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| 8-K - 8-K - CASCADE BANCORP | cacb8kq32015earningsreleas.htm |
NEWS RELEASE
FOR IMMEDIATE RELEASE
CASCADE BANCORP REPORTS THIRD QUARTER 2015 NET INCOME OF $5.1 MILLION, OR $0.07 PER SHARE, DRIVEN BY SOLID ORGANIC LOAN AND DEPOSIT GROWTH
Bend, Ore. - October 22, 2015 - Cascade Bancorp (NASDAQ: CACB) (“Company” or “Cascade”), the holding company for Bank of the Cascades (“Bank”), today announced its financial results for the three and nine months ended September 30, 2015.
Third Quarter 2015 Financial Highlights
• | Net income for the third quarter of 2015 was $5.1 million, or $0.07 per share, compared to $4.8 million, or $0.07 per share, for the second quarter of 2015 (“linked quarter”). |
• | Third quarter organic loan growth1 was approximately $26.3 million, or 7.7% annualized, and is net of a large construction payoff. Year-to-date (“YTD”) annualized organic growth was 11.9%. At September 30, 2015, gross loans were $1.6 billion. |
• | Total deposits were $2.1 billion at September 30, 2015, up $36.5 million compared to the linked quarter with non-interest bearing accounts up $44.7 million, or 6.3%, from the linked quarter. At quarter-end, total checking balances represented over 57.5% of total deposits with an overall cost of funds of 0.08%. |
• | Third quarter net interest income was $20.4 million, up $1.1 million, or 5.4%, from the linked quarter. |
• | Net interest margin (“NIM”) was 3.72% for the third quarter of 2015, compared to 3.70% in the linked quarter. |
• | Third quarter net loan recoveries totaled $3.1 million, bringing the allowance for loan losses (“ALLL”) to 1.62% of gross loans. |
• | At September 30, 2015, stockholders’ equity was $331.6 million, with book value per share of $4.56 and tangible book value2 per share of $3.38. |
• | Return on average tangible assets3 was 0.85% compared to 0.83% in the linked quarter. |
• | Return on average tangible stockholders' equity4 was 8.33% compared to 8.06% in the linked quarter. |
• | On October, 9, 2015, the Bank announced the hiring of a commercial banking team in the Seattle, Washington market. |
“Cascade is truly a unique banking franchise because of our strong market share in the high growth markets of the Pacific Northwest. Our footprint in Oregon and Idaho is benefiting from strong population in-migration combined with solid economic trends. This robust backdrop has enabled Cascade to achieve a double-digit rate of organic loan growth during 2015,” said Terry Zink, President and CEO. “Importantly, organic loan demand remained strong in the third quarter with $26.3 million in net originations, representing annual growth of 7.7%. This growth was accomplished despite a sizable $13 million payoff of a completed commercial real estate construction loan during the quarter. Our current pipeline remains very solid, providing visibility for continued loan growth through the balance of the year and into 2016.”
Mr. Zink continued, “Our deposit flows are one of the differentiating traits for Cascade. Non-interest bearing checking deposits increased at a double-digit pace and reflect the strong economic growth in our markets that has contributed to increased average balances for both business and retail customers. This strength has supported our strategy to diversify our loan footprint to markets outside of our core branch network. Our Portland commercial banking center is a prime example of the successful execution of this strategy. We are optimistic that we can replicate this success in Seattle, where we opened a commercial banking center earlier this month with an experienced local banking team led by Brandon Elieff, who has 15 years of expertise in middle market commercial and industrial (“C&I”) and business banking in the Seattle Metro Area.”
1 Organic loan growth is a non-GAAP measure defined as total loan growth less acquired loans during the period. See the last page of this release for a reconciliation of organic loan growth.
2 Tangible book value per common share is a non-GAAP measure defined as total stockholders’ equity, less the sum of core deposit intangible (“CDI”) and goodwill, divided by total number of shares outstanding. See the last page of this release for a reconciliation of tangible book value per common share.
3 Return on average tangible assets is a non-GAAP measure defined as average total assets, less the sum of average CDI and goodwill, divided by net income. See the last page of this release for a reconciliation of return on average tangible assets.
4 Return on average tangible stockholders' equity is a non-GAAP measure defined as average total stockholders' equity, less the sum of average CDI and goodwill, divided by net income. See last page of this release for a reconciliation of return on average tangible stockholders' equity.
Financial Review
The financial statements as of September 30, 2015 and 2014 are inclusive of purchase accounting adjustments to Home Federal Bancorp (“HFB”) assets and liabilities, which were acquired on May 16, 2014. Year-over-year comparisons are significantly affected by the HFB-related results and one-time charges in the comparable periods of 2014.
The financial highlights for the third quarter of 2015 include continued loan and deposit growth which resulted in higher net interest income as compared to the linked quarter. This improvement was partially offset by a modest sequential decline in non-interest income arising from non-recurring items in the prior period.
Balance Sheet:
At September 30, 2015 as compared to June 30, 2015 and December 31, 2014
Total assets at September 30, 2015 were $2.5 billion, up versus prior periods due mainly to increased organic loans and the acquisition of wholesale loans, as well as growth in core deposit balances.
Increases in cash and equivalents at September 30, 2015 relate mainly to increases in deposits net of changes in loan balances during the respective periods.
At September 30, 2015, investment securities classified as available-for-sale and held-to-maturity decreased to $439.9 million as compared to $472.5 million at December 31, 2014. During the quarter, the Company sold approximately $30.1 million in short duration mortgage-backed securities (“MBS”) with partial redeployment into current production adjustable rate mortgages (“ARMs”) to extend its "roll-down-the-curve" portfolio strategy.
Net of changes in both our organic and wholesale loan portfolios, gross loans at September 30, 2015 were $1.6 billion, up $21.4 million from the linked quarter. The current quarter included a large payoff of a commercial construction loan of approximately $13 million. Year-to-date, gross loans increased 10.4%, with growth distributed among commercial real estate, construction, and consumer residential loans. The latter included both retained and acquired ARMs. Strategically, the Bank continued to expand its ARM portfolio to further diversify its overall loan portfolio by geography and loan type. Organic growth was partially offset by a modest decline in the shared national credits (“SNC”) portfolio.
The ALLL at September 30, 2015 was $26.6 million as compared to $22.1 million at December 31, 2014. The increase is a result of year-to-date net recoveries of $6.6 million, less a $2.0 million provision credit in the first quarter of 2015. Net recoveries for the current quarter were $3.1 million, primarily related to a large project loan that was previously charged-off.
FHLB stock was $3.0 million at September 30, 2015 compared to $25.6 million at year end 2014. The 2015 reduction was due to changes in FHLB membership stock requirements in connection with the Seattle FHLB merging with Des Moines FHLB in the second quarter of 2015.
Total deposits as of September 30, 2015 increased 5.1% to $2.1 billion compared to December 31, 2014. Non-interest bearing accounts increased by $44.7 million to $749.9 million, or 6.3%, from the linked quarter and were up 21.1% for the year-to-date period. Offsetting this increase in non-interest bearing accounts was a reduction in time deposits of $16.0 million compared to the linked quarter and $50.2 million for the year-to-date period, owing to a strategic run-off of higher priced CDs acquired in the HFB acquisition. The year-to-date 2015 overall cost of funds was 0.09%.
Total stockholders’ equity at September 30, 2015 was $331.6 million compared to $315.5 million at December 31, 2014. This increase is primarily a result of 2015 net income of $15.0 million. Tangible common stockholders’ equity5 was $245.9 million, or $3.38 per share, at September 30, 2015 as compared to $227.7 million, or $3.14 per share, at December 31, 2014. The ratios of common stockholders’ equity to total assets and tangible common stockholders’ equity to total assets6 were 13.43% and 9.96% at September 30, 2015, respectively, and 13.48% and 9.73% at December 31, 2014, respectively.
5 Tangible stockholders’ equity is a non-GAAP measure defined as total stockholders' equity, less the sum of CDI and goodwill. See the last page of this release for a reconciliation of tangible stockholders’ equity.
6 Tangible common stockholders’ equity to total assets is a non-GAAP measure defined as total stockholders’ equity, less the sum of core deposit intangible (“CDI”) and goodwill, divided by total assets. See the last page of this release for a reconciliation of tangible common stockholders’ equity to total assets.
At September 30, 2015 as compared to September 30, 2014 (the year ago period)
Compared to the year ago period, cash and cash equivalents decreased $12.2 million and investment securities classified as available-for-sale and held-to-maturity decreased $5.3 million. The decreases were due to excess liquidity resulting from the HFB acquisition being deployed into growth in loans over the period.
On a year-over-year basis, gross loans increased $181.1 million to $1.6 billion, or an increase of 12.4%. Approximately 73% of this increase is owed to organic growth, with the remaining growth in the wholesale loan portfolio for the strategic reasons described above.
Total deposits increased $96.6 million, or 4.9%, at September 30, 2015 compared to September 30, 2014. In this same period, non-interest bearing accounts increased by $105.9 million, or 16.4%, and interest bearing demand deposits increased by $43.0 million, or 4.4%. These increases were offset by runoff in higher priced CDs acquired with the HFB acquisition; overall time deposits decreased $57.2 million, or 23.4%.
Income Statement:
For the quarter ended September 30, 2015 as compared to the quarter ended June 30, 2015(the linked quarter)
Net income for the third quarter of 2015 was $5.1 million, or $0.07 per share, compared to $4.8 million, or $0.07 per share, in the linked quarter.
Total interest income was $20.8 million for the three months ended September 30, 2015 as compared to $19.8 million in the linked quarter due to higher volume of earning loans. The NIM for the three months ended September 30, 2015 was stable at 3.72%. Yields on earning assets remained stable while the cost of funds improved to 0.08% for the quarter.
Non-interest income for the third quarter of 2015 was $6.4 million, compared to $6.7 million in the linked quarter. Service fees were seasonally higher and SBA related revenues increased compared to the prior period. Other income was lower because the linked quarter included a combined $1.1 million related to a vendor production performance bonus and the sale of merchant services portfolio that was partially offset by an approximate $0.5 million in gain on sale of short duration securities in the current period.
Non-interest expense in the third quarter of 2015 was $19.1 million compared to $18.4 million in the linked quarter. Salary and benefit expense for the current quarter increased due to incentive and commission-related costs that were seasonally higher, as well as an increase in funding of management's annual performance bonus pool. Current quarter expenses were lower in IT due to accrual timing, while occupancy expenses were down on a recovery on disposition of a decommissioned branch facility. Professional services were elevated due to costs for the Company’s conversion to a single imaging system and legal expenses, including those related to the large loan recovery described above.
The income tax provision for the third quarter of 2015 was $2.6 million, representing a 34.0% effective tax rate for the period, slightly lower than statutory due to the impact of permanent differences.
Income Statement:
For the three and nine month periods ended September 30, 2015 compared to year ago periods
Net income for the third quarter of 2015 was $5.1 million compared to $2.4 million for the third quarter of 2014. Net income for the nine months ended September 30, 2015 was $15.0 million as compared to a loss of $1.3 million for the year ago period. The nine months 2014 loss period was due to the costs incurred in the HFB acquisition. In addition, improvements in 2015 earnings are attributable to higher net interest income arising from increased earning assets from the HFB acquisition, as well as significantly increased non-interest income. The acquisition of HFB also resulted in a decline in the overall loan to deposit ratio due to HFB’s high level of cash and securities. Since the acquisition, the Company has been successful in growing its organic, community bank loan portfolio.
Non-interest income for the three and nine months ended September 30, 2015 was $6.4 million and $19.2 million, respectively, up from $5.5 million and $13.7 million during the respective year ago periods. Much of the year-over-year improvement is related to the Company’s increased customer base arising from the HFB acquisition, as well as the implementation and expansion of sales in its card, mortgage, interest rate swap, and SBA lines of business. This progress also reflects improvement in the local economies in its service areas.
Non-interest expense in the three and nine months ended September 30, 2015 was $19.1 million and $56.3 million, respectively, compared to $19.7 million and $63.8 million in the respective year ago periods. The changes between the three and nine months ended September 30, 2015 and the year ago periods relate primarily to the HFB acquisition costs incurred in 2014.
Income tax expense in the three and nine months ended September 30, 2015 was $2.6 million and $8.6 million, respectively, as compared to a tax expense of $2.0 million and a tax benefit of $2.8 million, respectively, in the year ago periods. The changes between the current three and nine month periods and the year ago periods relate to the tax impact of the HFB acquisition in 2014.
Asset Quality
Credit quality metrics were solid and remain stable for the current quarter. Net loan recoveries totaled $6.6 million year-to-date 2015, including $3.1 million for the third quarter, as compared to net loan recoveries of $0.3 million for the linked quarter and $0.9 million for the year ago quarter. The ratio of loan loss reserve to total loans increased to 1.62% as of September 30, 2015 and as compared to 1.45% at June 30, 2015 and 1.48% at December 31, 2014. A portion of the increase in reserves has been allocated to the SNC portfolio.
At September 30, 2015, delinquent loans were 0.31% of the loan portfolio. This compares to 0.07% at June 30, 2015, 0.27% at December 31, 2014, and 0.34% at September 30, 2014. Non-performing assets as a percentage of total assets was 0.36% at September 30, 2015, as compared to 0.41% at June 30, 2015, 0.64% at December 31, 2014 and 0.74% at September 30, 2014. General improvement in the rate of delinquency reflects improving economic conditions.
Acquired loans are recorded at fair value with no reserve provisions brought forward in accordance with purchase accounting principles. The net fair value adjustment to acquired loans from the HFB acquisition was $6.0 million, consisting of an interest rate and a credit mark which will be accreted over the life of the loans (approximately 10 years).
Conference Call
As previously announced, a conference call and webcast discussing the third quarter 2015 results will be held today, October 22, 2015 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Stockholders, analysts and other interested parties are invited to join the webcast by registering at http://public.viavid.com/index.php?id=116429 in or the live conference call by dialing (877) 407-4018 prior to 2:00 p.m. Pacific Time.
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, Idaho and Washington markets. Founded in 1977, Bank of the Cascades offers full-service community banking through 37 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.
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
NON-GAAP FINANCIAL MEASURES
This release contains certain non-GAAP financial measures. The Company’s management uses these non-GAAP financial measures, specifically efficiency ratio, organic loan growth, tangible book value per common share, tangible common equity ratio to total assets and tangible stockholders' equity, as important measures of the strength of its capital and its ability to generate earnings on its tangible capital invested by its shareholders. Management believes presentation of these non-GAAP financial measures provides useful supplemental information to our investors and others that contributes to a proper understanding of the financial results and capital levels of the Company. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”
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 and could cause actual results to differ materially from those projected and/or adversely affect our results of operations and financial condition. Such factors could include: local and national economic conditions; housing/real estate market prices, employment and wages rates, as well as historically low interest rates and/or the rate of change in such rates. Such factors, depending on severity, could adversely affect credit quality, collateral values, including real estate collateral and OREO (other real estate owned) properties, investment values, liquidity, the pace of loan growth and /or originations, the adequacy of reserves for loan losses including the trend and amount of loan charge offs and delinquency rates. These factors may be exacerbated by our concentration of operations in the States of Oregon, Idaho and Washington generally, and Central, Southern and Northwest Oregon, as well as the greater Boise/Treasure Valley, Idaho and greater Seattle, Washington areas, 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 reports filed with or furnished to the Securities and Exchange Commission (the “SEC”); 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 our financial condition. Such forward-looking statements also include, but are not limited to, statements about our strategy to expand our loan portfolio to markets outside our branch network, including Portland, Oregon and Seattle, Washington; and our ability to execute our business plan. Additional risks and uncertainties are identified and discussed in Cascade Bancorp’s reports filed with or furnished to the SEC and available at the SEC’s website at www.sec.gov. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ materially from our expectations. These forward-looking statements speak only as of the date of this release. Cascade Bancorp undertakes no obligation to update or publish revised forward-looking statements to reflect the impact of events or circumstances that may arise after the date hereof, except as required by applicable law. Readers should carefully review all disclosures filed or furnished by Cascade Bancorp from time to time with the SEC.
Information contained herein, other than information at December 31, 2014, 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, 2014, as contained in the Company’s Annual Report on Form 10-K for such fiscal year.
# # #
CASCADE BANCORP | ||||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
(In thousands) (Unaudited) | ||||||||||||||||
September 30, 2015 | June 30, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash and due from banks | $ | 47,007 | $ | 45,598 | $ | 39,115 | $ | 46,363 | ||||||||
Interest bearing deposits | 77,823 | 33,913 | 43,701 | 90,647 | ||||||||||||
Federal funds sold | 273 | 273 | 273 | 272 | ||||||||||||
Total cash and cash equivalents | 125,103 | 79,784 | 83,089 | 137,282 | ||||||||||||
Investment securities available-for-sale | 296,139 | 310,743 | 319,882 | 289,746 | ||||||||||||
Investment securities held-to-maturity | 143,793 | 147,863 | 152,579 | 155,454 | ||||||||||||
Federal Home Loan Bank (FHLB) stock | 3,012 | 3,026 | 25,646 | 25,916 | ||||||||||||
Loans held for sale | 2,824 | 2,164 | 6,690 | 1,839 | ||||||||||||
Loans, net | 1,619,238 | 1,601,058 | 1,468,784 | 1,443,452 | ||||||||||||
Premises and equipment, net | 42,106 | 42,509 | 43,649 | 44,399 | ||||||||||||
Bank-owned life insurance | 54,185 | 53,933 | 53,449 | 53,175 | ||||||||||||
Other real estate owned, net | 3,871 | 4,040 | 3,309 | 4,032 | ||||||||||||
Deferred tax asset, net | 53,823 | 56,612 | 66,126 | 69,266 | ||||||||||||
Core deposit intangible | 7,068 | 7,273 | 7,683 | 7,888 | ||||||||||||
Goodwill | 78,610 | 78,610 | 80,082 | 80,189 | ||||||||||||
Other assets | 38,501 | 30,872 | 30,169 | 27,741 | ||||||||||||
Total assets | $ | 2,468,273 | $ | 2,418,487 | $ | 2,341,137 | $ | 2,340,379 | ||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Deposits: | ||||||||||||||||
Demand | $ | 749,927 | $ | 705,232 | $ | 619,377 | $ | 643,997 | ||||||||
Interest bearing demand | 1,010,489 | 1,005,394 | 995,497 | 967,509 | ||||||||||||
Savings | 135,610 | 132,920 | 129,610 | 130,763 | ||||||||||||
Time | 186,969 | 202,969 | 237,138 | 244,165 | ||||||||||||
Total deposits | 2,082,995 | 2,046,515 | 1,981,622 | 1,986,434 | ||||||||||||
Other liabilities | 53,689 | 46,616 | 44,032 | 45,559 | ||||||||||||
Total liabilities | 2,136,684 | 2,093,131 | 2,025,654 | 2,031,993 | ||||||||||||
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 authorized | 452,350 | 451,481 | 450,999 | 450,662 | ||||||||||||
Accumulated deficit | (123,339 | ) | (128,438 | ) | (138,351 | ) | (143,391 | ) | ||||||||
Accumulated other comprehensive income | 2,578 | 2,313 | 2,835 | 1,115 | ||||||||||||
Total stockholders' equity | 331,589 | 325,356 | 315,483 | 308,386 | ||||||||||||
Total liabilities and stockholders' equity | $ | 2,468,273 | $ | 2,418,487 | $ | 2,341,137 | $ | 2,340,379 | ||||||||
CASCADE BANCORP | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(In thousands) (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2015 | June 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||||||
Interest income: | ||||||||||||||||||||
Interest and fees on loans | $ | 17,788 | $ | 16,987 | $ | 16,571 | $ | 51,269 | $ | 41,467 | ||||||||||
Interest on investments | 2,995 | 2,805 | 2,655 | 8,783 | 6,003 | |||||||||||||||
Other investment income | 58 | 27 | 87 | 118 | 159 | |||||||||||||||
Total interest income | 20,841 | 19,819 | 19,313 | 60,170 | 47,629 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Interest bearing demand | 337 | 315 | 284 | 965 | 676 | |||||||||||||||
Savings | 10 | 10 | 10 | 30 | 21 | |||||||||||||||
Time | 83 | 136 | 427 | 442 | 929 | |||||||||||||||
Other borrowings | — | 6 | — | 6 | 6 | |||||||||||||||
Total interest expense | 430 | 467 | 721 | 1,443 | 1,632 | |||||||||||||||
Net interest income | 20,411 | 19,352 | 18,592 | 58,727 | 45,997 | |||||||||||||||
Loan loss provision (recovery) | — | — | — | (2,000 | ) | — | ||||||||||||||
Net interest income after loan loss provision | 20,411 | 19,352 | 18,592 | 60,727 | 45,997 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges on deposit accounts | 1,326 | 1,249 | 1,457 | 3,836 | 3,324 | |||||||||||||||
Card issuer and merchant services fees, net | 1,837 | 1,856 | 1,884 | 5,336 | 4,480 | |||||||||||||||
Earnings on BOLI | 252 | 242 | 280 | 736 | 712 | |||||||||||||||
Mortgage banking income, net | 624 | 677 | 734 | 2,089 | 1,790 | |||||||||||||||
Swap fee income | 595 | 785 | 476 | 1,895 | 1,419 | |||||||||||||||
SBA gain on sales and fee income | 554 | 144 | 272 | 1,060 | 529 | |||||||||||||||
Gain (loss) on sales of investments | 503 | — | — | 503 | — | |||||||||||||||
Other income | 693 | 1,742 | 430 | 3,746 | 1,445 | |||||||||||||||
Total non-interest income | 6,384 | 6,695 | 5,533 | 19,201 | 13,699 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Salaries and employee benefits | 11,315 | 10,588 | 10,199 | 33,033 | 31,588 | |||||||||||||||
Occupancy | 1,123 | 1,417 | 1,553 | 3,906 | 7,544 | |||||||||||||||
Information technology | 745 | 1,046 | 1,032 | 2,729 | 3,634 | |||||||||||||||
Equipment | 390 | 395 | 497 | 1,142 | 1,463 | |||||||||||||||
Communications | 560 | 484 | 695 | 1,585 | 1,640 | |||||||||||||||
FDIC insurance | 342 | 306 | 371 | 1,046 | 1,057 | |||||||||||||||
OREO | 122 | (168 | ) | 314 | 11 | 1,016 | ||||||||||||||
Professional services | 1,548 | 1,289 | 1,461 | 3,931 | 6,887 | |||||||||||||||
Card issuer | 693 | 643 | 1,140 | 2,199 | 2,028 | |||||||||||||||
Insurance | 183 | 191 | 254 | 583 | 1,029 | |||||||||||||||
Other expenses | 2,049 | 2,200 | 2,212 | 6,116 | 5,917 | |||||||||||||||
Total non-interest expense | 19,070 | 18,391 | 19,728 | 56,281 | 63,803 | |||||||||||||||
Income (loss) before income taxes | 7,725 | 7,656 | 4,397 | 23,647 | (4,107 | ) | ||||||||||||||
Income tax (provision) benefit | (2,626 | ) | (2,861 | ) | (1,965 | ) | (8,635 | ) | 2,804 | |||||||||||
Net income (loss) | $ | 5,099 | $ | 4,795 | $ | 2,432 | $ | 15,012 | $ | (1,303 | ) | |||||||||
CASCADE BANCORP | |||||||||||||||||||||
NET INTEREST MARGIN | |||||||||||||||||||||
(In thousands) (Unaudited) | |||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield or Rates | Average Balance | Interest Income/ Expense | Average Yield or Rates | ||||||||||||||||
Assets | |||||||||||||||||||||
Investment securities | $ | 450,655 | $ | 2,995 | 2.64 | % | $ | 426,055 | $ | 2,655 | 2.47 | % | |||||||||
Interest bearing balances due from other banks | 97,099 | 58 | 0.24 | % | 145,433 | 87 | 0.24 | % | |||||||||||||
Federal funds sold | 273 | — | — | % | 191 | — | — | % | |||||||||||||
Federal Home Loan Bank stock | 3,018 | — | — | % | 26,124 | — | — | % | |||||||||||||
Loans | 1,626,066 | 17,788 | 4.34 | % | 1,433,394 | 16,571 | 4.59 | % | |||||||||||||
Total earning assets/interest income | 2,177,111 | 20,841 | 3.80 | % | 2,031,197 | 19,313 | 3.77 | % | |||||||||||||
Reserve for loan losses | (25,113 | ) | (21,341 | ) | |||||||||||||||||
Cash and due from banks | 45,781 | 42,400 | |||||||||||||||||||
Premises and equipment, net | 42,362 | 44,458 | |||||||||||||||||||
Bank-owned life insurance | 54,041 | 53,006 | |||||||||||||||||||
Deferred tax asset | 55,389 | 70,056 | |||||||||||||||||||
Goodwill | 78,610 | 76,032 | |||||||||||||||||||
Accrued interest and other assets | 43,729 | 46,128 | |||||||||||||||||||
Total assets | $ | 2,471,910 | $ | 2,341,936 | |||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||
Interest bearing demand deposits | $ | 1,040,493 | 337 | 0.13 | % | $ | 964,803 | 284 | 0.12 | % | |||||||||||
Savings deposits | 134,033 | 10 | 0.03 | % | 131,075 | 10 | 0.03 | % | |||||||||||||
Time deposits | 193,895 | 83 | 0.17 | % | 252,429 | 427 | 0.67 | % | |||||||||||||
Total interest bearing liabilities/interest expense | 1,368,421 | 430 | 0.12 | % | 1,348,307 | 721 | 0.21 | % | |||||||||||||
Demand deposits | 728,104 | 644,939 | |||||||||||||||||||
Other liabilities | 46,907 | 39,923 | |||||||||||||||||||
Total liabilities | 2,143,432 | 2,033,169 | |||||||||||||||||||
Stockholders' equity | 328,478 | 308,767 | |||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,471,910 | $ | 2,341,936 | |||||||||||||||||
Net interest income | $ | 20,411 | $ | 18,592 | |||||||||||||||||
Net interest spread | 3.67 | % | 3.56 | % | |||||||||||||||||
Net interest income to earning assets | 3.72 | % | 3.63 | % | |||||||||||||||||
CASCADE BANCORP | |||||||||||||||||||||
NET INTEREST MARGIN | |||||||||||||||||||||
(In thousands) (Unaudited) | |||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield or Rates | Average Balance | Interest Income/ Expense | Average Yield or Rates | ||||||||||||||||
Assets | |||||||||||||||||||||
Investment securities | $ | 459,306 | $ | 8,783 | 2.56 | % | $ | 308,958 | $ | 6,003 | 2.60 | % | |||||||||
Interest bearing balances due from other banks | 62,106 | 118 | 0.25 | % | 86,727 | 159 | 0.25 | % | |||||||||||||
Federal funds sold | 273 | — | — | % | 79 | — | — | % | |||||||||||||
Federal Home Loan Bank stock | 15,453 | — | — | % | 17,873 | — | — | % | |||||||||||||
Loans | 1,573,712 | 51,269 | 4.36 | % | 1,207,022 | 41,467 | 4.59 | % | |||||||||||||
Total earning assets/interest income | 2,110,850 | 60,170 | 3.81 | % | 1,620,659 | 47,629 | 3.93 | % | |||||||||||||
Reserve for loan losses | (24,038 | ) | (21,449 | ) | |||||||||||||||||
Cash and due from banks | 43,004 | 35,468 | |||||||||||||||||||
Premises and equipment, net | 43,024 | 38,685 | |||||||||||||||||||
Bank-owned life insurance | 53,795 | 44,660 | |||||||||||||||||||
Deferred tax asset | 60,962 | 58,708 | |||||||||||||||||||
Goodwill | 79,052 | 38,119 | |||||||||||||||||||
Accrued interest and other assets | 43,764 | 31,596 | |||||||||||||||||||
Total assets | $ | 2,410,413 | $ | 1,846,446 | |||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||
Interest bearing demand deposits | $ | 1,012,221 | $ | 965 | 0.13 | % | $ | 740,260 | $ | 676 | 0.12 | % | |||||||||
Savings deposits | 132,704 | 30 | 0.03 | % | 91,584 | 21 | 0.03 | % | |||||||||||||
Time deposits | 208,722 | 442 | 0.28 | % | 191,507 | 929 | 0.65 | % | |||||||||||||
Other borrowings | 2,253 | 6 | 0.36 | % | 2,960 | 6 | 0.27 | % | |||||||||||||
Total interest bearing liabilities/interest expense | 1,355,900 | 1,443 | 0.14 | % | 1,026,311 | 1,632 | 0.21 | % | |||||||||||||
Demand deposits | 684,859 | 539,197 | |||||||||||||||||||
Other liabilities | 45,764 | 31,400 | |||||||||||||||||||
Total liabilities | 2,086,523 | 1,596,908 | |||||||||||||||||||
Stockholders' equity | 323,890 | 249,538 | |||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,410,413 | $ | 1,846,446 | |||||||||||||||||
Net interest income | $ | 58,727 | $ | 45,997 | |||||||||||||||||
Net interest spread | 3.67 | % | 3.72 | % | |||||||||||||||||
Net interest income to earning assets | 3.72 | % | 3.79 | % | |||||||||||||||||
CASCADE BANCORP | ||||||||||||||||||||
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||||
(In thousands, except per share data) (Unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2015 | June 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||||||
Share Data | ||||||||||||||||||||
Basic net income per common share | $ | 0.07 | $ | 0.07 | $ | 0.03 | $ | 0.21 | $ | (0.02 | ) | |||||||||
Diluted net income per common share | $ | 0.07 | $ | 0.07 | $ | 0.03 | $ | 0.21 | $ | (0.02 | ) | |||||||||
Book value per basic common share | $ | 4.56 | $ | 4.47 | $ | 4.25 | $ | 4.56 | $ | 4.25 | ||||||||||
Tangible book value per common share1 | $ | 3.38 | $ | 3.29 | $ | 3.04 | $ | 3.38 | $ | 3.04 | ||||||||||
Basic average shares outstanding | 71,868 | 71,689 | 71,653 | 71,744 | 59,128 | |||||||||||||||
Fully diluted average shares outstanding | 71,969 | 71,727 | 71,732 | 71,849 | 59,176 | |||||||||||||||
Balance Sheet Detail | ||||||||||||||||||||
Gross loans | $ | 1,645,924 | $ | 1,624,559 | $ | 1,464,803 | $ | 1,645,924 | $ | 1,464,803 | ||||||||||
Wholesale loans | $ | 257,417 | $ | 262,328 | $ | 208,382 | $ | 257,417 | $ | 208,382 | ||||||||||
Total organic loans | $ | 1,388,507 | $ | 1,362,231 | $ | 1,256,421 | $ | 1,388,507 | $ | 1,256,421 | ||||||||||
Total deposits | $ | 2,082,995 | $ | 2,046,515 | $ | 1,986,434 | $ | 2,082,995 | $ | 1,986,434 | ||||||||||
Non interest bearing | $ | 749,927 | $ | 705,232 | $ | 643,997 | $ | 749,927 | $ | 643,997 | ||||||||||
Checking | $ | 1,197,521 | $ | 1,143,102 | $ | 1,064,658 | $ | 1,197,521 | $ | 1,064,658 | ||||||||||
Money market | $ | 562,895 | $ | 567,524 | $ | 546,878 | $ | 562,895 | $ | 546,878 | ||||||||||
Time | $ | 186,969 | $ | 202,969 | $ | 244,165 | $ | 186,969 | $ | 244,165 | ||||||||||
Key Ratios | ||||||||||||||||||||
Return on average stockholders' equity | 6.16 | % | 5.92 | % | 3.12 | % | 6.20 | % | (0.70 | )% | ||||||||||
Return on average tangible stockholders' equity2 | 8.33 | % | 8.06 | % | 4.29 | % | 8.45 | % | (0.84 | )% | ||||||||||
Return on average assets | 0.82 | % | 0.80 | % | 0.41 | % | 0.83 | % | (0.09 | )% | ||||||||||
Return on average tangible assets3 | 0.85 | % | 0.83 | % | 0.43 | % | 0.86 | % | (0.10 | )% | ||||||||||
Common stockholders’ equity ratio | 13.43 | % | 13.45 | % | 13.18 | % | 13.43 | % | 13.18 | % | ||||||||||
Tangible common stockholders’ equity ratio4 | 9.96 | % | 9.90 | % | 9.41 | % | 9.96 | % | 9.41 | % | ||||||||||
Net interest spread | 3.67 | % | 3.65 | % | 3.56 | % | 3.67 | % | 3.72 | % | ||||||||||
Net interest margin | 3.72 | % | 3.70 | % | 3.63 | % | 3.72 | % | 3.79 | % | ||||||||||
Total revenue (net int. inc. + non int. inc.) | $ | 26,796 | $ | 26,047 | $ | 24,125 | $ | 77,927 | $ | 59,696 | ||||||||||
Efficiency ratio5 | 71.17 | % | 70.60 | % | 81.77 | % | 72.22 | % | 106.88 | % | ||||||||||
Loan to deposit ratio | 77.74 | % | 78.23 | % | 72.67 | % | 77.74 | % | 72.67 | % | ||||||||||
Credit Quality Ratios | ||||||||||||||||||||
Reserve for loan losses | $ | 26,623 | $ | 23,501 | $ | 21,351 | $ | 26,623 | $ | 21,351 | ||||||||||
Reserve for loan losses to ending gross loans | 1.62 | % | 1.45 | % | 1.46 | % | 1.62 | % | 1.46 | % | ||||||||||
Reserve for credit losses | $ | 27,063 | $ | 23,941 | $ | 21,791 | $ | 27,063 | $ | 21,791 | ||||||||||
Reserve for credit losses to ending gross loans | 1.64 | % | 1.47 | % | 1.49 | % | 1.64 | % | 1.49 | % | ||||||||||
Non-performing assets (“NPAs”) | $ | 8,915 | $ | 9,984 | $ | 17,309 | $ | 8,915 | $ | 17,309 | ||||||||||
NPAs to total assets | 0.36 | % | 0.41 | % | 0.74 | % | 0.36 | % | 0.74 | % | ||||||||||
Delinquent >30 days to total loans (excl. NPAs) | 0.31 | % | 0.07 | % | 0.34 | % | 0.31 | % | 0.34 | % | ||||||||||
Net (recoveries) charge-offs | $ | (3,122 | ) | $ | (257 | ) | $ | (880 | ) | $ | (6,570 | ) | $ | (494 | ) | |||||
Net loan (recoveries) charge-offs to average total loans | (0.19 | )% | (0.02 | )% | (0.06 | )% | (0.42 | )% | (0.04 | )% | ||||||||||
1 Tangible book value per common share is a non-GAAP measure defined as total stockholders’ equity, less the sum of core deposit intangible (“CDI”) and goodwill, divided by total number of shares outstanding. See below for reconciliation of tangible book value per common share.
2 Return on average tangible stockholders' equity is a non-GAAP measure defined as average total stockholders' equity, less the sum of average CDI and goodwill, divided by net income. See below for a reconciliation of return on average tangible stockholders' equity.
3 Return on average tangible assets is a non-GAAP measure defined as average total assets, less the sum of average CDI and goodwill, divided by net income. See below for a reconciliation of return on average tangible assets.
4 Tangible common stockholders’ equity ratio is a non-GAAP measure defined as total stockholders’ equity, less the sum of CDI and goodwill, divided by total assets. See below for a reconciliation of tangible common stockholders’ equity ratio.
5 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.
CASCADE BANCORP | |||||||||
ADDITIONAL FINANCIAL INFORMATION (continued) | |||||||||
(In thousands, except per share data) (Unaudited) | |||||||||
September 30, 2015 | June 30, 2015 | September 30, 2014 | |||||||
Bank Capital Ratios | Estimate | ||||||||
Tier 1 capital leverage ratio | 8.96 | % | 8.93 | % | 7.25 | % | |||
Common equity Tier 1 ratio | 10.98 | % | 10.89 | % | n/a | ||||
Tier 1 risk-based capital ratio | 10.98 | % | 10.89 | % | 9.49 | % | |||
Total risk-based capital ratio | 12.24 | % | 12.16 | % | 10.74 | % | |||
Bancorp Capital Ratios | |||||||||
Tier 1 capital leverage ratio | 9.38 | % | 9.05 | % | 7.45 | % | |||
Common equity Tier 1 ratio | 11.19 | % | 11.08 | % | n/a | ||||
Tier 1 risk-based capital ratio | 11.19 | % | 11.08 | % | 9.73 | % | |||
Total risk-based capital ratio | 12.42 | % | 12.35 | % | 10.98 | % | |||
Reconciliation of Non-GAAP Measures (unaudited): | ||||||||||||||||||||
Reconciliation of period end stockholders’ equity to period end tangible stockholders’ equity: | September 30, 2015 | June 30, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Total stockholders’ equity | $ | 331,589 | $ | 325,356 | $ | 315,483 | $ | 308,386 | ||||||||||||
Core deposit intangible | 7,068 | 7,273 | 7,683 | 7,888 | ||||||||||||||||
Goodwill | 78,610 | 78,610 | 80,082 | 80,189 | ||||||||||||||||
Tangible stockholders’ equity | $ | 245,911 | $ | 239,473 | $ | 227,718 | $ | 220,309 | ||||||||||||
Reconciliation of period end common stockholders’ equity ratio to period end tangible common stockholders’ equity ratio: | September 30, 2015 | June 30, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Total stockholders’ equity | $ | 331,589 | $ | 325,356 | $ | 315,483 | $ | 308,386 | ||||||||||||
Total assets | $ | 2,468,273 | $ | 2,418,487 | $ | 2,341,137 | $ | 2,340,379 | ||||||||||||
Common stockholders’ equity ratio | 13.43 | % | 13.45 | % | 13.48 | % | 13.18 | % | ||||||||||||
Tangible stockholders’ equity | $ | 245,911 | $ | 239,473 | $ | 227,718 | $ | 220,309 | ||||||||||||
Total assets | $ | 2,468,273 | $ | 2,418,487 | $ | 2,341,137 | $ | 2,340,379 | ||||||||||||
Tangible common stockholders’ equity ratio | 9.96 | % | 9.90 | % | 9.73 | % | 9.41 | % | ||||||||||||
Reconciliation of period end total stockholders' equity to period end tangible book value per common share: | September 30, 2015 | June 30, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Total stockholders’ equity | $ | 331,589 | $ | 325,356 | $ | 315,483 | $ | 308,386 | ||||||||||||
Core deposit intangible | 7,068 | 7,273 | 7,683 | 7,888 | ||||||||||||||||
Goodwill | 78,610 | 78,610 | 80,082 | 80,189 | ||||||||||||||||
Tangible stockholders equity | $ | 245,911 | $ | 239,473 | $ | 227,718 | $ | 220,309 | ||||||||||||
Common shares outstanding | 72,789,412 | 72,848,611 | 72,491,850 | 72,477,147 | ||||||||||||||||
Tangible book value per common share | $ | 3.38 | $ | 3.29 | $ | 3.14 | $ | 3.04 | ||||||||||||
Quarter to date | Year to date | |||||||||||||||||||
Reconciliation of return on average tangible stockholders' equity: | September 30, 2015 | June 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||||||||
Average stockholders' equity | 328,478 | $ | 324,622 | 308,767 | 323,890 | 249,538 | ||||||||||||||
Average core deposit intangible | 7,141 | 7,344 | 7,959 | 7,343 | 4,278 | |||||||||||||||
Average goodwill | 78,610 | 78,610 | 76,032 | 79,052 | 38,119 | |||||||||||||||
Average tangible stockholders' equity | $ | 242,727 | $ | 238,668 | $ | 224,776 | $ | 237,495 | $ | 207,141 | ||||||||||
Net income | 5,099 | 4,795 | 2,432 | 15,012 | (1,303 | ) | ||||||||||||||
Return on average tangible stockholders' equity (annualized) | 8.33 | % | 8.06 | % | 4.29 | % | 8.45 | % | (0.84 | )% | ||||||||||
Quarter to date | Year to date | |||||||||||||||||||
Reconciliation of return on average tangible assets: | September 30, 2015 | June 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||||||||
Average total assets | $ | 2,471,910 | $ | 2,399,321 | $ | 2,341,936 | $ | 2,410,413 | $ | 1,846,446 | ||||||||||
Average core deposit intangible | 7,141 | 7,344 | 7,959 | 7,343 | 4,278 | |||||||||||||||
Average goodwill | 78,610 | 78,610 | 76,032 | 79,052 | 38,119 | |||||||||||||||
Average tangible assets | $ | 2,386,159 | $ | 2,313,367 | $ | 2,257,945 | $ | 2,324,018 | $ | 1,804,049 | ||||||||||
Net income | 5,099 | 4,795 | 2,432 | 15,012 | (1,303 | ) | ||||||||||||||
Return on average tangible assets (annualized) | 0.85 | % | 0.83 | % | 0.43 | % | 0.86 | % | (0.10 | )% | ||||||||||
Reconciliation of year-over-year total loan growth to organic loan growth (from September 30, 2015): | Year over year September 30, 2015 | |||
Total loan growth | $ | 181,121 | ||
Acquired loans growth | 49,035 | |||
Organic loan growth | $ | 132,086 | ||
Reconciliation of quarterly total loan growth to organic loan growth (from June 30, 2015): | QTD September 30, 2015 | |||
Total loan growth | $ | 21,365 | ||
Acquired loan net payoffs | (4,911 | ) | ||
Organic loan growth | $ | 26,276 | ||