Cascade Bancorp (CACB)

[Enterprising Investor]

Cascade Bancorp Reports Third Quarter 2013 Financial Results With Continued Revenue Increase (11/13/13)

BEND, Ore., Nov. 12, 2013 /PRNewswire/ -- Cascade Bancorp (NASDAQ: CACB) ("Company" or "Cascade") the holding company for Bank of the Cascades ("Bank"), today announced net income of $1.5 million or $0.03 per share for the quarter ended September 30, 2013. The full details of the Company's third quarter and year-to-date 2013 results were filed with the SEC in the Company's quarterly report on Form 10-Q on November 12, 2013.

Terry Zink, President and Chief Executive Officer of Cascade Bancorp commented, "We are very pleased at our improved earnings in the third quarter as depicted in the 10-Q filing. Underscoring this progress are several milestones that, taken together, are building Cascade into one of the top community banks in Oregon and in the Northwest."

Cascade Bancorp and Home Federal Bancorp Agree to Join Forces to Create a Leading Northwest Community Bank
Cascade announced on October 23, 2013 an agreement to acquire Home Federal Bancorp ("Home Federal") headquartered in Nampa, Idaho. The agreement was unanimously approved by the board of directors of each company and the transaction is expected to be completed in the first quarter of 2014, after obtaining the approval of the shareholders of each company, the necessary regulatory approvals and other customary closing conditions. As a result of the merger, we expect the following:

•the combined bank will have significant scale and market share;

•create a bank with over $2.0 billion in assets, making it the 4th largest community bank in the Pacific Northwest;1

•double Cascade's market share in Boise/Treasure Valley;

•solidify Cascade's #1 market share in Central Oregon;

•expands Cascade's footprint to Eugene, Oregon; and

•unlocks significant efficiency and profitability opportunities.

Zink commented "We are truly pleased to join forces with Home Federal and to provide an opportunity of unique and compelling value to both organizations. The combination of our two outstanding franchises will result in a strong balance sheet and capital base, attractive margins and good earnings potential. For our customers, we believe the banks are culturally compatible and the combined institution will deliver an expanded product offering and stronger lending capacity. For shareholders, we believe the increased scale of the combined company will position our bank to grow organically while also providing additional strength to pursue future acquisition opportunities. Finally, for our communities, we believe our combined organization will provide increased opportunity to deliver the advantages of community banking and to contribute to regional economic vitality."

Bank of the Cascades Completes Acquisition of Klamath Falls, Bend, and Redmond, Oregon AmericanWest Bank Branches
On October 18, 2013, the Bank successfully closed on its previously announced purchase of the Klamath Falls branch of AmericanWest Bank and the customer relationships of the AmericanWest Bank (known locally as PremierWest Bancorp) branches in Bend and Redmond, Oregon. According to Zink, "We are pleased to welcome these new customers to Bank of the Cascades and believe these customers were well satisfied with the transition to Cascade."

Bank of the Cascades Expands Critical Online and Customer Choice Delivery Services
During the third quarter of 2013, the Bank completed a conversion of its online banking services to a new platform providing opportunity for upgraded and additional banking convenience. To complement existing services, the Bank plans to offer mobile banking, mobile deposit and mobile bill pay services in the fourth quarter of 2013. Zink said, "I am excited that our new online services will give customers the best in convenient access to their bank."

Bank of the Cascades Receives Top Philanthropy Recognition
Bank of the Cascades was proud to have been recently recognized by the Portland Business Journal as the number one Oregon small business in Corporate Philanthropy in 2013. Enhancing the quality of life in the communities we serve has long been a core value of the organization and it is our honor to give back to our local non-profit organizations who work to serve the needs of all in our communities.

Financial Highlights of the Third Quarter and period ended September 30, 2013

•Quarter-to-Date Net Income: Net income for the third quarter of 2013 was $1.5 million or $0.03 per share compared to $1.8 million or $0.04 per share for the third quarter of 2012. Third quarter 2013 pretax income was up 15.7% from the year-ago quarter, however current quarter net income includes tax expense of $0.6 million compared to no tax provision in the same quarter a year-ago.

•Stockholders Equity/Book Value Per Share: Stockholders equity increased to $186.9 million or $3.93 per share at September 30, 2013 as compared to $140.8 million or $2.97 per share at December 31, 2012 due to the DTA recognition.

•Loans: Gross loans at September 30, 2013 are up $81.7 million or 9.52% compared to December 31, 2012.

•Deposits: Total deposits at September 30, 2013 are up $119.4 million or 11.09% compared to December 31, 2012.

•Credit Quality: Reserve for loan losses at September 30, 2013 was $21.7 million or 2.28% of loans compared to $27.3 million or 3.17% of loans at December 31, 2012.

•Credit Quality: Non-performing assets were 0.88% of total assets at September 30, 2013 compared to 1.94% at December 31, 2012.

•Credit Quality: Substandard loans were reduced by 61.61% to $48.6 million at September 30, 2013 as compared to December 31, 2012. Net charge-offs year-to-date were $6.6 million in 2013 compared to $9.4 million for the same period of 2012, the decreases were mainly related to resolution of substandard loans.

•Net Interest Margin ("NIM"): NIM was 3.81% at September 30, 2013 compared to 4.11% at December 31, 2012.

Total assets increased to $1.4 billion at September 30, 2013, an increase of $105.3 million from December 31, 2012. The primary cause of this increase was an increase of $91.9 million in total loans outstanding to $950.6 million at September 30, 2013, an increase in cash and cash equivalents of $16.8 million and a $51.5 million increase in DTA, primarily the result of a second quarter 2013 reversal of a full valuation allowance. These increases were offset by a decrease of $57.4 million in investment securities available-for-sale as a result of maturing securities in 2013 as well as increased principal paydowns.

The 10.71% growth in total loans outstanding at September 30, 2013 as compared to December 31, 2012 was attributable to local lending including owner-occupied commercial real estate, small business loans and lines, consumer lending, including residential mortgages and increased shared national credits in the commercial and industrial portfolio.

Loan quality continued to improve during the third quarter of 2013 with remediation of special mention and substandard loans. These adversely risk rated loans totaled $103.3 million at September 30, 2013 as compared to $175.6 million at December 31, 2012. Remediation was accomplished through payoffs/pay downs, note sales and/or charge offs related to the restructure of adversely risk rated loans as well as credit upgrades owing to improved obligor cash flows. Non-performing assets as of September 30, 2013 continued to improve to 0.88% of total assets as compared to 1.94% at December 31, 2012. During the third quarter of 2013, management made no provision for loan losses as management believes that the reserve for loan losses as a percentage of loans at 2.28% remains adequate.

Deposit balances increased $119.4 million to $1.2 billion at September 30, 2013 as compared to December 31, 2012. Approximately 20% of the increase was a result of increases in the deposits of public bank entities as their cash flow needs changed. The remaining increase relates to expanded relationships as the Bank worked with existing customers as well as timing of customers depositing funds into the Bank. The Bank is also making a concerted effort to gain new customers in the markets we serve.

The Company had no FHLB borrowings at September 30, 2013, a decrease of $60.0 million from December 31, 2012. The FHLB borrowings were re-paid during the second quarter of 2013.

Net income for the three months ended September 30, 2013 was $1.5 million or $0.03 per share compared to $1.8 million or $0.04 per share for the three months ended September 30, 2012. Net income for the three months ended September 30, 2013 includes an income tax provision of $0.6 million, while there was no income tax provision made during the three months ended September 30, 2012 as a result of a full DTA valuation.

Net interest income was $12.1 million for the third quarter of 2013, comparable to that of the third quarter of 2012. Net interest income for the nine months ended September 30, 2013 was $35.1 million, down $2.8 million from $37.9 million for the same period in 2012. These year-over-year declines were mainly due to reductions in yields on earnings assets as a result of the continued historically low interest rate market environment. Interest expense for the third quarter of 2013 decreased $0.7 million compared to the third quarter of 2012 and $1.6 million for the nine months ended September 30, 2013 compared to the year ago period. This decrease in interest expense in the three and nine months period ended September 30, 2013 was due to the decreased rates on deposits in the low market rate environment as well as prepayment of $60.0 million of FHLB borrowings bearing a weighted average rate of 3.17% during the second quarter of 2013.

Non-interest income in the third quarter of 2013 was $0.4 million higher than the third quarter of 2012 and non-interest income was $0.9 million higher for the nine months ended September 30, 2013 compared to the same period in 2012. These increases are primarily related to increased card issuer and merchant service fees, as well as increased mortgage banking income. Non-interest expense in the third quarter of 2013 was comparable to non-interest expense for the third quarter of 2012. Non-interest expense for the nine months ended September 30, 2013 was $4.4 million higher than non-interest expense for the nine months ended September 30, 2012. The increase was primarily related to second quarter 2013 increases primarily due to the $3.8 million prepayment penalty of FHLB advances and the $1.3 million recorded for one-time human resource related items including incentive and severance obligations and $0.4 million associated with branch consolidation costs.

About Cascade Bancorp and Bank of the Cascades

Cascade Bancorp (NASDAQ: CACB), headquartered in Bend, Oregon, and its wholly owned subsidiary, Bank of the Cascades, operate in Oregon and Idaho markets. Founded in 1977, Bank of the Cascades offers full-service community banking through 28 branches in Central, Southern and Northwest Oregon, as well as in the greater Boise/Treasure Valley, Idaho area. The Bank has a business strategy that focuses on delivering the best in community banking for the financial well-being of customers and shareholders. It executes its strategy through the consistent delivery of full relationship banking focused on attracting and retaining value-driven customers. For further information, please visit our website at www.botc.com.

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