Cascade Bancorp announced that Bank of the Cascades, a wholly-owned subsidiary of Bancorp, has agreed to sell approximately $108 million of certain non-performing, substandard, and related performing loans. Included in the sale is an additional $2 million of other real estate owned by the Bank.
Subject to closing the sale transaction, the Bank will receive proceeds from the sale of approximately $58 million, subject to adjustment as set forth in the purchase agreements, while incurring approximately $4 million in closing related costs. The sale will result in an estimated charge-off of approximately $55 million with an additional loss on the sale of OREO of approximately $1 million. The effect on the reserve for loan losses and subsequent provisioning is currently under evaluation and will be disclosed in conjunction with the Company’s regular reporting of its third quarter 2011 results.
The sale transaction is expected to close before the end of the third quarter of 2011 and is expected to result in a reduction of non-performing assets by approximately 38% leaving a remaining balance of approximately $60 million. Non-performing assets at June 30, 2011 were approximately $98 million including approximately $37 million of OREO. Bancorp’s management believes upon completion of this transaction, the Bank will remain well-capitalized with a Tier 1 leverage ratio greater than 10.00 percent.
“The successful capital raise completed by the Bank in early 2011 positioned the Bank to take this action to reduce its non-performing assets. The outcome will enable Cascade to fully focus its attention on its future as a regional bank supporting businesses and consumers with lending and deposit services,” said Patricia L. Moss, chief executive officer. “Consummating this transaction will be a significant step forward for the Company.”
Details of the assets to be sold, by loan category, are as follows:
|
Carrying Amount of Assets Prior to Sale |
||||||||||
|
Non-Performing |
Substandard |
Performing & |
Customer |
|||||||
|
Commercial real estate: |
||||||||||
|
Owner occupied |
$ 2,654 |
$ 13,071 |
$ 4,905 |
$ 21,766 |
||||||
|
Non-owner occupied and other |
1,698 |
15,428 |
13,150 |
31,406 |
||||||
|
Total commercial real estate loans |
4,352 |
28,499 |
18,055 |
53,172 |
||||||
|
Construction: |
||||||||||
|
1-4 Family |
1,242 |
85 |
– |
1,474 |
||||||
|
Other |
28,848 |
13,168 |
349 |
65,621 |
||||||
|
Total construction loans |
30,090 |
13,253 |
349 |
67,095 |
||||||
|
Residential real estate: |
||||||||||
|
Term |
241 |
3,058 |
383 |
3,683 |
||||||
|
Line of credit and other |
– |
1,523 |
– |
1,523 |
||||||
|
Total residential real estate loans |
241 |
4,581 |
383 |
5,206 |
||||||
|
Commercial and industrial |
3,124 |
5,648 |
1,452 |
16,842 |
||||||
|
Consumer and other |
– |
176 |
8 |
184 |
||||||
|
$ 37,807 |
$ 52,157 |
$ 20,247 |
$ 142,499 |
|||||||
Cascade Bancorp (NASDAQ: CACB), headquartered in Bend, Oregon, and its wholly-owned subsidiary, Bank of the Cascades, operates in Oregon and Idaho markets. Founded in 1977, Bank of the Cascades offers full-service community banking through 32 branches in Central Oregon, Southern Oregon, Portland/Salem and Boise/Treasure Valley. The Bank has a business strategy that focuses on delivering the best in community banking for the financial well-being of customers and shareholders. It executes its strategy through the consistent delivery of full relationship banking focused on attracting and retaining value driven customers. For further information, please visit our web site at http://www.botc.com.
