Cascade Financial Corporation (Nasdaq:CASB), the parent company of
Cascade Bank, today reported financial results for the second
quarter ended June 30, 2010 which included improvements in overall
credit quality metrics and further reductions of nonperforming
loans and nonperforming assets in the quarter.
"While managing through a very challenging economic environment
in the Pacific Northwest, our team remained focused on reducing
nonperforming assets, strengthening our performing loan portfolio,
growing our depositor base and increasing on-balance sheet
liquidity," said Carol K. Nelson, President and CEO. "We made
significant improvement in credit quality metrics across all areas
and saw progress during the quarter with a reduction of 11% in
nonperforming assets and a decline in the real estate construction
portfolio of 47% in the past year. We are pleased with the positive
progress we made in these areas and will remain focused on working
diligently to show continued improvement and a return to
profitability."
For the quarter, Cascade recorded an $11.7 million provision for
loan losses and a non-cash charge of $12.9 million against its
goodwill based upon an impairment analysis. As a result, Cascade
reported a net operating loss, excluding the goodwill impairment
charge, of $11.3 million and a net loss on a GAAP basis of $24.2
million. The non-cash goodwill impairment represents the write-off
of the remaining balance of the goodwill recorded from a prior bank
acquisition. The goodwill impairment charge does not impact
liquidity, operations, tangible capital or Cascade's regulatory
capital ratios.
Including accruals for preferred stock dividends and accretion
of the issuance discount on preferred stock issued to the U.S.
Treasury, Cascade reported a net loss attributable to common
stockholders of $24.8 million, or $2.02 per diluted common share,
for the second quarter of 2010, compared to a loss of $22.0
million, or $1.82 per diluted common share, for the second quarter
a year ago. Second quarter 2009 results include a goodwill
impairment charge of $11.7 million. Dividend accruals on
preferred stock issued to the U.S. Treasury under the Capital
Purchase Program for the second quarter of 2010 totaled $503,000,
and the accretion of the issuance discount on preferred stock for
the quarter was $112,000.
Significant items for the second quarter of 2010 include:
- Provision for loan losses of $11.7 million; a 63% decrease on a
sequential quarter basis and a 36% decrease from the same period in
the prior year;
- Net charge-offs of $11.7 million; a 63% decrease on a
sequential quarter basis and a 37% decrease from the same period in
the prior year;
- Nonperforming loans to total loans declined to 6.30% from
8.37%;
- Nonperforming assets to total assets declined to 6.57% from
7.34%;
- The allowance for loan losses increased to 2.36% of total
loans, up from 2.26% three months earlier and 2.00% a year
ago;
- Loan portfolio mix improved with a 24% reduction in real estate
construction loans compared to three months earlier, and a 47%
reduction from a year ago. Land acquisition and
development/land loans are a component of this portfolio and
declined $34.3 million, down 32% from three months earlier, and
down 57% from one year ago;
- A reduction in average interest rates paid on interest checking
and CDs combined to reduce the cost of deposits by 16 basis
points;
- Total deposits were up $10.7 million as strong growth in retail
CDs was offset by planned reductions in public deposits and
brokered CDs;
- Remaining balance of goodwill was written off;
- Risk based capital ratio at 10.7%.
For the first six months of the year, net losses were $56.3
million and losses allocated to common shareholders were $57.5
million. Losses per diluted common share were $4.71, compared
to a loss of $27.4 million, or $2.26 per diluted common share in
the first six months of 2009. The loan loss provision for the
first half of 2010 was $43.0 million versus $32.2 million in the
first half of 2009.
Asset Quality
After flattening in the first quarter, credit quality metrics
improved significantly in the second quarter. "Credit quality
metrics improved in all areas, including delinquent loan levels,
nonperforming loans, nonperforming assets and loan charge-offs,"
said Rob Disotell, EVP and Chief Credit Officer.
Nonperforming loans declined by 28% during the quarter to $69.8
million, or 6.30% of total loans at June 30, 2010, compared to
$96.7 million or 8.37% of total loans three months
earlier. Real estate owned (REO) increased $13.1 million
during the quarter as Cascade acquired title to properties securing
nonperforming loans. REO totaled $40.5 million at June 30,
2010, compared to $27.4 million three months
earlier. Nonperforming assets were 6.57% of total assets at
June 30, 2010, compared to 7.34% at the end of the preceding
quarter, and 7.59% a year ago.
The second quarter provision for loan losses was $11.7 million,
with net charge-offs of $11.7 million. The provision for loan
losses was $31.3 million for the preceding quarter and $18.3
million for the second quarter a year ago. The total allowance
for loan losses, which includes a $60,000 allowance for off-balance
sheet loan commitments, now stands at $26.1 million, or 2.36% of
total loans at quarter end, compared to $26.1 million, or 2.26% of
total loans at March 31, 2010, and $24.6 million, or 2.00% of total
loans a year ago.
The following table shows nonperforming loans versus total loans
in each category:
|
|
|
|
LOAN PORTFOLIO ($ in
000's) |
Balance at 6/30/2010 |
Nonperforming Loans (NPL) |
NPL as a % of Loans |
Business |
$ 437,516 |
$ 6,715 |
2% |
R/E construction |
|
|
|
Spec construction |
45,099 |
19,165 |
42% |
Land acquisition &
development/land |
74,119 |
19,305 |
26% |
Multifamily/custom
construction |
11,258 |
-- |
0% |
Commercial R/E construction |
26,338 |
-- |
0% |
Total R/E construction |
156,814 |
38,470 |
25% |
Commercial R/E |
184,223 |
24,126 |
13% |
Multifamily |
94,325 |
-- |
0% |
Home equity/consumer |
31,879 |
147 |
0% |
Residential |
203,138 |
366 |
0% |
Total |
$ 1,107,895 |
$ 69,824 |
6% |
Nonperforming loans continue to be centered in R/E construction
which accounted for 55% of Cascade's total nonperforming
loans. Commercial R/E loans account for 35% of Cascade's
nonperforming loans and consist of two office buildings.
"We are pleased to have made progress in reducing nonperforming
loans during the second quarter. We continue to move quickly
to convert nonperforming loans to REO, enabling us to actively
market and liquidate these properties," said Disotell. "During
the second quarter of 2010, a total of $24.7 million in loans were
placed on nonaccrual status, $25.3 million were converted to REO
status, $11.7 million were paid off or paid down during the quarter
and $12.4 million were charged off in connection with pending sales
transactions and as a result of new appraisals received in the
period."
Additions of $24.7 million to nonperforming loans were centered
in:
- $6.7 million in spec construction loans including $4.6 million
in advances on existing spec construction loans to fund the
completion of single-family homes as a part of work-out
strategies;
- $3.7 million in land acquisition and development/land
loans;
- A $12.2 million commercial real estate loan.
There were $11.7 million in paydowns on nonaccruing loans during
the quarter. These loans were centered in:
- $7.9 in spec construction loans through the sale of completed
homes;
- $3.2 million in land acquisition & development/land through
the sale of completed homes and payments.
The following table shows the migration of nonperforming loans
through the portfolio in each category (6/30/10 compared to
3/31/10).
NONPERFORMING LOANS ($ in
000's) |
Balance at
6/30/2010 |
Additions during
quarter |
Paydowns during
quarter |
Charge-offs
during quarter |
Transfers to
REO |
Transfers to Notes
Receivable |
Balance at
3/31/2010 |
Business |
$ 6,715 |
$ 2,165 |
$ (117) |
$ (5,150) |
$ (560) |
$ (2,225) |
$ 12,602 |
R/E construction |
|
|
|
|
|
|
|
Spec construction |
19,165 |
6,727 |
(7,939) |
(427) |
-- |
-- |
20,804 |
Land acquisition &
development/land |
19,305 |
3,686 |
(3,220) |
(5,436) |
(19,959) |
-- |
44,234 |
Commercial R/E construction |
-- |
20 |
-- |
(1,075) |
(4,745) |
-- |
5,800 |
Total R/E construction |
38,470 |
10,433 |
(11,159) |
(6,938) |
(24,704) |
-- |
70,838 |
Commercial R/E |
24,126 |
12,210 |
(185) |
(227) |
-- |
-- |
12,328 |
Home equity/consumer |
147 |
(81) |
(2) |
(102) |
-- |
-- |
332 |
Residential |
366 |
-- |
(251) |
(2) |
-- |
-- |
619 |
Total |
$ 69,824 |
$ 24,727 |
$ (11,714) |
$ (12,419) |
$ (25,264) |
$ (2,225) |
$ 96,719 |
The following table shows the change in REO during the
quarter:
REO ($ in 000's) |
Balance at
6/30/2010 |
Additions during
quarter |
Capitalized
costs |
Paydowns/ sales |
Writedowns/
loss/gain |
Balance at
3/31/2010 |
R/E construction |
|
|
|
|
|
|
Residential construction |
$ 1,029 |
$ 108 |
$ 1,329 |
$ (3,490) |
$ (248) |
$ 3,330 |
Land acquisition &
development/land |
31,606 |
19,851 |
1,243 |
(6,803) |
(2,896) |
20,211 |
Condominium construction |
2,112 |
-- |
449 |
-- |
(432) |
2,095 |
Total R/E construction |
34,747 |
19,959 |
3,021 |
(10,293) |
(3,576) |
25,636 |
Commercial R/E |
5,375 |
5,305 |
70 |
-- |
-- |
-- |
Residential |
341 |
-- |
-- |
(1,398) |
(19) |
1,758 |
|
$ 40,463 |
$ 25,264 |
$ 3,091 |
$ (11,691) |
$ (3,595) |
$ 27,394 |
"REO increased primarily in land development and finished lots
as that segment of the loan portfolio continues to be challenged,"
said Disotell. "By taking control of the projects through the
foreclosure process, the Bank gains the ability to control the
property and affect a quicker resolution. As a result,
approximately $26.2 million, or 64% of our REO balances are
currently under purchase and sales agreements or letters of
intent. This includes $921,000 in residential construction,
$20.1 million in land, $4.8 million in commercial real estate and
$341,000 in residential homes."
In the first quarter, Cascade announced that it had entered into
agreements to sell 397 residential lots associated with its two
largest land acquisition and development loans. On the first
of the two agreements, which included 263 lots, the first takedown
of 164 lots closed in the second quarter as scheduled resulting in
net sales proceeds of $4.7 million. The remaining lots are
expected to close in accordance with the agreement in the third
quarter and will generate approximately $3.0 million in net sales
proceeds. On the second of the two agreements for the sale of
134 lots in King County, Cascade was not able to convert the letter
of intent to a purchase and sale agreement. However, Cascade
has now executed a new letter of intent to enter into a purchase
and sale agreement for the property on essentially the same terms,
which is expected to close in the third quarter. In addition,
we have executed a letter of intent to enter into a purchase and
sale agreement for the sale of 146 lots located in Pierce County
for a property related to our third largest land acquisition and
development loan that was acquired by Cascade in the second
quarter. Closing on this property is expected in the third
quarter.
These transactions are subject to customary closing conditions
and there can be no guarantee they will close as Cascade currently
anticipates.
Loans delinquent 31-89 days and still accruing totaled $811,000,
or 0.07% of total loans at June 30, 2010, compared to $3.5 million,
or 0.30% of total loans at March 31, 2010 and $23.7 million, or
1.93% of total loans at June 30, 2009. Cascade had no loans
that were 90 days or more past due and still accruing interest at
June 30, 2010.
Loan Portfolio
Total loans decreased from a year ago as Cascade aggressively
reduced its real estate construction loan concentration.
Total loans decreased 10%, or $119 million, on a
year-over-year basis to $1.11 billion at June 30, 2010.
The following table shows the changes in the loan portfolio in
each category (6/30/10 compared to 3/31/10 and 6/30/09).
LOANS ($ in
000's) |
|
June 30,
2010 |
|
March 31,
2010 |
|
June 30,
2009 |
|
One Year
Change |
Business |
|
$ 437,516 |
|
$ 457,426 |
|
$ 467,923 |
|
-6% |
R/E construction |
|
|
|
|
|
|
|
|
Spec construction |
|
45,099 |
|
52,098 |
|
81,169 |
|
-44% |
Land acquisition &
development/land |
|
74,119 |
|
108,402 |
|
171,229 |
|
-57% |
Multifamily/custom construction |
|
11,258 |
|
12,905 |
|
14,795 |
|
-24% |
Commercial R/E construction |
|
26,338 |
|
31,996 |
|
29,738 |
|
-11% |
Total R/E construction |
|
156,814 |
|
205,401 |
|
296,931 |
|
-47% |
Commercial R/E |
|
184,223 |
|
183,027 |
|
192,886 |
|
-4% |
Multifamily |
|
94,325 |
|
89,920 |
|
91,554 |
|
3% |
Home equity/consumer |
|
31,879 |
|
31,274 |
|
30,919 |
|
3% |
Residential |
|
203,138 |
|
188,930 |
|
146,231 |
|
39% |
Total loans |
|
$ 1,107,895 |
|
$ 1,155,978 |
|
$ 1,226,444 |
|
-10% |
Business loans decreased 6% from the prior year to $438
million. Total R/E construction loans outstanding decreased
47% to $157 million at June 30, 2010, compared to $297 million a
year ago. Within this category, spec construction declined 44%
to $45.1 million and land acquisition & development/land
decreased 57% to $74.1 million at June 30, 2010 compared to one
year ago. Commercial real estate loans decreased 4% from the
prior year to $184 million. Multifamily loans increased 3%
from the prior year to $94.3 million. Home equity and consumer
loans increased 3% to $31.9 million, while residential loans grew
39% to $203 million, compared to a year ago. Growth in
residential loans came primarily from the success of the Builder
Sales Program used to facilitate the sale of newly constructed
homes to qualified buyers. Loans originated for the Builder
Sales Program have an average FICO credit score of 741 and are
performing as agreed.
Further details on changes during the first quarter are as
follows:
LOANS ($ in
000's) |
Balance at
6/30/2010 |
Net
Additions |
Reclassifi-cations |
Charge-offs
(1) |
Transfers to
REO |
Transfers to
Notes Receivable |
Balance at
3/31/2010 |
Business |
$ 437,516 |
$ (11,996) |
$ 21 |
$ (5,150) |
$ (560) |
$ (2,225) |
$ 457,426 |
R/E construction |
156,814 |
(14,132) |
(2,813) |
(6,938) |
(24,704) |
-- |
205,401 |
Commercial R/E |
184,223 |
869 |
554 |
(227) |
-- |
-- |
183,027 |
Multifamily |
94,325 |
2,115 |
2,290 |
-- |
-- |
-- |
89,920 |
Home equity/consumer |
31,879 |
759 |
(52) |
(102) |
-- |
-- |
31,274 |
Residential |
203,138 |
14,210 |
-- |
(2) |
-- |
-- |
188,930 |
Total loans |
1,107,895 |
(8,175) |
-- |
(12,419) |
(25,264) |
(2,225) |
1,155,978 |
Deferred loan fees |
(4,255) |
(383) |
-- |
-- |
-- |
-- |
(3,872) |
Allowance for loan losses |
(26,058) |
(11,725) |
(9) |
11,679 |
-- |
-- |
(26,003) |
Loans, net |
$ 1,077,582 |
$ (20,283) |
$ (9) |
$ (740) |
$ (25,264) |
$ (2,225) |
$ 1,126,103 |
|
|
|
|
|
|
|
|
(1) Loan charge-off detail
excludes negative NOW accounts totaling $68,000, recoveries of
$808,000 |
Investment Portfolio and Liquidity
Strong deposit growth and a reduction in the loan portfolio have
led to increased on-balance sheet liquidity. The investment
portfolio increased $58.7 million over the end of the second
quarter a year ago, and increased $44.7 million from the preceding
quarter, to $337 million. Most of the quarterly increase was
due to the increase in securities available-for-sale as a result of
net securities purchased. Interest-earning deposits, including
deposits at the Federal Reserve, were $157 million as of June 30,
2010, up considerably from $26.4 million a year earlier. "We
continue to maintain sizeable balances in our account at the
Federal Reserve Bank. This is a reflection of our commitment to
enhancing on-balance sheet liquidity," said Nelson. "With
interest rates at historically low levels, we are being very
cautious with our investment portfolio. The average life of
our investment portfolio, excluding our Federal Reserve deposits,
is approximately 2.9 years, in a range we believe provides the best
risk/reward balance at this point in time."
Deposit Growth
"During the quarter, we adjusted our deposit strategy to reduce
our levels of public funds as a result of anticipated changes to
collateral requirements, reduce brokered CDs and further enhance
liquidity, all while lowering our cost of deposits," said
Nelson. Total deposits increased $10.7 million during the
quarter or 1%, while checking account balances were down $61.8
million primarily through the cross-sale and conversion of checking
balances to MMDA and CDs. Savings and MMDA declined $4.4
million during the quarter through the planned reduction of $17.6
million in public funds MMDA mostly offset by an increase of $13.6
million in personal MMDA. CDs increased $76.8 million during
the quarter. Total deposits were up $182 million, or 18%
compared to a year ago. Total checking account balances were
up $121 million, or 42% over the past year with personal checking
account balances increasing 108% or $158 million during the same
period. Business checking accounts were down $36.6 million on
a year-over-year basis due to a planned reduction in public funds
checking which require 100% collateralization. CDs increased
$64.3 million on a year-over-year basis.
The following table shows deposits in each category (6/30/10
compared to 3/31/10 and 6/30/09).
DEPOSITS ($ in
000's) |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
One Year Change |
Personal checking accounts |
$ 304,145 |
$ 353,610 |
$ 146,310 |
108% |
Business checking accounts |
103,789 |
116,090 |
140,345 |
-26% |
Total checking accounts |
407,934 |
469,700 |
286,655 |
42% |
Savings and MMDA |
128,803 |
133,188 |
132,704 |
-3% |
CDs |
646,218 |
569,370 |
581,937 |
11% |
Total deposits |
$ 1,182,955 |
$ 1,172,258 |
$ 1,001,296 |
18% |
Capital
Total stockholders' equity was $83.8 million as of June 30,
2010. Book value was $3.79 per common share at June 30, 2010,
compared to $7.89 a year ago and tangible book value was $3.77 per
common share at quarter-end compared to $6.79 a year
ago. Cascade had a risk-based capital ratio of 10.65% and a
Tier 1 capital ratio of 6.08% as of June 30, 2010. Cascade's
tangible capital to assets ratio was 2.75% at quarter-end compared
to 5.15% a year earlier.
Operating Results
Second quarter net interest income was down 13% to $9.5 million
compared to $10.8 million for the second quarter of 2009, due
primarily to Cascade's enhanced on-balance sheet liquidity
position.
Total other income increased 74% to $3.8 million for the
quarter, compared to $2.2 million for the second quarter a year
ago. The increase in total other income compared to the prior
year's second quarter was primarily due to a gain on sale of
securities of $1.8 million. Excluding the gain on sale of
securities, other income was $2.1 million, up 11% from the prior
quarter. Checking fees were up 11% over the second quarter a
year ago.
Total other expenses (excluding the 2Q10 goodwill impairment
charge) were $12.9 million in the second quarter of 2010, compared
to $10.0 million (excluding the 2Q09 goodwill impairment charge),
in the second quarter of 2009. Compensation expenses
decreased by 5% during the second quarter compared to the second
quarter a year ago, partly as a result of the suspension of the
Bank's 401(k) match program at the beginning of the second quarter
of 2010. However, they were more than offset by a $2.4 million
increase in writedowns or losses on sale of REO.
For the first six months of 2010, net interest income was $19.2
million, compared to $21.9 million in the first six months of
2009. Other income was $5.7 million for the first half of 2010
compared to $5.9 million in the first half of 2009. For the
first half of the year, total other expenses (excluding the 2Q10
goodwill impairment) increased to $22.1 million compared to $18.6
million (excluding the 2Q09 goodwill impairment) in the first half
of 2009. The increase was largely due to the increase in writedowns
or losses on sale of REO.
The efficiency ratio excluding the 2Q10 goodwill charge was
96.7% in the second quarter of 2010 compared to 79.6% in the
preceding quarter. The efficiency ratio, excluding the 2Q09
goodwill and OTTI charge, was 76.6% in the second quarter a year
ago. The ratio was impacted by the reduction in interest
income from nonperforming loans and higher costs associated with
REO and legal expenses.
Net Interest Margin
"The net interest margin was impacted negatively during the
quarter compared to the prior quarter mostly due to the change in
mix in assets towards a higher level of securities as we increased
the securities portfolio by purchasing low yielding high quality
securities to enhance on-balance sheet liquidity," said
Nelson. Cascade's net interest margin was 2.49% for the second
quarter of 2010, compared to 2.60% in the immediate prior quarter
and 3.01% for the second quarter a year ago. The yield on
earning assets declined by 24 basis points compared to the
preceding quarter, while the cost of interest-bearing liabilities
declined by 14 basis points. The decline in the yield on
earning assets compared to the prior quarter was due to a
combination of an increase of 17 basis points in the yield on total
loans, more than offset by a decline of 101 basis points in the
yield of investments. The decline in the yield on investments
is the result of repositioning the investment portfolio toward
shorter duration investment securities to enhance on-balance sheet
liquidity.
The following table depicts Cascade's yield on earning assets,
its cost of funds on paying liabilities and the resulting spread
and margin:
|
2Q10 |
1Q10 |
4Q09 |
3Q09 |
2Q09 |
1Q09 |
4Q08 |
3Q08 |
2Q08 |
Asset yield |
4.89% |
5.13% |
5.35% |
5.60% |
5.63% |
5.83% |
6.07% |
6.67% |
6.31% |
Liability cost |
2.46% |
2.60% |
2.65% |
2.63% |
2.74% |
3.02% |
3.33% |
3.44% |
3.51% |
|
|
|
|
|
|
|
|
|
|
Spread |
2.43% |
2.53% |
2.70% |
2.97% |
2.89% |
2.81% |
2.74% |
3.23% |
2.80% |
Margin |
2.49% |
2.60% |
2.79% |
3.03% |
3.01% |
3.03% |
3.01% |
3.52% |
3.17% |
Recent Developments
Earlier this month Cascade named Debra L. Johnson as Executive
Vice President and Chief Financial Officer. Johnson has served
as a consultant and interim CFO at Cascade since February of this
year. She has nearly 30 years of banking experience, including
12 years as Chief Financial Officer for HomeStreet Bank in
Seattle.
"Debbie's proven performance as a senior level executive and
CFO, along with her understanding of the dynamics of community
banking, makes her an exceptional choice for this position," Nelson
said.
On July 21, 2010, Cascade Bank entered into a Consent Order with
the FDIC and Washington State DFI. Under the Order, Cascade
Bank is required, among other things, to improve asset quality and
reduce classified assets; to improve profitability; and to increase
Tier 1 capital to 10% and Risk Based Capital to 12% within 120
days.
It is also expected that Cascade will enter into a similar Order
with the Federal Reserve Bank of San Francisco. In light of these
developments, Cascade will actively engage in efforts to raise
additional capital.
Additionally, Craig G. Skotdal and Dwayne R. Lane resigned from
the Board of Directors on July 16, 2010 and July 20, 2010,
respectively.
Conference Call
Cascade's management team will host an analyst call on Thursday,
July 22, 2010, at 10:00 a.m. PDT (1:00 p.m. EDT) to discuss second
quarter results. Interested investors may listen to the call
live or via replay at www.cascadebank.com under shareholder
information. Investment professionals are invited to dial
(480) 629-9770, using access code 4325841 to participate in the
live call. A replay will be available for a week at (303)
590-3030, using access code 4325841.
About Cascade Financial
Established in 1916, Cascade Bank, the only operating subsidiary
of Cascade Financial Corporation, is a state chartered commercial
bank headquartered in Everett, Washington. Cascade Bank
maintains an "Outstanding" CRA rating and has proudly served the
Puget Sound region for over 90 years. Cascade Bank operates 22
full service branches in Everett, Lynnwood, Marysville, Mukilteo,
Shoreline, Smokey Point, Issaquah, Clearview, Woodinville, Lake
Stevens, Bellevue, Snohomish, North Bend, Burlington and
Edmonds.
In October 2009, Cascade Bank was named Favorite Snohomish
County Company in the fourth annual NW.Jobs.com People's Picks
awards. In June 2009, Cascade was ranked #55 on the Seattle
Times' Northwest 100 list of public companies. In April 2010,
Cascade was ranked #8 on the Puget Sound Business Journal's list of
largest bank companies headquartered in the Puget Sound area.
Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures
in addition to results presented in accordance with Generally
Accepted Accounting Principles (GAAP). These measures include
tangible book value per share, efficiency ratio and tangible
capital/assets ratio. These measures should not be construed
as a substitute for GAAP measures; they should be read and used in
conjunction with Cascade's GAAP financial information. A
reconciliation of the included non-GAAP financial measures to GAAP
measures is included elsewhere in this release.
Forward-Looking Statements
This press release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995 ("PSLRA"). This statement is included for the express
purpose of availing Cascade of the protections of the safe harbor
provisions of the PSLRA. Readers should not place undue
reliance on forward-looking statements, which reflect management's
views only as of the date hereof. The words "should,"
"anticipate," "expect," "will," "believe," and words of similar
meaning are intended, in part, to help identify forward-looking
statements. Future events are difficult to predict, and the
expectations described above are subject to risks and uncertainties
that may cause actual results to differ materially. Should one
or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or expected. In
addition to discussions about risks and uncertainties set forth
from time to time in the Company's filings with the Securities and
Exchange Commission, factors that may cause actual results to
differ materially from those contemplated in these forward-looking
statements include, among others: (1) the extent and duration
of continued economic and market disruptions and governmental
actions to address these disruptions; (2) the risk of new and
changing legislation, regulation and/or regulatory actions; (3)
pending litigation and regulatory actions; (4) local and national
general and economic conditions; (5) changes in interest rates; (6)
reductions in loan demand or deposit levels; and (7) changes in
loan collectibility, defaults and charge-off rates.
Cascade undertakes no obligation to publicly revise or update
these forward-looking statements to reflect events or circumstances
that arise after the date of this release. Readers should carefully
review the risk factors described in this and other documents
Cascade files from time to time with the Securities and Exchange
Commission, including Cascade's 2009 Form 10-K and Cascade's Form
10-Q for the quarter ending June 30, 2010.
BALANCE SHEET |
|
|
|
|
|
(Dollars in thousands except per share
amounts) |
June 30, 2010 |
March 31, 2010 |
Three Month
Change |
June 30, 2009 |
One Year Change |
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Cash and due from banks |
$ 4,464 |
$ 4,371 |
2% |
$ 13,976 |
-68% |
Interest-earning deposits |
157,127 |
152,440 |
3% |
26,403 |
495% |
|
|
|
|
|
|
Securities available-for-sale, fair
value |
303,064 |
247,240 |
23% |
227,924 |
33% |
Securities held-to-maturity, amortized
cost |
21,849 |
32,956 |
-34% |
38,243 |
-43% |
Federal Home Loan Bank (FHLB) stock |
11,920 |
11,920 |
0% |
11,920 |
0% |
Total securities |
336,833 |
292,116 |
15% |
278,087 |
21% |
Loans |
|
|
|
|
|
Business |
437,516 |
457,426 |
-4% |
467,923 |
-6% |
R/E construction |
156,814 |
205,401 |
-24% |
296,931 |
-47% |
Commercial R/E |
184,223 |
183,027 |
1% |
192,886 |
-4% |
Multifamily |
94,325 |
89,920 |
5% |
91,554 |
3% |
Home equity/consumer |
31,879 |
31,274 |
2% |
30,919 |
3% |
Residential |
203,138 |
188,930 |
8% |
146,231 |
39% |
Total loans |
1,107,895 |
1,155,978 |
-4% |
1,226,444 |
-10% |
Deferred loan fees |
(4,255) |
(3,872) |
10% |
(2,928) |
45% |
Allowance for loan losses |
(26,058) |
(26,003) |
0% |
(24,490) |
6% |
Loans, net |
1,077,582 |
1,126,103 |
-4% |
1,199,026 |
-10% |
Real estate owned (REO) |
40,463 |
27,394 |
48% |
7,872 |
414% |
Premises and equipment, net |
13,932 |
14,268 |
-2% |
15,319 |
-9% |
Bank owned life insurance |
25,012 |
24,759 |
1% |
24,052 |
4% |
Goodwill |
-- |
12,885 |
-100% |
12,885 |
-100% |
Prepaid FDIC insurance premiums |
5,009 |
6,071 |
-17% |
26 |
N/A |
Federal income tax receivable |
-- |
13,420 |
-100% |
11,768 |
-100% |
Deferred tax asset |
-- |
-- |
N/A |
7,167 |
-100% |
Other assets |
18,111 |
16,434 |
10% |
14,115 |
28% |
Total assets |
$ 1,678,533 |
$ 1,690,261 |
-1% |
$ 1,610,696 |
4% |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Deposits |
|
|
|
|
|
Personal checking accounts |
$ 304,145 |
$ 353,610 |
-14% |
$ 146,310 |
108% |
Business checking accounts |
103,789 |
116,090 |
-11% |
140,345 |
-26% |
Total checking accounts |
407,934 |
469,700 |
-13% |
286,655 |
42% |
Savings and money market accounts |
128,803 |
133,188 |
-3% |
132,704 |
-3% |
Certificates of deposit |
646,218 |
569,370 |
13% |
581,937 |
11% |
Total deposits |
1,182,955 |
1,172,258 |
1% |
1,001,296 |
18% |
FHLB advances |
239,000 |
239,000 |
0% |
239,000 |
0% |
Securities sold under agreement to
repurchase |
145,420 |
146,065 |
0% |
146,600 |
-1% |
Federal Reserve borrowings |
-- |
-- |
N/A |
60,000 |
-100% |
Junior subordinated debentures |
15,465 |
15,465 |
0% |
15,465 |
0% |
Junior subordinated debentures, fair
value |
3,341 |
3,341 |
0% |
8,708 |
-62% |
Other liabilities |
8,573 |
9,879 |
-13% |
7,307 |
17% |
Total liabilities |
1,594,754 |
1,586,008 |
1% |
1,478,376 |
8% |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Preferred stock |
37,262 |
37,150 |
0% |
36,826 |
1% |
Common stock and paid in capital |
44,030 |
43,841 |
0% |
43,443 |
1% |
Retained earnings |
(2,740) |
22,047 |
-112% |
53,430 |
N/A |
Accumulated other comprehensive gain (loss),
net |
5,227 |
1,215 |
330% |
(1,379) |
N/A |
Total stockholders' equity |
83,779 |
104,253 |
-20% |
132,320 |
-37% |
Total liabilities and stockholders'
equity |
$ 1,678,533 |
$ 1,690,261 |
-1% |
$ 1,610,696 |
4% |
|
|
|
|
|
|
STATEMENT OF OPERATIONS |
|
|
|
|
|
(Dollars in thousands except per share
amounts) |
Quarter Ended June 30,
2010 |
Quarter Ended March 31,
2010 |
Three Month
Change |
Quarter Ended June 30,
2009 |
One Year Change |
(Unaudited) |
|
|
|
|
|
Interest income |
$ 18,627 |
$ 19,131 |
-3% |
$ 20,215 |
-8% |
Interest expense |
9,162 |
9,444 |
-3% |
9,392 |
-2% |
Net interest income |
9,465 |
9,687 |
-2% |
10,823 |
-13% |
Provision for loan losses |
11,725 |
31,290 |
-63% |
18,300 |
-36% |
Net interest loss after provision for loan
losses |
(2,260) |
(21,603) |
-90% |
(7,477) |
-70% |
Other income: |
|
|
|
|
|
Checking fees |
1,414 |
1,263 |
12% |
1,270 |
11% |
Service fees |
247 |
233 |
6% |
286 |
-14% |
Bank owned life insurance |
253 |
237 |
7% |
191 |
32% |
Gain on sales/calls of securities |
1,764 |
28 |
N/A |
226 |
681% |
Gain on sale of loans |
11 |
26 |
-58% |
98 |
-89% |
Fair value gains |
-- |
-- |
N/A |
12 |
-100% |
Other |
149 |
125 |
19% |
120 |
24% |
Total other income |
3,838 |
1,912 |
101% |
2,203 |
74% |
|
|
|
|
|
|
Total income (loss) |
1,578 |
(19,691) |
-108% |
(5,274) |
N/A |
Other expenses: |
|
|
|
|
|
Compensation expense |
3,393 |
3,682 |
-8% |
3,587 |
-5% |
Other operating expenses |
3,447 |
3,346 |
3% |
3,323 |
4% |
Legal |
585 |
162 |
261% |
162 |
261% |
Contract services |
406 |
200 |
103% |
84 |
383% |
FDIC insurance |
1,106 |
853 |
30% |
1,241 |
-11% |
Real estate owned (REO) and real estate
in acquisition (REA) expense |
333 |
296 |
13% |
356 |
-6% |
Writedowns/loss on sales of REO |
3,595 |
698 |
415% |
1,225 |
193% |
Goodwill impairment |
12,885 |
-- |
N/A |
11,700 |
10% |
Total other expenses |
25,750 |
9,237 |
179% |
21,678 |
19% |
|
|
|
|
|
|
Net loss before provision (benefit) for
income tax |
(24,172) |
(28,928) |
-16% |
(26,952) |
-10% |
|
|
|
|
|
|
Provision (benefit) for income tax |
-- |
3,211 |
-100% |
(5,552) |
N/A |
|
|
|
|
|
|
Net loss |
(24,172) |
(32,139) |
-25% |
(21,400) |
13% |
|
|
|
|
|
|
Dividends on preferred stock |
503 |
499 |
1% |
487 |
3% |
Accretion of issuance discount on preferred
stock |
112 |
112 |
0% |
105 |
7% |
|
|
|
|
|
|
Loss attributable to common stockholders |
$ (24,787) |
$ (32,750) |
-24% |
$ (21,992) |
13% |
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic |
$ (2.02) |
$ (2.69) |
-25% |
$ (1.82) |
11% |
Net loss per common share, diluted |
$ (2.02) |
$ (2.69) |
-25% |
$ (1.82) |
11% |
|
|
|
|
|
|
Weighted average number of shares
outstanding |
|
|
|
|
|
Basic |
12,246,529 |
12,165,167 |
|
12,110,434 |
|
Diluted |
12,246,529 |
12,165,167 |
|
12,110,434 |
|
|
|
|
STATEMENT OF OPERATIONS |
Six Months
Ended |
|
(Dollars in thousands except per share
amounts) |
June 30, 2010 |
June 30, 2009 |
Six Month
Change |
(Unaudited) |
|
|
|
Interest income |
$ 37,758 |
$ 41,626 |
-9% |
Interest expense |
18,606 |
19,683 |
-5% |
Net interest income |
19,152 |
21,943 |
-13% |
Provision for loan losses |
43,015 |
32,175 |
34% |
Net interest loss after provision for loan
losses |
(23,863) |
(10,232) |
133% |
Other income: |
|
|
|
Checking fees |
2,677 |
2,382 |
12% |
Service fees |
480 |
535 |
-10% |
Bank owned life insurance |
490 |
414 |
18% |
Gain on sales/calls of securities |
1,792 |
344 |
421% |
Gain on sale of loans |
37 |
138 |
-73% |
Fair value gains |
-- |
1,802 |
-100% |
Other |
273 |
236 |
16% |
Total other income |
5,749 |
5,851 |
-2% |
|
|
|
|
Total loss |
(18,114) |
(4,381) |
313% |
Other expenses: |
|
|
|
Compensation expense |
7,075 |
7,195 |
-2% |
Other operating expenses |
6,647 |
6,519 |
2% |
Legal |
746 |
246 |
203% |
Other insurance premiums |
753 |
126 |
498% |
FDIC insurance |
1,960 |
1,632 |
20% |
WPDPC assessment |
-- |
368 |
-100% |
Real estate owned (REO) and real estate
in acquisition (REA) expense |
629 |
365 |
72% |
Writedowns/loss on sales of REO |
4,292 |
1,279 |
236% |
OTTI charge |
-- |
858 |
-100% |
Goodwill impairment |
12,885 |
11,700 |
10% |
Total other expenses |
34,987 |
30,288 |
16% |
|
|
|
|
Net loss before provision (benefit) for
income tax |
(53,101) |
(34,669) |
53% |
|
|
|
|
Provision (benefit) for income tax |
3,211 |
(8,452) |
N/A |
|
|
|
|
Net loss |
(56,312) |
(26,217) |
115% |
|
|
|
|
Dividends on preferred stock |
1,002 |
969 |
3% |
Accretion of issuance discount on preferred
stock |
223 |
210 |
6% |
|
|
|
|
Loss attributable to common stockholders |
$ (57,537) |
$ (27,396) |
110% |
|
|
|
|
NET LOSS PER COMMON SHARE
INFORMATION |
|
|
|
|
|
|
|
Net loss per common share, basic |
$ (4.71) |
$ (2.26) |
108% |
Net loss per common share, diluted |
$ (4.71) |
$ (2.26) |
108% |
|
|
|
|
Weighted average number of shares
outstanding |
|
|
|
Basic |
12,210,751 |
12,104,805 |
|
Diluted |
12,210,751 |
12,104,805 |
|
|
|
|
|
|
|
(Dollars in thousands except per share
amounts) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
Quarter
Ended |
Six Months
Ended |
PERFORMANCE MEASURES AND
RATIOS |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
Return on average common equity
(annualized) |
-187.06% |
-137.53% |
-83.14% |
-154.71% |
-47.92% |
Return on average tangible common equity
(annualized)* |
-90.30% |
-159.35% |
-44.50% |
-131.94% |
-32.93% |
Return on average assets |
-5.85% |
-7.74% |
-5.47% |
-6.79% |
-3.40% |
Efficiency ratio |
193.57% |
79.64% |
166.42% |
140.50% |
108.97% |
Efficiency ratio (excluding goodwill and
OTTI)* |
96.71% |
79.64% |
76.60% |
88.76% |
63.79% |
Net interest margin |
2.49% |
2.60% |
3.01% |
2.54% |
3.02% |
*Non-GAAP measurement |
|
|
|
|
|
|
Quarter
Ended |
Six Months
Ended |
AVERAGE BALANCES |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
Average assets |
$ 1,699,249 |
$ 1,715,524 |
$ 1,611,721 |
$ 1,707,598 |
$ 1,622,955 |
Average earning assets |
1,526,742 |
1,512,046 |
1,440,316 |
1,519,434 |
1,465,368 |
Average total loans |
1,134,477 |
1,196,091 |
1,247,475 |
1,165,114 |
1,253,370 |
Average deposits |
1,197,710 |
1,169,309 |
986,945 |
1,183,588 |
980,118 |
Average equity (including preferred
stock) |
90,338 |
133,652 |
142,861 |
112,132 |
152,006 |
Average common equity (excluding preferred
stock) |
53,149 |
96,574 |
106,102 |
74,998 |
115,287 |
Average tangible common equity (excluding
preferred stock and goodwill and intangibles) |
52,867 |
83,353 |
92,776 |
68,247 |
96,125 |
|
|
|
|
|
|
EQUITY ANALYSIS |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
|
|
Total equity |
$ 83,779 |
$ 104,253 |
$ 132,320 |
|
|
Less: preferred stock |
37,262 |
37,150 |
36,826 |
|
|
Total common equity |
46,517 |
67,103 |
95,494 |
|
|
Less: goodwill and intangibles |
282 |
13,202 |
13,308 |
|
|
Tangible common equity |
$ 46,235 |
$ 53,901 |
$ 82,186 |
|
|
|
|
|
|
|
|
Common stock outstanding |
12,271,529 |
12,171,529 |
12,110,434 |
|
|
Book value per common share |
$ 3.79 |
$ 5.51 |
$ 7.89 |
|
|
Tangible book value per common share |
$ 3.77 |
$ 4.43 |
$ 6.79 |
|
|
|
|
|
|
(Dollars in thousands except per share
amounts) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
ASSET QUALITY |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
Nonperforming loans (NPLs) |
$ 69,824 |
$ 96,719 |
$ 114,449 |
Nonperforming loans/total loans |
6.30% |
8.37% |
9.33% |
REO and other repossessed assets |
$ 40,463 |
$ 27,394 |
$ 7,872 |
Nonperforming assets |
$ 110,287 |
$ 124,113 |
$ 122,321 |
Nonperforming assets/total assets |
6.57% |
7.34% |
7.59% |
Net loan charge-offs in the quarter |
$ 11,679 |
$ 31,187 |
$ 18,512 |
Net charge-offs in the quarter/total
loans |
1.05% |
2.70% |
1.51% |
|
|
|
|
Allowance for loan losses |
$ 26,058 |
$ 26,003 |
$ 24,490 |
Plus: Allowance for off-balance sheet
commitments |
60 |
69 |
72 |
Total allowance for loan losses |
$ 26,118 |
$ 26,072 |
$ 24,562 |
Total allowance for loan losses/total
loans |
2.36% |
2.26% |
2.00% |
Total allowance for loan losses/nonperforming
loans |
37.41% |
26.96% |
21.46% |
|
|
|
|
Capital/asset ratio (including junior
subordinated debentures) |
6.48% |
7.65% |
9.77% |
Capital/asset ratio (Tier 1, including junior
subordinated debentures) |
6.08% |
6.75% |
9.10% |
Tangible cap/asset ratio (excluding preferred
stock and goodwill and intangibles) |
2.75% |
3.21% |
5.15% |
Risk based capital/risk weighted asset
ratio |
10.65% |
11.00% |
12.60% |
|
|
|
|
|
|
Quarter Ended |
|
INTEREST SPREAD
ANALYSIS |
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
Yield on interest-earning deposits |
0.22% |
0.22% |
0.16% |
Yield on total loans |
5.65% |
5.48% |
6.00% |
Yield on investments |
3.13% |
4.14% |
4.49% |
Yield on earning assets |
4.89% |
5.13% |
5.63% |
|
|
|
|
Cost of deposits |
1.31% |
1.47% |
1.62% |
Cost of FHLB advances |
4.35% |
4.35% |
4.33% |
Cost of Federal Reserve borrowings |
0.00% |
0.25% |
0.30% |
Cost of securities sold under agreement to
repurchase |
5.92% |
5.94% |
5.74% |
Cost of junior subordinated debentures |
10.78% |
10.68% |
8.79% |
Cost of interest-bearing liabilities |
2.46% |
2.60% |
2.74% |
|
|
|
|
Net interest spread |
2.43% |
2.53% |
2.89% |
Net interest margin |
2.49% |
2.60% |
3.01% |
|
|
|
|
|
|
RECONCILIATION TO NON-GAAP FINANCIAL
MEASURES* |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
Quarter
Ended |
Six Months
Ended |
|
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
|
|
|
|
|
|
AVERAGE TANGIBLE COMMON
EQUITY |
|
|
|
|
|
Loss attributable to common stockholders |
$ (24,787) |
$ (32,750) |
$ (21,992) |
$ (57,537) |
$ (27,396) |
Goodwill impairment |
12,885 |
-- |
11,700 |
12,885 |
11,700 |
Loss available for common stockholders
(excluding goodwill impairment) |
$ (11,902) |
$ (32,750) |
$ (10,292) |
$ (44,652) |
$ (15,696) |
|
|
|
|
|
|
Average equity |
$ 90,338 |
$ 133,652 |
$ 142,861 |
$ 112,132 |
$ 152,006 |
Average preferred stock |
37,189 |
37,078 |
36,679 |
37,134 |
36,719 |
Average common equity |
53,149 |
96,574 |
106,182 |
74,998 |
115,287 |
Average goodwill and intangibles |
282 |
13,221 |
13,406 |
6,751 |
19,162 |
Average tangible common equity (excluding
preferred stock and goodwill and intangibles) |
$ 52,867 |
$ 83,353 |
$ 92,776 |
$ 68,247 |
$ 96,125 |
Return on average tangible common equity
(annualized) |
-90.30% |
-159.35% |
-44.50% |
-131.94% |
-32.93% |
|
|
|
|
|
|
EFFICIENCY RATIO |
|
|
|
|
|
Total other expenses |
$ 25,750 |
$ 9,237 |
$ 21,678 |
$ 34,987 |
$ 30,288 |
Less goodwill impairment |
12,885 |
-- |
11,700 |
12,885 |
11,700 |
Less OTTI |
-- |
-- |
-- |
-- |
858 |
Total other expenses (excluding goodwill
impairment and OTTI) |
$ 12,865 |
$ 9,237 |
$ 9,978 |
$ 22,102 |
$ 17,730 |
|
|
|
|
|
|
Net interest income |
$ 9,465 |
$ 9,687 |
$ 10,823 |
$ 19,152 |
$ 21,943 |
Other income |
3,838 |
1,912 |
2,203 |
5,749 |
5,851 |
Total income |
$ 13,303 |
$ 11,599 |
$ 13,026 |
$ 24,901 |
$ 27,794 |
|
|
|
|
|
|
Efficiency ratio (excluding goodwill
impairment and OTTI) |
96.71% |
79.64% |
76.60% |
88.76% |
63.79% |
|
|
|
|
|
|
TANGIBLE COMMON EQUITY |
|
|
|
|
|
Total assets |
$ 1,678,533 |
$ 1,690,261 |
$ 1,610,696 |
|
|
Less goodwill and intangibles |
282 |
13,202 |
13,308 |
|
|
Total tangible assets |
$ 1,678,251 |
$ 1,677,059 |
$ 1,597,388 |
|
|
|
|
|
|
|
|
Total equity |
$ 83,779 |
$ 104,253 |
$ 132,320 |
|
|
Less: preferred stock |
37,262 |
37,150 |
36,826 |
|
|
Total common equity |
46,517 |
67,103 |
95,494 |
|
|
Less: goodwill and intangibles |
282 |
13,202 |
13,308 |
|
|
Tangible common equity |
$ 46,235 |
$ 53,901 |
$ 82,186 |
|
|
|
|
|
|
|
|
Tangible cap/asset ratio (excluding preferred
stock and goodwill and intangibles) |
2.75% |
3.21% |
5.15% |
|
|
|
|
|
|
|
|
*Management believes that the
presentation of non-GAAP results provides useful information to
investors regarding the effects on the Company's reported results
of operations. |
CONTACT: Cascade Bank
Investor Contacts:
Carol K. Nelson, CEO
Rob Disotell, CCO
425.339.5500
www.cascadebank.com
Cascade Financial Corp. (MM) (NASDAQ:CASB)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Cascade Financial Corp. (MM) (NASDAQ:CASB)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024