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Bank Of The Cascades Second Quarter 2013 Results With Continued Earnings Resulting From A Non-Recurring Tax Benefit Arising From Recognition Of Deferred Tax Asset

Stocks in this article: CACB

BEND, Ore., Aug. 9, 2013 /PRNewswire/ -- Cascade Bancorp (NASDAQ: CACB) ("Company") the holding company for Bank of the Cascades ("Bank"), announced 2013 second quarter results showing continued growth. Net income and shareholder equity was significantly and positively affected by the non-recurring release of our deferred tax asset ("DTA") valuation allowance. The release of the DTA allowance is recorded as a non-recurring $51.7 million benefit to income taxes in the Company's income statement. The recognition of DTA indicates that it is more likely than not that future taxable income will be sufficient to realize the benefit of the Company's tax profile over time. Also during the second quarter of 2013 the Company recorded non-recurring charges which we anticipate will position the Company for improved profitability going forward. The largest of these charges was a $3.8 million prepayment penalty to extinguish high rate FHLB advances. This payoff is expected to reduce Company borrowing costs in the future by approximately $500 thousand per quarter. 

With the release of DTA at June 30, 2013, stockholders' equity increased to $187.9 million or $3.95 per share as compared to $140.8 million or $2.97 per share at December 31, 2012 when net DTA was nil.

The full details of the Company's second quarter 2013 results were filed with the SEC in the Company's quarterly report on Form 10-Q on August 9, 2013.

Financial Highlights of the Second Quarter and period ended June 30, 2013

  • Net Income for the Second Quarter of 2013: After recognizing the non-reoccurring DTA, partially offset by the $3.8 million prepayment penalty to extinguish high rate FHLB advances, the Bank reported second quarter 2013 net income of $46.4 million
  • Earnings per Share: Diluted earnings per share for the six months ended June 30, 2013, which were largely influenced by recognition of the non-recurring DTA, were $1.02 per common share compared to $0.06 per share for the six months ended June 30, 2012.
  • Stockholder Equity/Book Value Per Share:  Stockholder equity increased to $187.9 million or $3.95 per share at June 30, 2013 as compared to $140.8 million or $2.97 per share at December 31, 2012 due to DTA recognition.
  • Loans: Gross loans up $54.4 million or 6.34% compared to December 31, 2012.
  • Deposits: Total deposits up $28.0 million or 2.60% compared to December 31, 2012.
  • Credit Quality: Reserve for loan losses at June 30, 2013 was $22.7 million or 2.49% of loans compared to $27.3 million or 3.17% of loans at December 31, 2012.
  • Credit Quality: Non-performing assets were 0.84% of total assets at June 30, 2013 compared to 1.94% at December 31, 2012.
  • Credit Quality: Substandard loans were reduced by 54.06% to $58.2 million at June 30, 2013 as compared to December 31, 2012. Net charge-offs for the quarter were $2.9 million mainly related to resolution of substandard loans.
  • Net Interest Margin ("NIM"): NIM was 3.75% at June 30, 2013 compared to 4.11% at December 31, 2012.

"Recognition of the deferred tax asset is a regular occurrence at banks that have rebounded from periods of operating losses. We believe the DTA was already largely built into Cascade's current stock price," commented Terry Zink, President and Chief Executive Officer. "However with the DTA recognition it reinforces the strength of our capital and our confidence in sustainable profitability into the future. In doing so we believe this action underscores that Cascade has fully returned to its standing as a premier banking franchise in the Northwest."  

Zink continued, "Most importantly for our customers, this means Cascade stands strong in providing business and consumer credit as well as mortgage loans and advanced technology to make community banking convenient. We are committed to growing the health and prosperity of our local economies by partnering with customers and neighbors who chose the advantages of investing in their communities by banking local."

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