital Ratios
Average shareholders' equity to
average assets 10.74% 8.40% 28.0%
Leverage ratio (5) (Est Q2-06) 10.39% 11.00% -5.5%
Total risk-based capital ratio (5)
(Est Q2-06) 11.53% 12.90% -10.6%
Notes:
(1) Core deposits include all demand, interest bearing demand, savings
plus time deposits of amounts less than $100,000.
(2) Excludes goodwill, core deposit intangible and other identifiable
intangible assets, related to the acquisitions of Community Bank of
Grants Pass F&M Holding Company.
(3) Efficiency ratio is noninterest expense divided by (net interest income
+ noninterest income).
(4) Nonperforming assets consist of loans contractually past due 90 days or
more, nonaccrual loans and other real estate owned.
(5) Computed in accordance with FRB and FDIC guidelines.
Total Shares Outstanding as of 6/30/06: 22,526,754
SOURCE Cascade Bancorp
-0- 07/13/2006
/CONTACT: Gregory D. Newton, EVP, Chief Financial Officer,
+1-541-617-3526, or Patricia L. Moss, President and Chief Executive Officer,
+1-541-385-6205, both of Cascade Bancorp/
/Web site: http://www.botc.com /