Capital Ratios to Remain Above Well Capitalized Levels
Cascade Financial Corporation (Nasdaq:CASB) parent company of
Cascade Bank today announced that it has entered into agreements to
sell the assets associated with its two largest land acquisition
and development loans, further reducing the Company's exposure to
builder lots designated for residential development. The two
non-performing loans represent the sale of 397 residential lots in
King and Snohomish Counties.
Cascade now expects to take a provision for loan losses of
approximately $25 to $27 million in the first quarter of
2010. The company's increased provision expense is the
result of increased charges associated with the two loans as well
as updated appraisals on other real estate loans.
On the first of the two agreements, the company will record a
$5.6 million charge on a $13 million loan that the bank has now
foreclosed upon. The collateral for the loan consisted of 263
lots located in Snohomish County, which were converted to Real
Estate Owned in March 2010. The Bank has entered into a letter
of intent for the planned sale of these lots, half of which are
scheduled to close in the second quarter, and the remaining lots
are expected to close in the third quarter.
On the second of the two agreements, the company will record an
$8.2 million charge from the sale of a $17 million land acquisition
and development loan expected to close in the second
quarter. The collateral for the loan consists of 134 lots
located in King County. Both transactions are subject to
customary closing conditions and there can be no guarantee they
will close as Cascade currently anticipates.
Upon closing, Cascade's land acquisition and development
portfolio is expected to decline to approximately 11% of the total
loan portfolio, down from 16% at the end of FY 2009. As of
March 31, 2010, the land acquisition and development portfolio had
declined from $163 million to $134 million, or by 18%.
"Housing and land prices have not yet stabilized in the Pacific
Northwest, resulting in lower lot values," stated Rob Disotell,
Chief Credit Officer. "Consequently, we also are recording
additional impairments of approximately $13 million on other loans
to reflect recently updated appraisals on real estate collateral
securing loans in our portfolio. While we never welcome
declining asset values, we are pleased to have negotiated sales to
resolve our two largest land acquisition and development
loans."
Associated with the increased loan loss provisioning, Cascade
has determined that a deferred tax asset valuation allowance is
necessary. First quarter results will include an income tax
provision of approximately $3.2 million as the result of recording
the deferred tax valuation allowance.
"Further deterioration in real estate values and the residential
construction market continue to negatively impact community banks
that have supported local builders," said Carol K. Nelson,
President and CEO. "As a result of declining land values and
the tax consequences relating to the losses we have incurred in the
past year, the estimated loss for the first quarter is expected to
be within a range of $27 to $29 million. Despite the
anticipated loss, Cascade expects to maintain capital ratios above
regulatory levels for well capitalized banks."
Cascade expects to report first quarter 2010 results after the
market closes on Wednesday, April 28, 2010. The following
day, on Thursday, April 29, Cascade's management team will discuss
the company's operation results in a conference call at 11:00 a.m.
PDT (2:00 p.m. EDT). The call will also be broadcast live via
the internet.
Interested investors may listen to the call live or via replay
at www.cascadebank.com. Investment professionals are invited
to dial (480) 629-9724, using access code 4272631 to participate in
the call. A replay will be available for one week at (303)
590-3030, using access code 4272631.
Cascade's Annual Shareholder Meeting will be held on Tuesday,
June 22, 2010 at 6:30 p.m. PDT at the Everett Civic Auditorium,
located at 2416 Colby Avenue in Everett, WA.
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 has
proudly served the Puget Sound region for over 90 years and
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.
Forward-Looking Statements
Certain of the statements contained herein that are not
historical facts are forward-looking statements within the meaning
of the Private Securities Reform Act. CASB's actual results
may differ materially from those included in the forward-looking
statements. Forward-looking statements are typically
identified by words or phrases such as "believe," "expect,"
"intend," "may increase," "may fluctuate," and similar expressions
or future or conditional verbs such as "will," "should," "would,"
and "could." These forward-looking statements involve risks
and uncertainties including, but not limited to, economic
conditions, portfolio growth, the credit performance of the
portfolios, including bankruptcies, and seasonal factors; changes
in general economic conditions including the performance of
financial markets, prevailing inflation and interest rates,
realized gains from sales of investments, gains from asset sales,
and losses on commercial lending activities; results of various
investment activities; the effects of competitors' pricing
policies, of changes in laws and regulations on competition and of
demographic changes on target market populations' savings and
financial planning needs; industry changes in information
technology systems on which we are highly dependent; failure of
acquisitions to produce revenue enhancements or cost savings at
levels or within the time frames originally anticipated or
unforeseen integration difficulties; the adoption by CASB of an
FFIEC policy that provides guidance on the reporting of delinquent
consumer loans and the timing of associated credit charge-offs for
financial institution subsidiaries; and the resolution of legal
proceedings and related matters. In addition, the banking
industry in general is subject to various monetary and fiscal
policies and regulations, which include those determined by the
Federal Reserve Board, the Federal Deposit Insurance Corporation,
and state regulators, whose policies and regulations could affect
CASB's results. These statements are representative only on
the date hereof, and CASB undertakes no obligation to update any
forward-looking statements made.
CONTACT: Cascade Bank
Investor Contacts:
Carol K. Nelson, CEO
Rob Disotell, CCO
425.339.5500
www.cascadebank.com
Sard Verbinnen & Co
Media Contacts:
Paul Kranhold
Diane Henry
415.618.8750
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