Cascade Financial Reports Sixth Consecutive Record Quarter: Profits Up 54% With Net Income Rising To $1.8 Million and EPS of $0.28.Business Editors EVERETT Everett. 1 City (1990 pop. 35,701), Middlesex co., E Mass., an industrial suburb of Boston, on the Mystic River; settled c.1643, set off from Malden 1870, inc. as a city 1892. , Wash.--(BUSINESS WIRE)--April 22, 2002 Cascade A connected series of devices or images. It often implies that the second and subsequent device takes over after the previous one is used up. For example, cascading tapes in a dual-tape backup system means the second tape is written after the first one is full. Financial Corporation (Nasdaq:CASB CASB Cost Accounting Standards Board CASB Colorado Association of School Boards CASB Canadian Aviation Safety Board CASB Catalogs and Surveys Branch CASB Chinese Association at Stony Brook CASB Council for the Advancement of Small Business ), parent company of Cascade Bank, today reported record profits and revenues for the first quarter as margins continued to expand and efficiencies improved company-wide. Profits were up 54% to $1.8 million, or $0.28 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the quarter ended March 31, 2002 compared to $1.2 million, or $0.18 per diluted share for the same period last year. "We are continuing our successful transition to a commercial bank," said Carol K. Nelson, Cascade Bank President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Steady improvement in return on equity and assets, increased interest margin and improving efficiencies are indicators of that transition. Our strategy, which emphasizes building strong customer relationships through high quality service, has contributed to our sixth consecutive record quarter. We will be reviewing our progress at our upcoming annual meeting and invite shareholders and interested investors to join us on Wednesday Wednesday: see week. , May 8, at 6:30 p.m. at the Everett Golf & Country Club." Financial Highlights for the quarter ended 03/31/02 compared to 03/31/01 -- Net income increased 54% to $1.8 million, or $0.28 per diluted share. -- Return on average equity increased to 15.33%, compared to 11.47%. -- Return on average assets grew to 0.98% from 0.67%. -- Net interest margin expanded to 3.46% from 2.90%. -- The efficiency ratio (operating expenses to revenues) improved to 54% from 64%. -- Business loans grew to 22.3% of the total loan portfolio compared to 18.4%. -- Asset quality remained strong with nonperforming loans to total loans at 0.48%. -- Allowance for loan losses grew to 1.15% of total loans compared to 0.98%. "We are extremely proud of the exceptional earnings growth we have achieved. While we recognize sustaining such high earnings growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. will be difficult in this economy, we believe that achieving our target EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth at a rate of 15% is reasonable. Our strategic plan is geared to enhance shareholder value over the long term, and we are on track to meet these objectives," said Nelson. March 31 Quarterly Operating Results For the quarter, Cascade's net income increased 54% to $1.8 million, or $0.28 per diluted share, compared to $1.2 million, or $0.18 per diluted share reported for the like quarter a year ago. Revenues (net interest income before provision for loan losses plus non-interest income) grew 28% to $7.4 million, compared to $5.8 million in the March quarter of the previous year. The provision for loan losses was $700,000 for the quarter ended March 31, 2002, compared to $290,000 for the quarter ended March 31, 2001. Net interest income increased 28.0% to $6.5 million for the quarter ended March 31, 2002 compared to $5.0 million in the like quarter a year ago. Net interest income grew as the cost of liabilities declined more than the yield of assets. The stability of rates in the first quarter of 2002 allowed the repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing of deposits to catch up with the decline in asset yields associated with the 475 basis points drop in the prime rate. Other income increased 23% to $972,000, which includes $527,000 in gains on sales of loans, securities and real estate. This compares to other income of $792,000 including total gains of $214,000 for the same period a year ago. Profits from the sale of a former REO reo Noun NZ a language [Maori] property held for investment accounted for the majority of this difference in gain from sales. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 7% to $4.0 million compared to $3.7 million in the previous year. "We plan to leverage our infrastructure, keeping growth of overhead expenses low, while not sacrificing service or credit quality," commented Nelson. Cascade's efficiency ratio improved to 54% in the quarter compared to 64% in the quarter a year ago. Return on average equity improved substantially reaching 15.33% for the quarter ended March 31, 2002, from 11.47% for the like quarter in the previous year. "We are pleased with the steady improvement in our return on equity and assets, putting Cascade in a good position relative to other comparable banks," said Lars Johnson, Chief Financial Officer. "As we continue our transition to a commercial bank, we remain focused on expanding net margin and improving our efficiency ratio, as reflected at 3.46% and 54% respectively." Asset Management Total assets increased 7% to $764 million at March 31, 2002 from $715 million a year ago. Investment securities increased 38% to $167 million, from $121 million as of March 31, 2001. The growth in the investment portfolio offset the reduction in the residential loan portfolio, increasing liquidity and more effectively leveraging capital. Total loan levels were down slightly in the first quarter from March 31, 2001 to $566 million, as residential mortgage loan refinancing Refinancing An extension and/or increase in amount of existing debt. exceeded loan production. "This reduction in residential mortgages in our portfolio was nearly offset by the increase in commercial lending, which is right in line with our strategic objectives," said Johnson. The following summary reflects the bank's success in growing its business loans and diversifying its loan portfolio: ---------------------------------------------------------------------- Types of Loans 03/31/2002 % of Portfolio 03/31/2001 % of Portfolio ---------------------------------------------------------------------- ($ in thousands) ---------------------------------------------------------------------- Business $ 125,970 22.3% $ 104,563 18.4% ---------------------------------------------------------------------- Real Estate Construction (net) 72,119 12.7% 59,707 10.5% ---------------------------------------------------------------------- Commercial Real Estate 62,239 11.0% 58,054 10.2% ---------------------------------------------------------------------- Home Equity and Consumer 55,667 9.8% 62,076 10.9% ---------------------------------------------------------------------- Residential 142,902 25.3% 175,573 30.8% ---------------------------------------------------------------------- Multifamily 106,900 18.9% 109,244 19.2% ---------------------------------------------------------------------- Total Loans $ 565,797 100% $ 569,217 100% ---------------------------------------------------------------------- Credit Quality Credit quality compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to industry levels. The bank's ratio of nonperforming loans to total loans was 0.48% and allowances for loan losses to total loans was 1.15% at the end of the quarter. "Net charge offs this quarter were $472,000, compared to $99,000 for the quarter ended March 31, 2001. However, $305,000 of this amount was charged to specific reserves established in prior periods," said Johnson. "While the local economy has yet to show a significant downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. , management is closely monitoring credit quality. We are also focusing on identifying potential problem credits and any possible loss exposure as early as possible. We continue to build reserves for future possible loan losses as we increase the commercial lending portion of our portfolio," added Johnson. Liabilities and Capital Management Cascade's deposits increased 12% from a year ago to $441 million, with increases in all deposit categories due to a heightened emphasis on generating core deposits. The success of our deposit gathering led to a 4% reduction in FHLB FHLB Federal Home Loan Bank advances which were $219 million as of March 31, 2002. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $49 million, or $7.82 per share in the first quarter, up 14% from $43 million, or $7.09 per share at March 31, 2001. Capital ratios continue to be above the well-capitalized guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. established by regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. . The corporation's capital/asset ratio (including trust preferred securities) at quarter end was 7.74% compared to 7.41% a year ago. Established in 1916, Cascade Bank, the only operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of Cascade Financial Corporation, is a state chartered commercial bank headquartered in Snohomish Snohomish can refer to:
Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. rating for serving the credit needs of the local community. Cascade Bank operates 14 full service offices, located in Everett, Lynnwood Lynnwood, city (1990 pop. 28,695), Snohomish co., W central Wash., a residential and industrial suburb of Seattle; inc. 1959. Aerospace parts, communications and electrical equipment, electronic components, precious metal jewelry, and scales and balances are among , Marysville Marysville is the name of several places. Locations Australia
John Stevens, 1749–1838, b. New York City, was graduated from King's College (now Columbia Univ.) in 1768. and Bellevue Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. . This document may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Those factors include, but are not limited to, impact of the current national and regional economic recession on small business loan demand in the Puget Sound Puget Sound (py `jĕt), arm of the Pacific Ocean, NW Wash., connected with the Pacific by Juan de Fuca Strait, entered through the Admiralty Inlet and extending in two arms c. area, loan
delinquency delinquencyCriminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. rates, the bank's ability to continue to attract quality commercial business, interest rate movements, changes in the demographic See demographics. make-up Make-up The amount of deficiency when a cash flow or capital item is deficient. For example, an interest make-up relates to the interest amount above a ceiling percentage. of the Company's market, fluctuation Fluctuation A price or interest rate change. in demand for the Company's products and services, the Company's ability to attract and retain qualified people, and other factors. For a discussion of factors that could cause actual results to differ, please see the Company's publicly available Securities and Exchange Commission filings, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 31, 2001.
FINANCIAL HIGHLIGHTS
INCOME STATEMENT
(Dollars in thousands Three Months Ended
except per share amounts) March 31, March 31, %
(Unaudited) 2002 2001 Change
---- ---- ------
Interest income $ 13,373 14,319 -7%
Interest expense 6,919 9,277 -25%
--------------- ---------------
Net interest income 6,454 5,042 28%
Provision for loan losses 700 290 141%
--------------- ---------------
Net interest income after
provision for loan losses 5,754 4,752 21%
Other income
Gain on sale of loans 118 89 33%
Gain on sale of securities 33 79 -58%
Service fees 402 533 -25%
Gain on sale of real estate 376 46 717%
Other 43 45 -4%
--------------- ---------------
Total other income 972 792 23%
--------------- ---------------
Total income 6,726 5,544 21%
Other expense
Salary and employee benefits 2,141 2,089 2%
Other non-interest expenses 1,729 1,633 6%
Debt prepayment fees 105 -
--------------- ---------------
Total other expense 3,975 3,722 7%
Income before Federal income
taxes 2,751 1,822 51%
Federal income taxes 903 623 45%
--------------- ---------------
Net Income $ 1,848 1,199 54%
=============== ===============
EARNINGS PER SHARE INFORMATION
Earnings per share, basic $ 0.29 0.20 45%
Earnings per share, diluted 0.28 0.18 56%
Weighted average number of
shares outstanding
basic 6,296,989 6,070,274
diluted 6,529,829 6,481,242
PERFORMANCE MEASURES
Return on average equity 15.33% 11.47% 34%
Return on average assets 0.98% 0.67% 46%
Efficiency ratio 53.53% 63.79% -16%
Net interest margin 3.46% 2.90% 19%
BALANCE SHEET
March 31, December 31, March 31,
2002 2001 2001
--------- ----------- ---------
(Dollars in thousands
except per share amounts) (Unaudited) (Audited) (Unaudited)
Cash and due from banks $ 8,384 8,535 7,926
Interest bearing deposits 14,990 3,087 7,466
Investment securities 166,719 156,327 120,853
Loans, net 556,877 576,226 560,958
Premises and equipment 8,378 8,620 9,052
Other assets 8,536 9,218 9,040
--------- ----------- ---------
Total assets 763,884 762,013 715,295
========= =========== =========
Deposits 440,706 419,980 392,269
FHLB advances 218,500 226,500 227,551
Securities sold under agreement
to repurchase 36,635 49,792 33,161
Accrued expenses and other
liabilities 8,830 8,064 9,302
--------- ----------- ---------
Total liabilities 704,671 704,336 662,283
--------- ----------- ---------
Trust preferred securities 10,000 10,000 10,000
Stockholders' equity
Common stock & paid-in capital 10,982 10,484 5,382
Retained earnings 39,861 38,012 38,157
Treasury Stock (1,224) (972) (584)
Accumulated comprehensive
gain/(loss) (406) 153 57
--------- ----------- ---------
Total stockholders' equity 49,213 47,677 43,012
--------- ----------- ---------
Total liabilities and equity $ 763,884 762,013 715,295
========= =========== =========
Book value per common share 7.82 7.71 7.09
ASSET QUALITY
Net loan charge-offs $ 472 89 99
Net charge-offs/total loans 0.08% 0.02% 0.02%
Nonperforming loans/total loans 0.48% 0.32% 0.49%
Allowance for loan losses/
nonperforming loans 235% 315% 183%
Allowance for loan losses/total
loans 1.15% 1.09% 0.98%
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