<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
(MARK ONE)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1998
--------------
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission file number: 0-23322
-----------
CASCADE BANCORP
(Exact name of Registrant as specified in its charter)
Oregon 93-1034484
(State of Incorporation) (I.R.S. Employer Identification No.)
1100 NW Wall Street
Bend, Oregon 97701
(Address of principal executive offices)
(Zip Code)
(541) 385-6205
(Registrant's telephone number, including area code)
----------------------
Indicate by check mark whether the registrant: (1) has 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 4,144,862 shares of no par
value Common Stock on April 30, 1998. --------------------------
- ------------------------------------
<PAGE>
CASCADE BANCORP AND SUBSIDIARIES
FORM 10-Q
QUARTERLY REPORT
MARCH 31, 1998
INDEX
PART I: FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Condensed Consolidated Balance Sheets
as of March 31, 1998 and December 31, 1997. . . . . .. . . . . . . . . . .3
Condensed Consolidated Statements of Income and Comprehensive Income
for the three months ended March 31, 1998 and 1997. . . . . . . . . . . . 4
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the three months ended March 31, 1998 and 1997. . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997. . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . .. . . . . . . . . . 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations. . .. . . . . . . . . . . . . . . . . . . . . .11
PART II: OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
CASCADE BANCORP & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
1998 1997
------------ ------------
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 17,991,741 $ 21,053,706
Federal funds sold 8,300,000 8,500,000
------------ ------------
Total cash and cash equivalents 26,291,741 29,553,706
Investment securities available-for-sale 39,032,917 41,953,637
Investment securities held-to-maturity 2,472,873 2,445,957
Loans, net 161,764,992 153,024,926
Mortgage loans held for sale 4,285,669 1,876,186
Premises and equipment, net 5,341,490 5,057,388
Accrued interest and other assets 10,647,509 8,699,681
------------ ------------
Total assets $249,837,191 $242,611,481
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 73,431,136 $ 65,199,160
Interest bearing demand 112,427,708 111,481,437
Savings 13,795,108 13,070,325
Time deposits 22,869,486 21,593,851
------------ ------------
Total deposits 222,523,438 211,344,773
Other borrowings - 5,000,000
Accrued interest and other liabilities 3,017,587 2,030,284
------------ ------------
Total liabilities 225,541,025 218,375,057
Stockholders'equity:
Common stock, no par value;
10,000,000 shares authorized;
4,144,862 issued and outstanding
(4,172,238-1997) 9,605,136 10,365,015
Retained earnings 14,350,899 13,568,644
Accumulated other comprehensive income 340,131 302,765
------------ ------------
Total stockholders' equity 24,296,166 24,236,424
------------ ------------
Total liabilities and stockholders'
equity $249,837,191 $242,611,481
============ ============
See accompanying notes.
3
<PAGE>
CASCADE BANCORP & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1998 and 1997
(Unaudited)
1998 1997
---------- ----------
Interest income:
Interest and fees on loans $4,224,311 $3,503,779
Taxable interest on investments 692,160 467,639
Nontaxable interest on investments 11,717 21,118
Interest on federal funds sold 60,911 100,225
---------- ----------
Total interest income 4,989,099 4,092,761
Interest expense:
Deposits:
Interest bearing demand 822,437 666,745
Savings 71,748 66,483
Time 280,960 231,279
Other borrowings 40,428 85,970
--------- ----------
Total interest expense 1,215,573 1,050,477
--------- ----------
Net interest income 3,773,526 3,042,284
Loan loss provision 83,861 96,078
--------- ----------
Net interest income after loan loss provision 3,689,665 2,946,206
Noninterest income:
Service charges on deposit accounts 468,861 423,711
Mortgage loan origination and processing fees 425,322 227,064
Gains (losses) on sales of mortgage loans (18,087) 63,230
Other income 340,654 245,288
---------- ----------
Total noninterest income 1,216,750 959,293
Noninterest expense:
Salaries and employee benefits 1,597,930 1,175,949
Net occupancy & equipment 389,738 348,984
Other expenses 835,645 648,252
---------- ----------
Total noninterest expense 2,823,313 2,173,185
---------- ----------
Income before income taxes 2,083,102 1,732,314
Provision for income taxes 803,881 660,992
---------- ----------
Net income $1,279,221 $1,071,322
Other comprehensive income, net of tax:
Net unrealized gains (losses) on investment
securities available-for-sale 37,366 (189,504)
---------- ----------
Comprehensive income $1,316,587 $ 881,818
========== ==========
Net income per common share $ 0.31 $ 0.25
========== ==========
Diluted net income per common share $ 0.30 $ 0.24
========== ==========
See accompanying notes.
4
<PAGE>
CASCADE BANCORP & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
ACUMULATED
OTHER TOTAL
COMMON RETAINED COMPREHENSIVE STOCKHOLDERS'
STOCK EARNINGS INCOME EQUITY
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 13,058,417 $ 10,442,535 $ 71,097 $ 23,572,049
Net change in unrealized gains
(losses) on securities
available-for-sale - - (189,504) (189,504)
Cash dividend declared in January 1997 - (1,066,484) - (1,066,484)
($0.25 per common share)
Net income - 1 071 322 - 1,071,322
------------ ------------ ---------- -------------
Balance at March 31, 1997 $ 13,058,417 $ 10,447,373 $ (118,407) $ 23,387,383
============ ============ ========== =============
Balance at December 31, 1997 $ 10,365,015 $ 13,568,644 $ 302,765 $ 24,236,424
Net change in unrealized gains
(Losses) on securities
available-for-sale - - 37,366 37,366
Cash dividend declared in January 1998
($0.12 per common share) - (496,966) - (496,966)
Repurchase of common stock (759,879) - - (759,879)
Net income - 1,279,221 - 1,279,221
------------ ------------ ---------- ------------
Balance at March 31, 1998 $ 9,605,136 $ 14,350,899 $ 340,131 $ 24,296,166
============ ============ ========== ============
</TABLE>
See accompanying notes.
5
<PAGE>
CASCADE BANCORP & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Net cash provided (used) by operating activities $ (1,980,333) $ 2,286,040
Investing activities:
Purchases of investment securities
available-for-sale - (11,500,000)
Proceeds from maturities and calls of
investment securities available-for-sale 3,000,000 4,967,969
Purchases of investment securities
held-to-maturity (28,500) (26,200)
Proceeds from maturities and calls of
investment securities held-to-maturity - 144,797
Net increase in loans (8,842,014) (2,076,574)
Purchases of premises and equipments, net (332,938) (123,551)
------------- -------------
Net cash used in investing activities (6,203,452) (8,613,559)
Financing activities:
Net increase in deposits 11,178,665 10,533,730
Cash dividends paid (496,966) (1,066,484)
Repurchases of stock (759,879) -
Net decrease in other borrowings (5,000,000) -
------------- -------------
Net cash provided by financing activities 4,921,820 9,467,246
------------- -------------
Net increase (decrease) in cash and cash equivalents (3,261,965) 1,945,661
Cash and cash equivalents at beginning of period 29,553,706 28,892,608
------------- -------------
Cash and cash equivalents at end of period $ 26,291,741 $ 30,838,269
============= =============
</TABLE>
See accompanying notes.
6
<PAGE>
CASCADE BANCORP & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
1. BASIS OF PRESENTATION
The interim condensed consolidated financial statements include the
accounts of Cascade Bancorp (Bancorp), a bank holding company, and its
wholly-owned subsidiaries, Bank of the Cascades (the Bank) and Cascade
Finance, (collectively, "the Company"). The Bank is an Oregon state-chartered,
federally insured commercial bank and Cascade Finance is a consumer finance
company. All significant intercompany accounts and transactions have been
eliminated in consolidation.
The interim condensed consolidated financial statements are unaudited,
but include all adjustments, consisting of only normal accruals, which the
Company considers necessary for a fair presentation of the results of
operations for such interim periods. In preparing the condensed consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of
the balance sheets and income and expenses for the periods. Actual results
could differ from those estimates.
The balance sheet data as of December 31, 1997 was derived from audited
financial statements, but does not include all disclosures contained in the
Company's 1997 Annual Report to Shareholders.
The interim condensed consolidated financial statements should be read in
conjunction with the December 31, 1997 consolidated financial statements,
including the notes thereto, included in the Company's 1997 Annual Report to
Shareholders.
Certain amounts for 1997 have been reclassified to conform with the 1998
presentation.
2. INVESTMENT SECURITIES
Investment securities at March 31, 1998 and December 31, 1997 consisted
of the following:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
MARCH 31, 1998 COST GAINS LOSSES FAIR VALUE
- ------------------------------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Available-for-Sale
- ------------------
U.S. Government agencies...... $ 34,962,620 $ 328,879 $ - $ 35,291,499
U.S. Treasury securities...... 2,989,812 84,250 - 3,074,062
Equity securities............. 531,887 135,469 - 667,356
------------ --------- --------- ------------
$ 38,484,319 548,598 $ - $ 39,032,917
Held-to-Maturity
- ----------------
Obligations of state and
Political subdivisions..... $ 1,028,209 $ 4,170 $ - $ 1,032,379
Other......................... 1,444,664 - - 1,444,664
------------ --------- --------- ------------
$ 2,472,873 $ 4,170 $ - $ 2,477,043
============ ========= ========= ============
7
<PAGE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
DECEMBER 31, 1997 COST GAINS LOSSES FAIR VALUE
- ------------------------------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C>
Available-for-Sale
- ------------------
U.S. Government agencies...... $ 37,945,376 $ 393,249 $ - $ 38,338,625
U.S. Treasury securities...... 2,988,043 95,082 - 3,083,125
Equity securities............. 531,887 - - 531,887
------------ --------- --------- ------------
$ 41,465,306 488,331 $ - $ 41,953,637
Held-to-Maturity
- ----------------
Obligations of state and
Political subdivisions..... $ 1,029,793 $ 7,018 $ - $ 1,036,811
Other......................... 1,416,164 - - 1,416,164
------------ --------- --------- ------------
$ 2,445,957 $ 7,018 $ - $ 2,452,975
============ ========= ========= ============
</TABLE>
3. LOANS AND RESERVE FOR LOAN LOSSES
The composition of the loan portfolio at March 31, 1998 and December 31,
1997 was as follows:
1998 1997
----------- ------------
Commercial.................... $ 30,618,767 $ 30,058,992
Real Estate:
Construction............... 33,658,945 30,862,916
Mortgage................... 24,141,275 23,395,618
Commercial................. 53,725,379 52,356,507
Installment................... 22,264,148 18,901,259
------------ ------------
164,408,514 155,575,292
Less:
Reserve for loan losses.... 2,100,971 2,048,561
Deferred loan fees......... 542,551 501,805
------------ ------------
2,643,522 2,550,366
------------ ------------
Loans, net ................... $161,764,992 $153,024,926
============ ============
Mortgage loans held for sale of $4,285,669 and $1,876,186 at March 31,
1998 and December 31, 1997, respectively, represent real estate mortgage
loans. These loans are recorded at cost which approximates market.
Transactions in the reserve for loan losses for the three months ended
March 31, 1998 and 1997 were as follows:
1998 1997
----------- ------------
Balance at beginning of period... $ 2,048,561 $ 1,691,260
Provisions charged to operations. 83,861 96,078
Loans charged off................ (51,131) (65,248)
Recoveries of loans previously
charged off.................... 19,680 13,671
------------ ------------
Balance at end of period......... $ 2,100,971 $ 1,735,761
============ ============
The reserve for loan losses represents management's recognition of the
assumed risks of extending credit and the quality of the existing loan
portfolio. The reserve is maintained at a level considered adequate to
provide for potential loan losses based on management's assessment of various
factors affecting the portfolio. Such factors include loss experience, review
of problem loans, current economic conditions, and an overall evaluation of
the quality,
8
<PAGE>
risk characteristics and concentration of loans in the portfolio. The reserve
is increased by provisions charged to operations and reduced by loans
charged-off, net of recoveries.
Although a risk of nonpayment exists with respect to all loans, certain
specific types of risks are associated with different types of loans. Due to
the nature of the Bank's customer base and the growth experienced in the
Bank's market area, real estate is frequently a material component of
collateral for the Bank's loans. The expected source of repayment of these
loans is generally the operations of the borrower's business or personal
income; however, real estate 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 Bank 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 Bank. The commercial real
estate risk is further mitigated by making the majority of commercial real
estate loans to owner-occupied users of the property. The Bank manages the
general risks inherent in the loan portfolio by following loan policies and
underwriting practices designed to result in prudent lending activities.
The following table presents information with respect to non-performing
assets at March 31, 1998 and December 31, 1997 (dollars in thousands):
1998 1997
------ ------
Loans on non-accrual status........... $ 538 $ 43
Loans past due 90 days or more
but non on non-accrual status...... 10 45
Other real estate owned............... - 9
------ ------
Total non-performing assets........... $ 548 $ 97
====== ======
Percentage of non-performing assets
to total assets.................... .22% .04%
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 three months ended March 31, 1998 and 1997.
At March 31, 1998, 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.
4. MORTGAGE SERVICING RIGHTS
At March 31, 1998 and December 31, 1997, the Bank held servicing rights
to approximately $189,804,000 and $174,294,000, respectively, in mortgage
loans which have been sold to the Federal National Mortgage Association.
Effective March, 1998 these mortgage loans are being serviced by the Bank.
The sale of these mortgage loans are subject to technical underwriting
exceptions and related repurchase risks. Such risks are considered in the
determination of the reserve for loan losses. Beginning effective January 1,
1996 the Bank began prospectively recognizing as separate assets the rights to
service mortgage loans which are acquired through loan origination activities.
Other assets in the accompanying condensed consolidated balance sheets as of
March 31, 1998 and December 31, 1997 include approximately $1,437,000 and
approximately $1,270,000, respectively, for the capitalized mortgage servicing
rights.
9
<PAGE>
The fair value of the capitalized mortgage servicing rights was
determined based on estimates of the present value of expected future cash
flows and comparisons to current market transactions involving mortgage
servicing rights with similar portfolio characteristics. The predominant risk
characteristics of the underlying loans used to stratify the capitalized
mortgage servicing rights for purposes of measuring impairment are note rates,
terms and interest methods (i.e., fixed and variable).
5. OTHER BORROWINGS
At December 31, 1997 the Bank had $5 million in borrowings from the
Federal Home Loan Bank of Seattle (FHLB). In January 1998, the Bank paid-off
its borrowings with the FHLB.
6. NET INCOME PER COMMON SHARE
The Company's basic net income per common share is computed by dividing
net income by the weighted- average number of common shares outstanding during
the period. The Company's diluted net income per common share is calculated
by dividing net income by the weighted-average number of common shares
outstanding plus dilative common shares related to stock options. The
weighted average number of common shares outstanding used to compute basic net
income per common share, was approximately 4,152,000 for the three-months
ended March 31, 1998. The weighted average number of common shares
outstanding used to compute diluted net income per common share, was
approximately 4,294,000 for the three-months ended March 31, 1998. All share
and per share amounts in the accompanying financial statements have been
adjusted to retroactively reflect a two-for-one stock split declared in June
1997.
7. ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1997, Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income" was issued. This statement established
requirements for disclosure of comprehensive income and its components
(revenues, expenses, gains, and losses) and became effective for financial
statements beginning in 1998. Accordingly, unrealized gains and losses on
investment securities available-for-sale are included in other comprehensive
income as disclosed in the accompanying statements of income and comprehensive
income.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" was issued. SFAS No. 131 requires publicly-held
companies to report financial and other information about key revenue-
producing segments of the entity for which such information is available and
is utilized by the chief operating decision maker. Specific information to be
reported for individual segments includes profit or loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements will be required.
SFAS No. 131 becomes retroactively effective for financial statements for
annual periods ending after December 15, 1997 and it has not yet been
determined whether the Company will be required to make any additional
disclosure.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited condensed consolidated financial statements and the notes thereto
for the three-month periods ended March 31, 1998 and 1997 included in this
report.
The following discussion includes certain forward-looking statements.
Those statements may involve a number of risks and uncertainties, which could
cause actual results to differ materially from the expectation stated,
including the following: slower than expected growth in the Company's
business, deterioration of business conditions generally or specifically in
the banking industry, regulatory changes involving banking, competitive
factors, and general market conditions.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 AND 1997
OVERVIEW
The Company reported net income of approximately $1,279,000, or $.31
basic net income per common share, for the three months ended March 31, 1998,
compared to net income of approximately $1,071,000, or $.25 basic earnings per
common share, for the same period in 1997. This represents an increase in net
income of 19.4 percent. The increased earnings during the first quarter of
1998 reflected primarily the expansion of the Company's interest-earning
assets and increased net interest income. At March 31, 1998, interest-earning
assets increased 20.3 percent as compared to March 31, 1997.
NET INTEREST INCOME
Net interest income increased 24.0 percent for the three months ended
March 31, 1998 as compared to the same period in 1997. The net increase
resulted from higher earning asset volumes generating increased interest
income which exceeded the increase in interest expense.
Total interest income increased approximately $896,300 (or 21.9%) for the
three months ended March 31, 1998 as compared to the same period in 1997. The
increase was primarily the result of an increase in the volume of loans and
investment securities available-for-sale.
Total interest expense increased approximately $165,100 (or 15.7%) for
the three month ended March 31, 1998 as compared to the same period in 1997.
The increase was primarily due to increased volume in interest bearing demand
deposits, savings and time deposits partially offset by a decrease in other
borrowings.
LOAN LOSS PROVISION
The loan loss provision decreased $12,217 for the three months ended
March 31, 1998 as compared to the same period in 1997. Management believes
the current loan loss provision maintains the reserve for loan losses at an
appropriate level. The Bank's ratio of reserve for loan losses to total loans
was 1.28 percent at March 31, 1998 compared to 1.32 percent at December 31,
1997.
NONINTEREST INCOME
Total noninterest income increased 26.8 percent for the three months
ended March 31, 1998 as compared to the same period in 1997. The increase was
primarily due to an increase in service charges, mortgage loan origination and
processing fees and other income, which were partially offset by a decrease in
gains on sales of mortgage loans.
11
<PAGE>
The increase in service charge income was primarily due to an increase in
the volume of deposit activity during the periods presented. The slight
decrease in net gains on sales of mortgage loans for the three months ended
March 31, 1998 was primarily attributable to an acceleration of mortgage
servicing rights amortization expense related to recent rapid refinance
activity within the Bank's portfolio of serviced mortgage loans.
NONINTEREST EXPENSE
Total noninterest expense increased 29.9 percent for the three months
ended March 31, 1998 as compared to the same period in 1997. The increase was
primarily the result of increased personnel and operating expenses due to
continued growth of the Company.
INCOME TAXES
Income tax expense increased between the periods presented primarily as a
result of higher pre-tax income.
FINANCIAL CONDITION
The Company's total assets increased 3.0 percent to $249.8 million at
March 31, 1998 compared to $242.6 million at December 31, 1997, primarily due
to increases in net loans and mortgage loans held for sale, which were offset
in part by a decrease in cash and due from banks and investment securities
available-for-sale. The higher total assets were funded primarily by an
increase in deposits, which also compensated for the payoff of a $5 million
FHLB term borrowing. Loan demand was steady with total loans increasing 5.7
percent to $164.4 million at March 31, 1998 compared to $155.6 million at
December 31, 1997. Deposits increased 5.3 percent to $222.5 million at March
31, 1998 compared to $211.3 million at December 31, 1997. The increase in
deposits was the result of increases in all categories of deposits partially
offset by a decrease in other borrowings. One of the contributing factors to
the Company's increased deposits is that the Bank emphasizes the development
of core deposit relationships which such deposits provide a stable source of
funds for operations at a relatively low cost. Also, core deposit customers
are more likely to purchase other banking services. Core deposits include
demand, interest bearing demand and savings deposits. The Bank's core
deposits aggregated approximately $199.7 million at March 31, 1998.
LIQUIDITY
The Company analyzes and manages its liquidity to ensure the availability
of sufficient funds to meet depositor withdrawals as well as to fund borrowing
needs of its loan customers. The Bank's stable deposit base is the foundation
of it's long-term liquidity since these funds are not subject to significant
volatility as a result of changing interest rates and other economic factors.
A further source of liquidity is the Bank's ability to borrow funds from a
variety of reliable counter parties. In addition, the Bank has substantial
available-for-sale investment securities which could be liquidated to provide
a tertiary source of liquidity. The Bank is also a member of the Federal Home
Loan Bank, Seattle, Washington, which provides secured borrowings and other
funding opportunities for liquidity purposes.
Management believes that the Bank's existing sources of liquidity will
enable the Bank to fund its requirements in the normal course of business.
CAPITAL RESOURCES
During the three months ended March 31, 1998 the Company's total capital
increased slightly to $24.3 million, or 9.7 percent of total assets. The
increase was primarily due to the Company's net income of $1,279,221 for the
three months ended March 31, 1998 and the net change in unrealized gains on
investment securities available-for-sale of $37,366. These increases to
capital were partially offset by the payment of $759,879 for shares
repurchased under the stock repurchase plan (27,376 shares) and the payment of
a cash dividend declared in January, 1998, totaling $496,966.
12
<PAGE>
In September 1997, the Company announced the establishment of a stock
repurchase plan. The plan authorized management to repurchase up to 106,648
shares of the Company's common stock through the open market or in privately
negotiated transactions in accordance with all applicable State and Federal
laws and regulations. In December 1997, the Board of Directors approved a
program to repurchase an additional 2.5 percent of the Company's common stock
outstanding during 1998. At March 31, 1998 there are 67,288 shares remaining
to be repurchased under the plan.
At March 31, 1998, the Company's Tier 1 and total risked-based capital
ratios under the Federal Reserve Board's ("FRB") risk-based capital guidelines
were approximately 12.4% and 13.5%, respectively. The FRB's minimum
risk-based capital ratio guidelines for Tier 1 and total capital are 4% and
8%, respectively.
PART II - OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No exhibits were required to be filed for the quarter ended
March 31, 1998.
(b) Reports on Form 8-K. The Company did not file any reports on
Form 8-K during the quarter ended March 31, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASCADE BANCORP
-----------------------------------------
(Registrant)
Date 5/5/98 By /s/ Roger J. Shields
----------------- -----------------------------------------
Roger J. Shields, President
Date 5/5/98 By /s/ Patricia L. Moss
----------------- -----------------------------------------
Patricia L. Moss,Executive Vice President
Form 10-Q, March 31, 1998
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