Cascade Bancorp Reports First Quarter 2014 Financial Results PR Newswire BEND, Ore., May 8, 2014 BEND, Ore., May 8, 2014 /PRNewswire/ -- Cascade Bancorp, (NASDAQ: CACB) ("Company" or "Cascade") the holding company for Bank of the Cascades ("Bank"), today announced its financial results for the three months ended March 31, 2014. The full details of the Company's first quarter 2014 results were filed with the Securities and Exchange Commission ("SEC") in the Company's quarterly report on Form 10-Q on May 8, 2014. First Quarter 2014 Financial Highlights oNet income for the first quarter of 2014 was $0.9 million or $0.02 per diluted share compared to $1.7 million or $0.04 per diluted share for the first quarter of 2013. oStockholders' equity increased to $190.3 million or $4.00 per share at March 31, 2014 as compared to $188.7 million or $3.97 per share at December 31, 2013. oGross loans at March 31, 2014 totaled $1.0 billion, an increase of 14.9% and 1.1% compared to March 31, 2013 and December 31, 2013, respectively. oAs of March 31, 2014, substandard loans were reduced by 4.9% to $39.2 million compared to December 31, 2013. oNon-performing assets improved to 0.65% of total assets at March 31, 2014 compared to 0.81% at December 31, 2013 and net recoveries for the first quarter of 2014 were $0.9 million, as compared to net charge-offs of $2.7 million in the first quarter of 2013. oTotal deposits as of March 31, 2014 decreased $4.7 million or 0.40% compared to December 31, 2013. oNet Interest Margin ("NIM") was 3.83% as of March 31, 2014 compared to 4.11% for the quarter ended December 31, 2013. Terry Zink, President and Chief Executive Officer of Cascade Bancorp, commented, "The first quarter marked a critical inflection point in Cascades' recent history as we focus our strategy toward becoming a leading Pacific Northwest community bank with strong return metrics."He continued by saying, "Assuming we receive the requisite shareholder approvals, we expect to close our proposed merger with Home Federal Bancorp ("Home Federal") in mid-May." Mr. Zink went on to say, "Upon the anticipated closing of the merger, we look forward to welcoming Home Federal Bank customers to Bank of the Cascades and realizing the opportunities to enhance efficiencies while delivering expanded services and conveniences." Greg Newton, Chief Financial Officer, added, "Much of our focus during this quarter was preparation for the merger with Home Federal. We are pleased that our credit quality metrics continued to improve during the quarter with reductions in both substandard loans and non-performing assets, while loans and deposits were stable during our seasonally slower winter quarter."He added, "Also, during this quarter we continued to re-balance the loan portfolioin favor of commercial and industrial loans.This loan type was up $19.3 million or 7.6% from the prior quarter while commercial real estate loans declined $8.3 million or 1.5% during the quarter.This resulted in modest overall loan growth in our seasonally weakest period." Financial Review Total assets were $1.4 billion at March 31, 2014, down $32.2 million from December 31, 2013. The decrease in total assets during the period ended March 31, 2014 primarily resulted from decreases in cash and cash equivalents of $31.8 million, investments of $4.7 million and loans held for sale of $6.0 million. These decreases were partially offset by a $10.3 million increase in net loans. The decline in cash and cash equivalents resulted primarily from the payoff of $27.0 million short-term FHLB advances outstanding at year end. The decline in investment securities available-for-sale during the three months ended March 31, 2014 was primarily the result of the principal pay downs of our mortgage-backed securities. Total loans and loans held-for-sale outstanding increased $5.2 million to $1.0 billion at March 31, 2014 compared to December 31, 2013, primarily attributable to increased balances in the commercial and industrial portfolio. Loan quality continued to improve with remediation of special mention and substandard loans. Loans categorized as such totaled $67.3 million at March 31, 2014 as compared to $85.1 million at December 31, 2013. Remediation was accomplished through credit upgrades owing to improved obligor cash flows as well as payoffs/paydowns, note sales and/or charge offs related to the restructure of adversely risk rated loans. Non-performing assets as of March 31, 2014 improved to 0.65% of total assets as compared to 0.81% at December 31, 2013. Net recoveries during the first quarter of 2014 were $0.9 million; the Company made no provision for loan losses as management believes the reserve for loan losses of $21.7 million at March 31, 2014 is adequate. Total liabilities were $1.2 billion at March 31, 2014, a $33.8 million decrease from December 31, 2013. This was primarily the result of $27.0 million in reduced FHLB borrowings and a $4.7 million decrease in total deposits. Net income for the quarter ended March 31, 2014 was $0.02 per share, or $0.9 million, compared to $0.04 per share, or $1.7 million, for the first quarter of 2013 and $0.03 per share, or $1.2 million, in the fourth quarter of 2013 ("linked quarter"). The decrease in net income in the first quarter of 2014 compared to the same period in 2013 was primarily the result of $0.8 million in transaction related expenses related to our proposed merger with Home Federal. The decrease in net income in the first quarter of 2014 compared to the fourth quarter of 2013 was primarily a result of a recovery of $1.0 million in interest from the payoff of a non-accrual loan in the fourth quarter of 2013. Net interest income was $11.7 million for the first quarter of 2014, comparable to $11.6 million in the first quarter of 2013 and down from $13.1 million in the fourth quarter of 2013. The $1.3 million decline from the linked quarter to the current quarter was related to the inclusion of the $1.0 million recovery discussed above. Total interest income decreased $0.5 million from $12.6 million in the first quarter of 2013 to $12.1 million in the first quarter of 2014. The decrease was due primarily to lower interest rates in the first quarter of 2014 compared to the same period in 2013. Total interest expense for the first quarter of 2014 decreased $0.6 million compared to the first quarter of 2013. This improvement was primarily due to lower rates on deposits and reduced borrowing expenses. Total non-interest income remained relatively consistent in the first quarter of 2014 compared to the same period in 2013 mainly as a result of increases in card issuer and merchant services fees of $0.3 million, customer swap fee income of $0.3 million in connection with the Company's newly initiated interest rate swap products, as well as increased Small Business Administration fees. These increases were offset by reduced mortgage banking income of $0.7 million in the first quarter of 2014 compared to the first quarter of 2013. Total non-interest expense for the three months ended March31, 2014 increased over the three months ended March31, 2013 due primarily to merger related expenses of $0.8 million in the first quarter of 2014. Total non-interest expense decreased $0.9 million in the first quarter of 2014 compared to the linked quarter. The decrease was primarily related to $0.7 million of accrued bonuses in the fourth quarter of 2013 issued in connection with the Company's annual incentive plan. Conference Call Information Cascade announced on April 30, 2014 in a Form 8-K filed with the SEC that they will conduct a quarterly earnings conference call Thursday, May 8, 2014, at 2:00 p.m. PDT (5:00 p.m. EDT). Terry E. Zink, President and CEO, and Gregory Newton, Executive Vice President and CFO, will discuss first quarter 2014 results and provide an update on recent activities. There will be a question-and-answer session following the presentation. Shareholders, analysts and other interested parties are invited to join the call by dialing (888) 567-1602 a few minutes before 2:00 p.m. Information to be discussed in the teleconference will be available on the Company's website www.botc.com under the "Investor Information" tab, shortly after the call. 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. FORWARD LOOKING STATEMENTS This release contains forward-looking statements about Cascade Bancorp's plans and anticipated results of operations and financial condition. These statements include, but are not limited to, our plans, objectives, expectations, and intentions and are not statements of historical fact. When used in this report, the word "expects," "believes," "anticipates," "could," "may," "will," "should," "plan," "predicts," "projections," "continue" and other similar expressions constitute forward-looking statements, as do any other statements that expressly or implicitly predict future events, results or performance, and such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain risks and uncertainties and Cascade Bancorp's success in managing such risks and uncertainties could cause actual results to differ materially from those projected, including among others, the following factors: local and national economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our results of operations and financial condition; the local housing/real estate market could continue to decline for a longer period than we anticipate; the risks presented by a continued economic recession, which could continue to adversely affect credit quality, collateral values, including real estate collateral and OREO properties, investment values, liquidity and loan originations, reserves for loan losses and charge offs of loans and loan portfolio delinquency rates and may be exacerbated by our concentration of operations in the States of Oregon and Idaho generally, and Central, Southern and Northwest Oregon, as well as the greater Boise/Treasure Valley, Idaho area, specifically; interest rate changes could significantly reduce net interest income and negatively affect funding sources; competition among financial institutions could increase significantly; competition or changes in interest rates could negatively affect net interest margin, as could other factors listed from time to time in Cascade Bancorp's SEC reports; the reputation of the financial services industry could further deteriorate, which could adversely affect our ability to access markets for funding and to acquire and retain customers; and existing regulatory requirements, changes in regulatory requirements and legislation (including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act) and our inability to meet those requirements, including capital requirements and increases in our deposit insurance premium, could adversely affect the businesses in which we are engaged, our results of operations and financial condition. Such forward-looking statements also include, but are not limited to, statements about the benefits of the proposed merger involving Cascade and Home Federal, including future financial and operating results, Cascade's or Home Federal's plans, objectives, expectations and intentions, the expected timing of completion of the merger and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: (i) the ability to obtain the requisite Cascade and Home Federal shareholder approvals; (ii) the risk that a condition to the closing of the merger may not be satisfied; (iii) the timing to consummate the proposed merger; (iv) the risk that the businesses will not be integrated successfully; (v) the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; (vi) disruption from the transaction making it more difficult to maintain relationships with customers, employees or vendors; (vii) the diversion of management time on merger-related issues; (viii) general worldwide economic conditions and related uncertainties; (ix) liquidity risk affecting Cascade's ability to meet its obligations when they come due; (x) excessive loan losses; (xi) the effect of changes in governmental regulations; and (xii) other factors we discuss or refer to in the "Risk Factors" section of Cascade's most recent Annual Report on Form 10-K filed with Securities and Exchange Commission (the "SEC") on March 31, 2014. These risks, as well as other risks associated with the merger, are more fully discussed in the joint proxy statement/prospectus mailed to stockholders of Cascade and Home Federal on or about April 16, 2014, and included in the Registration Statement on Form S-4 (registration statement number 333-192865), as amended, that was filed with the SEC in connection with the merger. Additional risks and uncertainties are identified and discussed in Cascade's reports filed with the SEC and available at the SEC's website at www.sec.gov. These forward-looking statements speak only as of the date of this release. Cascade Bancorp undertakes no obligation to publish revised forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date hereof. Readers should carefully review all disclosures filed by Cascade Bancorp from time to time with the SEC. Participants in the Solicitation Cascade, Home Federal and their respective directors and executive officers may be soliciting proxies from Cascade and Home Federal shareholders in favor of the proposed merger and related matters. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Cascade and Home Federal shareholders in connection with the proposed merger and a description of their direct and indirect interests, by security holdings or otherwise is set forth in the joint proxy statement/prospectus filed with the SEC on April 11, 2014. You can find information about Cascade's directors and executive officers in Cascade's definitive proxy statement filed with the SEC on April 28, 2014 for its 2014 Annual Meeting of Shareholders. You can find information about Home Federal's directors and executive officers in Home Federal's Form 10-K/A filed with the SEC on April 29, 2014. Additional information about Cascade's directors and executive officers and Home Federal's directors and executive officers can also be found in the above-referenced joint proxy statement/prospectus and other relevant materials filed with the SEC. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You can obtain free copies of these documents from Cascade and Home Federal using the contact information above. Additional Information about the Proposed Merger and Where to Find It This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between Cascade and Home Federal, Cascade has filed with the SEC a Registration Statement on Form S-4 (registration statement number 333-192865), which includes a joint proxy statement of Cascade and Home Federal that also constitutes a prospectus. The joint proxy statement/prospectus was mailed to shareholders of Cascade and Home Federal on or about April 16, 2014. Each of Cascade and Home Federal may file other relevant documents concerning the proposed transaction. Cascade and Home Federal urge investors and security holders to read the definitive joint proxy statement/prospectus regarding the proposed merger, as well as other documents filed with the SEC because they will contain important information about the proposed merger. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (www.sec.gov). You may also obtain these documents, free of charge, from: (i) Cascade's website (www.botc.com) under the heading "About Us" and then under the heading "Investor Relations" and then under the heading "Investor Information" and then under the tab "SEC Filings;" (ii) Cascade upon written request to Cascade Bancorp, Attn: Investor Relations, 1100 North West Wall Street, P.O. Box 369, Bend, Oregon 97701; (iii) Home Federal's website (www.myhomefed.com/ir) under the heading "Investor Relations" and then under the heading "SEC Filings;" or (iv) Home Federal upon written request to Home Federal Bancorp, Inc., Attn: Eric Nadeau, 500 12th Avenue South, Nampa, Idaho 83651. Information contained herein, other than information at December 31, 2013, and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of Cascade Bancorp and subsidiary as of and for the fiscal year ended December 31, 2013, as contained in the Company's Annual Report on Form 10-K for such fiscal year. CASCADE BANCORP CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, 2014 December 31, 2013 March 31, 2013 ASSETS Cash and cash equivalents: Cash and due from banks $ 30,776 $ 33,300 $ 31,430 Interest bearing deposits 19,239 48,527 113,243 Federal funds sold 22 22 22 Total cash and cash 50,037 81,849 144,695 equivalents Investment securities 189,752 194,481 232,672 available-for-sale Investment securities 1,320 1,320 1,806 held-to-maturity Federal Home Loan Bank 9,820 9,913 10,192 (FHLB) stock Loans held for sale 4,398 10,359 1,444 Loans, net 983,925 973,618 850,765 Premises and equipment, net 32,376 32,953 34,166 Bank-owned life insurance 36,750 36,567 35,916 (BOLI) Other real estate owned 2,995 3,144 5,684 (OREO), net Deferred tax asset (DTA), 49,477 50,068 — net Other assets 13,163 11,947 11,165 Total assets $ 1,374,013 $ 1,406,219 $ 1,328,505 LIABILITIES & STOCKHOLDERS' EQUITY Liabilities: Deposits: Demand $ 450,648 $ 431,079 $ 387,451 Interest bearing demand 534,723 544,668 541,343 Savings 53,443 50,258 43,419 Time 123,779 141,315 131,974 Total deposits 1,162,593 1,167,320 1,104,187 FHLB borrowings — 27,000 60,000 Other liabilities 21,157 23,184 22,269 Total liabilities 1,183,750 1,217,504 1,186,456 Stockholders' equity: Preferred stock, no par value; 5,000,000 shares — — — authorized; none issued or outstanding Common stock, no par value; 100,000,000 shares 330,988 330,839 330,150 authorized Accumulated deficit (141,145) (142,088) (191,236) Accumulated other 420 (36) 3,135 comprehensive income Total stockholders' equity 190,263 188,715 142,049 Total liabilities and $ 1,374,013 $ 1,406,219 $ 1,328,505 stockholders' equity CASCADE BANCORP CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (Unaudited) Three Months Ended Three Months Ended March 31, December 31, 2014 2013 2013 2012 Interest income: Interest and fees on loans $ 10,749 $ 11,238 12,053 11,601 Interest on investments 1,328 1,322 1,377 1,377 Other investment income 27 37 72 45 Total interest income 12,104 12,597 13,502 13,023 Interest expense: Deposits: Interest bearing demand 175 166 191 179 Savings 4 5 5 5 Time 183 333 216 405 Other borrowings 5 474 21 479 Total interest expense 367 978 433 1,068 Net interest income 11,737 11,619 13,069 11,955 Loan loss provision — — Net interest income after loan loss 11,737 11,619 13,069 11,955 provision Non-interest income: Service charges on deposit 753 735 786 773 accounts Card issuer and merchant services 1,001 751 837 662 fees, net Earnings on bank owned life 183 211 203 271 insurance Mortgage banking income, net 434 1,160 757 1,371 Swap fee income 326 — 430 — Other income 655 499 931 374 Total non-interest income 3,352 3,356 3,944 3,451 Non-interest expense: Salaries and employee benefits 7,643 7,647 8,412 7,839 Occupancy 1,140 1,155 1,101 1,154 Information Technology 787 577 563 543 Equipment 337 368 392 404 Communications 383 366 388 392 FDIC insurance 232 445 237 471 OREO (8) 277 207 891 Professional services 1,332 681 1,714 1,369 Decrease in reserve for unfunded — — — (1,110) loan commitments Other expenses 2,004 1,795 1,752 2,116 Total non-interest expense 13,850 13,311 14,766 14,069 Income before income taxes 1,239 1,664 2,247 1,337 Income tax benefit (provision) (296) 32 (1,013) (29) Net income $ 943 $ 1,696 $ 1,234 $ 1,308 CASCADE BANCORP ADDITIONAL FINANCIAL INFORMATION (In thousands, except per share data) (Unaudited) LINKED QUARTER YEAR OVER YEAR March 31, 2014 December 31, March 31, March 31, 2013 2014 2013 Share Data Basic net income per common $ 0.02 $ 0.03 $ 0.02 $ 0.04 share Diluted net income per $ 0.02 $ 0.03 $ 0.02 $ 0.04 common share Book value per basic common $ 4.00 $ 3.97 $ 4.00 $ 2.99 share Basic average shares 47,233 47,588 47,233 47,141 outstanding Fully diluted average 47,296 47,576 47,296 47,254 shares outstanding Key Ratios Return on average total 2.02 % 2.59 % 2.02 % 4.84 % shareholders' equity Return on average total 0.28 % 0.35 % 0.28 % 0.53 % assets Net interest spread 3.75 % 4.02 % 3.75 % 3.71 % Net interest margin 3.83 % 4.11 % 3.83 % 3.92 % Total revenue $ 15,089 $ 17,013 $ 15,089 $ 14,975 Efficiency ratio^1 91.79 % 86.79 % 91.79 % 88.89 % Credit Quality Ratios Reserve for credit losses $ 22,162 $ 21,297 $ 22,162 $ 24,988 Reserve for credit losses 2.20 % 2.14 % 2.20 % 2.85 % to ending gross loans Non-performing assets $ 8,906 $ 11,453 $ 8,906 $ 21,902 ("NPAs") Non-performing assets to 0.65 % 0.81 % 0.65 % 1.65 % total assets Delinquent >30 days to 0.33 % 0.29 % 0.33 % 0.61 % total loans (excl. NPAs) Net Charge off's $ (865) $ 796 $ (865) $ 2,713 Net loan charge-offs to (0.09) % 0.08 % (0.09) % 0.31 % average total loans Bank Capital Ratios Tier 1 capital leverage 10.89 % 10.49 % 10.89 % 10.69 % ratio Tier 1 risk-based capital 13.21 % 13.01 % 13.21 % 14.27 % ratio Total risk-based capital 14.47 % 14.27 % 14.47 % 15.54 % ratio Bancorp Capital Ratios Tier 1 capital leverage 10.89 % 10.49 % 10.89 % 10.72 % ratio Tier 1 risk-based capital 13.19 % 12.99 % 13.19 % 14.31 % ratio Total risk-based capital 14.45 % 14.25 % 14.45 % 15.58 % ratio ^1 The efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense by the sum of net interest income and non-interest income. Other companies may define and calculate this data differently. SOURCE Cascade Bancorp Website: http://www.botc.com Contact: Terry E. Zink, President and Chief Executive Officer, Cascade Bancorp (541) 617-3527, Gregory D. Newton, EVP and Chief Financial Officer, Cascade Bancorp (541) 617-3526
Cascade Bancorp Reports First Quarter 2014 Financial Results
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