SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For the fiscal year ended: December 31, 2000

For the transition period from __________ to __________

Commission file number: 0-23322

CASCADE BANCORP
(Name of registrant as specified in its charter)

(541) 385-6205
(Registrant’s telephone number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, no par value
(Title of Class)

     Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No___

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [___]

     State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. $91,177,161 aggregate market value as of March 5, 2001, based on the average bid and asked price.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 6,886,543 shares of no par value Common Stock on March 5, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Part III is incorporated by reference from the issuer’s definitive proxy statement for the annual meeting of shareholders to be held on April 23, 2001.

CASCADE BANCORP
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS

PART I

PART III

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PART I

ITEM 1.      BUSINESS

Company

     Cascade Bancorp (Bancorp) is an Oregon chartered Financial Holding Company formed in 1990 and headquartered in Bend, Oregon. Bancorp’s principal subsidiary is Bank of the Cascades (the Bank). The Holding Company has an inactive subsidiary, Cascade Bancorp Financial Services, Inc (collectively, the Company). At December 31, 2000 the Company had total consolidated assets of approximately $423 million, net loans of approximately $353 million and deposits of approximately $358 million.

Bank of the Cascades

     The Bank was chartered as an Oregon State bank in March 1976 and opened for business in February 1977. Bank of the Cascades is a community bank offering the full range of financial services to its business and consumer clients, including trust and investments. The Bank has a network of eleven branches, nine located in Central Oregon, and two in the Salem area, of Oregon. In Deschutes County, its largest market concentration, the Company is the market share leader in customer deposits, holding over 30% share. It also is the market share leader in construction and commercial real estate lending as well as in residential mortgage origination and home equity lending. Owing to in-migration and a flourishing tourism industry, the population of Deschutes County has grown at a rate faster than any County in the Northwest during the past decade. The Bank’s headquarters is located in Bend, Oregon.

     With a relationship banking strategy, the Bank offers a broad range of commercial and personal banking services to its customers. Lending activities serve small to medium-sized business and consumer accounts. The Bank provides commercial real estate loans, real estate construction and development loans, commercial and industrial loans as well as consumer installment, line-of-credit, credit card, and home equity loans. The Bank originates residential mortgage loans that are typically sold on the secondary market. The Bank provides consumer and business deposit services including checking, money market, and time deposit accounts and related payment services such as cash management, lock box, internet banking and bill payment. In addition, the Bank purchases used vehicle installment contracts from local dealerships and also offers direct consumer finance loans.

     In mid-1999 the Company began offering Trust and Investment services. Trust services focus on the personal trust needs of existing and prospective clients by providing living and testamentary trust, asset and financial management, and fiduciary services. Investment services are provided by a licensed on-site broker through a broker/dealer agent relationship.

Cascade Bancorp Financial Services

     The Company formerly engaged in the dealer vehicle installment contracts business through Cascade Bancorp Financial Services, Inc (CBFS). Those activities as well as the assets, liabilities and capital of CBFS became a division of the Bank in 2000, and the subsidiary is now inactive.

Employees

     The Company views its employees as an integral resource in achieving its strategies and long term goals, and considers its relationship with its employees to be good. Bancorp has no employees other than its executive officers, who are also employees of the Bank. As of December 31, 2000, the Company had 207 full-time equivalent employees compared to 205 a year earlier. None of the employees of the Company are subject to a collective bargaining agreement.

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Business Strategy

     Cascade Bancorp has established the following key performance goals: 1) Consistently exceed 20% return on equity, 2) Consistently exceed 12% growth in earnings per share, 3) Identify and prudently manage credit and business risk and 4) Strive to profitably diversify revenue and continuously seek efficiency improvements in all its activities. There can be no assurance as to the ongoing achievement of these goals due to the inherent uncertainty of future events, competitive forces, the vitality of the local, regional and national economy and other unforeseen circumstances.

     For nearly a quarter of a century, Bank of the Cascades has focused on delivering the best in hometown banking services to the Oregon communities it serves. Its strategy is to profitably grow its business by attracting and retaining high value relationship customers. This is accomplished by providing the personal touch customer service while offering a broad array of products and financial services. The Company is committed to providing customer choice in delivery channels by implementing advanced technology and delivery systems. Such channels include traditional branches, ATMs, Internet banking, and telephonic access.

     In addition to targeting growth and increased market share in its existing locations, the Company may also consider future expansion by de novo branching where it identifies market opportunities. The Company expects to open its third office in the Salem area in mid 2001. The Company may also consider strategic partnerships or making selective business acquisitions to expand its market opportunities.

     The Company’s broad risk management objectives are to develop loan policies and underwriting practices designed to prudently manage credit risk. Funding policies are designed to maintain an appropriate volume and mix of core deposits and time deposit balances to efficiently fund its loan and investment activities. The Company may complement its deposit gathering strategies with wholesale funding from reliable counterparties such as the Federal Home Loan Bank. The Company monitors its sensitivity to changing interest rates primarily by utilizing simulation analysis in addition to traditional interest rate gap calculations.

Competition

     Commercial and consumer banking in Central Oregon, as well as in the State of Oregon and nation as a whole, is highly competitive. The Company competes principally with other commercial banks, savings and loan associations, credit unions, mortgage companies, brokers and other non-bank financial service providers. In addition to traditional competition in interest rates paid on deposits and pricing of loans, competition exists with respect to the scope and type of services offered, customer service levels, convenience as well as in fees and service charges. In addition, improvements in technology, communications and the Internet have intensified delivery channel competition. Certain competitors may have greater resources than the Company resulting in heightened competition for banking and financial services.

     The Company competes for customers principally through its commitment to customer service, the relative attractiveness of its products and services, and by ensuring customer convenience and functionality in accessing those products and services. The Company believes its hometown banking philosophy, technology and focus on small and medium-sized business, professional and consumer accounts, enables it to compete effectively with other financial service providers. In addition, the Company’s lending officers and senior managers have significant experience in their respective marketplaces. This enables them to maintain close working relationships with their customers. To serve customers whose borrowing requirements exceed its lending limits, the Bank may participate loans to other financial institutions.

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Consolidated Statistical Information

     The following tables present certain financial and statistical information with respect to the Company for the periods indicated. Most of the information is required by Guide 3, “Statistical Disclosure by Bank Holding Companies”, published by the Securities and Exchange Commission. At the beginning of each table, information is presented as to the nature of data disclosed in the table.

     For most financial institutions, including the Company, the primary component of earnings is net interest income. Net interest income is the difference between interest income earned, principally from loans and investment securities portfolio, and interest paid, principally on customer deposits and borrowings. Changes in net interest income result from changes in volume, spread and margin. Volume refers to the dollar level of interest-earning assets and interest-bearing liabilities. Spread refers to the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. Margin refers to net interest income divided by interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities.

Analysis of Changes in Interest Differential

     The following table shows the dollar amount of the increase (decrease) in the Company’s consolidated interest income and expense, and attributes such variance to “volume” or “rate” changes. Variances that were immaterial have been allocated equally between rate and volume categories. (Dollars in thousands):

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Average Balances and Average Rates Earned and Paid

     The following table sets forth for 2000, 1999, and 1998 information with regard to average balances of assets and liabilities, as well as total dollar amounts of interest income from interest-earning assets and interest expense on interest-bearing liabilities, resultant average yields or rates, net interest income, net interest spread, net interest margin and the ratio of average interest-earning assets to average interest-bearing liabilities for the Company. (Dollars in thousands):

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Loan Portfolio Composition

     Interest earned on the loan portfolio is the primary source of income for the Company. Net loans represent 83% of total assets as of December 31,2000. The Company makes substantially all of its loans to customers located within the Company’s service area. Due to the rapid growth in population and the tourism and service nature of the economy in its primary markets, the Bank loan concentration has historically been in real estate construction and commercial real estate. The Company has no loans defined as highly leveraged transactions by the Federal Reserve Bank. The Company has no significant agricultural loans.

     The following table presents the composition of the Company’s loan portfolio, at the dates indicated (dollars in thousands):

     At December 31, 2000, the maturities of all loans by category were as follows (dollars in thousands):

     Variable rate loans due after one year totaled $115,870 at December 31, 2000 and loans with predetermined or fixed rates due after one year totaled $85,934 at December 31, 2000.

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Lending and Credit Management

     The Company has a comprehensive risk management process to control, underwrite, monitor and manage credit risk in lending. The underwriting process relies principally on historical and prospective cash flow analysis augmented by collateral assessment, credit bureau information, as well as business plan assessment. Ongoing loan portfolio monitoring is performed by a centralized credit administration function including review and testing of compliance to loan policies and procedures. Internal and external auditors periodically sample and test certain credit files as well.

     Risk of nonpayment exists with respect to all loans, although certain specific types of risks are associated with different types of loans. Due to the nature of the Company’s customer base and the growth experienced in the Company’s market area, real estate is frequently a material component of collateral for the Company’s loans. The expected source of repayment of these loans is generally the operations of the borrower’s business, or the obligor’s personal income. However, real estate collateral provides an additional measure of security. Risks associated with real estate loans include fluctuating land values, local economic conditions, changes in tax policies, and a concentration of loans within the Bank’s market area. The Company mitigates risks on construction loans by generally lending funds to customers that have been prequalified for long term financing and who are using experienced contractors approved by the Company. Making the majority of commercial real estate loans to owner-occupied users of the property mitigates, but does not eliminate, commercial real estate risk.

     The following table presents information with respect to non-performing assets (dollars in thousands):

     The accrual of interest on a loan is discontinued when, in management’s judgment, the future collectibility of principal or interest is in doubt. Loans placed on nonaccrual status may or may not be contractually past due at the time of such determination, and may or may not be secured. When a loan is placed on nonaccrual status, it is the Bank’s policy to reverse, and charge against current income, interest previously accrued but uncollected. Interest subsequently collected on such loans is credited to loan principal if, in the opinion of management, full collectibility of principal is doubtful. If interest on nonaccrual loans had been accrued, such income would have been insignificant for the periods presented.

     At December 31, 2000, there were no potential problem loans, except as discussed above, where known information about possible credit problems of the borrower caused management to have serious doubts as to the ability of such borrower to comply with the present loan repayment terms and which may result in such loans being placed on a non-accrual basis.

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Reserve for Loan Losses

     The reserve for loan losses is maintained at a level consistent with the known and inherent risks within the loan portfolio. The reserve is increased by provisions charged to operations and reduced by loans charged-off, net of recoveries. In evaluating the adequacy of the Reserve for Loan Losses, management considers such factors as historic and current loss experience, portfolio quality characteristics, specific evaluation of problem loans, assessment of current and prospective economic conditions, risk and collateral profiles, risk characteristics and concentration of loan types. However, this assessment cannot preclude unforeseen loan losses that are sizable in relation to the amount reserved.

     The following table summarizes the Company’s reserve for loan losses and charge-off and recovery activity for each of the last five years (dollars in thousands):

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Allocation of Reserve for Loan Losses

     The following table presents estimated allocation of the Reserve for Loan Losses to major loan types. As a part of the methodology employed by the Company to analyze the adequacy of the Reserve for Loan Losses, management may estimate and allocate portions of the reserve for loan losses to specific loan categories. In this process, the Company seeks to quantify, at a point in time, its estimate of the inherent credit loss exposure within each loan type, given relative and know credit quality circumstances, historical loss rates as well as the impact of current and anticipated economic and business conditions. Such an allocation process may not accurately predict future credit losses by loan type or in aggregate. The total Reserve is available to absorb losses that may arise from any loan type or category. For comparative purposes, prior period allocation figures may be re-estimated to reflect evolving analytical methods.

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Investment Portfolio

     The following table shows the carrying value of the Company’s portfolio of investments at December 31, 2000, 1999, and 1998 (dollars in thousands).

     The following is a summary of the contractual maturities and weighted average yields of investment securities at December 31, 2000 (dollars in thousands):

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Deposit Liabilities and Time Deposit Maturities

     The following table summarizes the average amount of, and the average rate paid on, each of the deposit categories for the periods shown (dollars in thousands):

     As of December 31, 2000 the Company’s time deposit liabilities had the following times remaining to maturity (dollars in thousands):

Short-Term Borrowings

     At December 31, 2000, the Company’s other short-term borrowings consisted of FHLB borrowings totaling $25.5 million ($15.5 million under the FHLB CMA Program and a $10.0 million seven day advance maturing 1/4/01). At December 31, 1999, the Company’s other short-term borrowings consisted of FHLB borrowings totaling $13.0 million ($5.0 million under the FHLB CMA Program and $8.0 million under a promissory note agreement due 2/11/00) and federal funds purchased totaling $17.1 million. At December 31, 1998, the Company had no short-term borrowings.

     The following table sets forth certain information with respect to the Company’s other short-term borrowings at December 31 and during each of 2000 and 1999 (dollars in thousands):

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SUPERVISION AND REGULATION

     Bancorp and the Bank are extensively regulated under federal and Oregon law. These laws and regulations are primarily intended to protect depositors and the deposit insurance fund, not shareholders of the Company. To the extent that the following information describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statutory or regulatory provisions. Any change in applicable laws or regulations may have a material effect on the business and prospects of the Company. The operations of the Company may be affected by legislative changes and by the policies of various regulatory authorities. Management is unable to predict the nature or the extent of the effects on its business and earnings that fiscal or monetary policies, economic control or new Federal or State legislation may have in the future.

Federal Bank Holding Company Regulation

     The Company is a one-bank holding Company within the meaning of the Bank Holding Company Act (Act), and as such, it is subject to regulation, supervision and examination by the Federal Reserve Bank (FRB). The Company has been designated a Financial Holding Company as defined in the 1999 Gramm-Leach-Bliley Act (see description below). The Company is required to file annual reports with the FRB and to provide the FRB such additional information as the FRB may require.

     The Act requires every bank holding Company to obtain the prior approval of the FRB before (1) acquiring, directly or indirectly, ownership or control of any voting shares of another bank or bank holding Company if, after such acquisition, it would own or control more than 5% of such shares (unless it already owns or controls the majority of such shares); (2) acquiring all or substantially all of the assets of another bank or bank holding Company; or (3) merging or consolidating with another bank holding Company. The FRB will not approve any acquisition, merger or consolidation that would have a substantial anticompetitive result, unless the anticompetitive effects of the proposed transaction are clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The FRB also considers capital adequacy and other financial and managerial factors in reviewing acquisitions or mergers.

     With certain exceptions, the Act also prohibits a bank holding Company from acquiring or retaining direct or indirect ownership or control of more than 5% of the voting shares of any Company which is not a bank or bank holding Company, or from engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries. The principal exceptions to these prohibitions involve certain non-bank activities, which by statute or by FRB regulation or order, have been identified as activities closely related to the business of banking or of managing or controlling banks. In making this determination, the FRB considers whether the performance of such activities by a bank holding Company can be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency in resources, which can be expected to outweigh the risks of possible adverse effects such as decreased or unfair competition, conflicts of interest or unsound banking practices.

Financial Modernization Act

     On November 12, 1999 the Gramm-Leach-Bliley Act became law, repealing the 1933 Glass-Steagall Act’s separation of the commercial and investment banking industries. The Gramm-Leach-Bliley Act expands the range of nonbanking activities a bank holding company may engage in, while reserving existing authority for bank holding companies to engage in activities that are closely related to banking. The new legislation creates a new category of holding company called a “Financial Holding Company,” a subset of bank holding companies that satisfy the following criteria:

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     Financial holding companies may engage in any activity that (i) is financial in nature or incidental to such financial activity (ii) is complementary to a financial activity and does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally. The Gramm-Leach-Bliley Act specifies certain activities that are financial in nature. These activities include:

     The Federal Reserve Board and the Secretary of the Treasury have authority to decide whether other activities are also financial in nature or incidental to financial activity, taking into account changes in technology, changes in the banking marketplace, competition for banking services and so on.

     The Gramm-Leach-Bliley Act has only recently become law. Regulations of the banking agencies implementing the legislative changes can be expected in the near future. Except for the increase in competitive pressures faced by all banking organizations that is a likely consequence of the Gramm-Leach-Bliley Act, the legislation and implementing regulations are likely to have a more immediate impact on large regional and national institutions than on community based institutions engaged principally in traditional banking activities. Because the legislation permits bank holding companies to engage in activities previously prohibited altogether or severely restricted because of the risks they posed to the banking system, implementing regulations can be expected to impose strict and detailed prudential safeguards on affiliations among banking and nonbanking companies in a holding company organization. Additionally, because the legislation allows various affiliates within a single holding company organization to serve a broader array of customers’ financial goals, including their banking, insurance and investment goals, implementing regulations can be expected to impose strict safeguards on sharing of customer information among affiliated entities within an organization.

     The Company evaluated the provisions of the Act and became a designated “Financial Holding Company” during the second quarter of 2000. It does not expect such designation to have a material effect on its financial condition or results of operations.

Federal and State Bank Regulation

     The Bank, as a Federal Deposit Insurance Corporation (FDIC) insured bank which is not a member of the Federal Reserve System, is subject to the supervision and regulation of the State of Oregon Department of Consumer and Business Services, Division of Finance and Corporate Securities, and to the supervision and regulation of the FDIC. These agencies may prohibit the Bank from engaging in what they believe constitute unsafe or unsound banking practices.

     The Community Reinvestment Act (CRA) requires that, in connection with examinations of financial institutions within their jurisdiction, the FRB or the FDIC evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those banks. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. The Bank’s current CRA rating is “Outstanding”.

     The Bank is also subject to certain restrictions imposed by the Federal Reserve Act on extensions of credit to executive officers, directors, principal stockholders or any related interest of such persons. Extensions of credit (I) must be made on substantially the same terms, collateral and following credit underwriting procedures that are not less stringent than those prevailing at the time for comparable transactions with persons not described above, and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. The Bank is also subject to certain lending limits and restrictions on overdrafts to such persons. A violation of these restrictions may result in the assessment of substantial civil monetary penalties on the Bank or any officer, director, employee, agent or other person participating in the conduct of the affairs of the Bank, the imposition of a cease and desist order, and other regulatory sanctions.

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     Under the Federal Deposit Insurance Corporation Improvement Act (FDICIA), each Federal banking agency is required to prescribe by regulation, non-capital safety and soundness standards for institutions under its authority. These standards are to cover internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, such other operational and managerial standards as the agency determines to be appropriate, and standards for asset quality, earnings and stock valuation. An institution, which fails to meet these standards, must develop a plan acceptable to the agency, specifying the steps that the institution will take to meet the standards. Failure to submit or implement such a plan may subject the institution to regulatory sanctions. The Company believes that the Bank already meets substantially all the standards that are likely to be adopted, and therefore does not believe that the implementation of these regulatory standards will materially affect the Company’s business operations.

Interstate Banking Legislation

     Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Interstate Act”), bank holding companies are permitted to acquire banks located in any state regardless of the state law in effect at the time. The Interstate Act also provides for the nationwide interstate branching of banks. Under the Interstate Act, both national and state chartered banks, including Oregon, are permitted to merge across state lines and thereby create interstate branch networks.

Deposit Insurance

     As a member institution of the FDIC, the deposits of the Bank are currently insured to a maximum of $100,000 per depositor through the Bank Insurance Fund (“BIF”), and the Bank is required to pay semiannual deposit insurance premium assessments to the FDIC.

     The Deposit Insurance Funds Act of 1996 (“Funds Act”) eliminated the statutorily imposed minimum assessment amount, effective January 1, 1997. The Funds Act also authorizes assessments on Bank Insurance Fund-assessable deposits (such as, the Bank’ deposits) and stipulates that the rate of assessment must equal one-fifth the Financing Corporation assessment rate that is applied to deposits assessable by the Savings Association Insurance Fund. The Financing Corporation assessment rate for Bank Insurance Fund-assessable deposits is 1.296 cents per $100 of deposits per year. The Bank’s FDIC insurance expense for 2000 was approximately $62,000.

Regulatory Dividend Restrictions

     The principal source of Bancorp’s cash revenues have been provided from dividends received from the Bank. The Oregon banking laws impose the following limitations on the payment of dividends by Oregon state chartered banks: (1) no dividends may be paid which would impair capital; (2) until the surplus fund of a bank is equal to 50% of its capital, no dividends may be declared unless there has been carried to the surplus account no less than one fifth of its net profits for the dividend period; and (3) dividends are payable only out of a bank’s undivided profits.

     In addition, the appropriate regulatory authorities are authorized to prohibit banks and bank holding companies from paying dividends, which would constitute an unsafe or unsound banking practice. The Bank and Bancorp are not currently subject to any regulatory restrictions on their dividends other than those noted above.

Regulatory Capital

     The Federal bank regulatory agencies use capital adequacy guidelines in their examination and regulation of bank holding companies and banks. If the capital falls below the minimum levels established by these guidelines, the bank holding company or bank may be denied approval to acquire or establish additional banks or non-bank businesses or to open facilities. At December 31, 2000 the Company is considered “well capitalized” according to these regulatory capital guidelines. See footnote 17 to the Financial Statements in this report.

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     The FRB and FDIC promulgate risk-based capital guidelines for banks and bank holding companies. Risk-based capital guidelines are designed to make capital requirements sensitive to differences in risk profile among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Assets and off-balance sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items. The guidelines are minimums, and the FRB has noted that bank holding companies contemplating significant expansion programs should not allow expansion to diminish their capital ratios and should maintain ratios well in excess of the minimum. The current guidelines require all bank holding companies and banks to maintain a minimum risk-based total capital ratio equal to 8%, of which at least 4% must be Tier 1 capital.

     Tier 1 capital for bank holding companies includes common stockholders’ equity, qualifying perpetual preferred stock (up to 25% of total Tier 1 capital, if cumulative; under a FRB rule, redeemable perpetual preferred stock may not be counted as Tier 1 capital unless the redemption is subject to the prior approval of the FRB) and minority interests in equity accounts of consolidated subsidiaries, less intangibles. Tier 2 capital includes: (I) the allowance for loan losses of up to 1.25% of risk-weighted assets; (ii) any qualifying perpetual preferred stock which exceeds the amount which may be included in Tier 1 capital; (iii) hybrid capital instrument; (iv) perpetual debt; (v) mandatory convertible securities and (vi) subordinated debt and intermediate term preferred stock of up to 50% of Tier 1 capital. Total capital is the sum of Tier 1 and Tier 2 capital less reciprocal holdings of other banking organizations, capital instruments and investments in unconsolidated subsidiaries.

     Banks’ and bank holding companies’ assets are given risk-weights of 0%, 20%, 50% and 100%. In addition, certain off-balance sheet items are given credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. These computations result in the total risk-weighted assets.

     Loans are generally assigned to the 100% risk category, except for first mortgage loans fully secured by residential property, which carry a 50% rating. The Company’s investment securities, mainly U.S. Government sponsored agency obligations, are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% risk-weight, and direct obligations of or obligations fully guaranteed by the United States Treasury or United States Government, which have 0% risk-weight. Off-balance sheet items, direct credit substitutes, including general guarantees and standby letters of credit backing financial obligations, are given a 100% conversion factor. Transaction related contingencies such as bid bonds, other standby letters of credit and undrawn commitments, including commercial credit lines with an initial maturity of more than one year, have a 50% conversion factor. Short-term, self-liquidating trade contingencies are converted at 20%, and short-term commitments have a 0% factor.

     The FRB also has implemented a leverage ratio, which is Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to risk-based guidelines. The principal objective of the leverage ratio is to place a constraint on the maximum degree to which a bank holding Company may leverage its equity capital base. The FRB requires a minimum leverage ratio of 3%. However, for all but the most highly rated bank holding companies and for bank holding companies seeking to expand, the FRB expects an additional cushion of at least 1% to 2%.

     The FDICIA also created a new statutory framework of supervisory actions indexed to the capital level of the individual institution. Under regulations adopted by the FDIC, an institution is assigned to one of five capital categories depending on its total risk-based capital ratio, Tier 1 risk-based capital ratio, and leverage ratio, together with certain subjective factors. Institutions that are deemed “undercapitalized”, depending on the category to which they are assigned, are subject to certain mandatory supervisory corrective actions.

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Monetary Policy

     The earnings of a bank holding company are affected by the policies of regulatory authorities, including the FRB, in connection with the FRB’s regulation of the money supply. Various methods employed by the FRB are open market operations in United States Government securities, changes in the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. These methods are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may also affect interest rates charged on loans or paid on deposits. The monetary policies of the FRB have had a significant affect on the operating results of commercial banks in the past and are expected to continue to do so in the future.

ITEM 2. PROPERTIES

     At December 31, 2000, the Company conducted banking services in eleven locations. Nine located in Central Oregon and two in the Salem area of Oregon. All offices are free standing buildings except one location, which is leased space in a supermarket. The main office/administrative center and five other branch buildings are owned and are situated on leased land. The Bank owns land and building at two branch locations. The Bank leases land and building at two branch locations. All leases include multiple renewal options. The Bank owns property in the Old Mill district of Bend for a possible future branch, or combination branch/operations facility. In addition to the above, the Bank has entered into a land lease in South Salem, Oregon which is targeted to open in mid-2001.

     The Bank’s Main Office and Administrative Center is located at 1100 NW Wall Street, Bend, Oregon, and consists of approximately 15,000 square feet. The building is owned by the Bank and is situated on leased land. The ground lease term is for 30 years and commenced June 1, 1989. There are ten renewal options of five years each. Monthly rental is $5,290 per month with adjustments every five years by mutual agreement of landlord and tenant. The main bank branch occupies the ground floor. Mortgage lending, administrative and operational functions occupy approximately 8,400 square feet. A separate data processing and drive-up facility is also located on site. In 1999 the Bank acquired a 3,000 square foot adjacent building for future expansion of administrative functions for $295,000. Certain other operations are located in an adjacent building subject to a short-term lease agreement.

     In the opinion of management all of the Bank’s properties are adequately insured.

ITEM 3. LEGAL PROCEEDINGS

     The Company is from time to time a party to various legal actions arising in the normal course of business. Management believes that there is no threatened or pending proceedings against the Company, which, if determined adversely, would have a material effect on the business or financial position of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

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PART II

ITEM 5. MARKET FOR CASCADE BANCORP’S COMMON STOCK AND RELATED
               STOCKHOLDER MATTERS

     Cascade Bancorp common stock trades on The NASDAQ Small Cap Market tier of The NASDAQ Stock Market under the symbol CACB. The primary market makers are: Dain Rauscher Wessels Inc., Ragen MacKenzie, Inc., D.A. Davidson & Co., Hoefer & Arnett, Pacific Crest Securities, Black & Company Inc., Herzog, Heine, Geduld, Inc., and Keefe, Bruyette & Woods, Inc.

     The high and low sales prices shown below are retroactively adjusted for stock dividends and splits and are based on actual trade statistical information provided by The NASDAQ Stock Market for the periods indicated.

     The Company declared a 10% stock dividend in June 1999. The Company announced the establishment of regular quarterly cash dividends in 1997. The dividends declared and paid listed below have been retroactively adjusted for past stock dividends and stock splits.

DIVIDENDS DECLARED AND PAID

     At March 5, 2001, the Company had 6,886,543 shares of common stock outstanding held by approximately 2,700 shareholders of record.

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ITEM 6. SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes which are included in this Annual Report on Form 10-K, (in thousands, except per share data and ratios; unaudited):

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Selected Quarterly Financial Data

     The following table sets forth the Company’s unaudited data regarding operations for each quarter of 2000 and 1999. This information, in the opinion of management, includes all normal recurring adjustments necessary to state fairly the information set forth therein (in thousands, except per share amounts):