Cascade Bancorp (“Bancorp”), is an Oregon chartered bank holding company formed in 1990, headquartered in Bend, Oregon. Bancorp conducts its business activities through its wholly-owned subsidiary, Bank of the Cascades (the “Bank”) which provides a broad range of commercial and retail banking services (collectively, Bancorp and the Bank are referred to as “the Company” or “Cascade”). At December 31, 2008, the Company had total consolidated assets of approximately $2.3 billion, net loans of approximately $1.9 billion and deposits of approximately $1.8 billion.
Overview & Business Strategy
Management and directors of Cascade have developed and implemented long-term goals and strategies with the objective of achieving sustainable, above peer diluted earnings per share (EPS) growth for its shareholders while progressively serving the banking and financial needs of its customers and communities. The Company’s business strategies include: 1) operate in and expand into growth markets; 2) strive to recruit and retain the best relationship bankers in such markets; 3) consistently deliver the highest levels of customer service; and 4) apply state-of-the-art technology for the convenience of customers. Cascade’s mission statement is to “deliver the best in community banking for the financial well-being of customers and shareholders.” As is detailed elsewhere in this document, the current downturn in the economy and related declines in real estate values have had a direct and adverse affect on the financial condition and results of operations for the Company, making near term execution of its growth related strategies problematic until such time as economic conditions stabilize and/or improve. In the interim, the Company plans to conserve its capital and liquidity resources in light of the uncertain duration and severity of the present cycle.
The Company is managed by legal entity and not lines of business and therefore it presents one principal operating segment for financial reporting purposes. For more information regarding the Company’s operating segment, see Note 1 to the Company’s consolidated financial statements included under “Basis of Presentation and Summary of Significant Accounting Policies.”
The Company’s original market was Central Oregon, where in the past years population has grown in the 96th percentile nationally due largely to in-migration of those seeking the quality of life offered by the region. The Company has grown with the community to a point of holding a 26% deposit market share of this market. The combination of a historically fast growing economy and powerful market share contributed to sustained high performance until the 2007 economic downturn. In past years, management has sought to augment its banking footprint by expanding into other attractive Oregon markets, including Northwest and Southern Oregon. Loans and deposits in these markets total a combined 35% and 28%, respectively of total Company balances. In April of 2006, Cascade acquired Farmers and Merchants Bank (F&M) in Boise, Idaho. F&M held the top community bank deposit market share of 6.9% in Ada County at that time. At December 31, 2008, this newest market held loans and deposits of approximately 30% and 21%, respectively of total Company balances. This expansion furthered the diversification of the Company’s banking business into multiple states and markets.
Bank of the Cascades
The Bank is an Oregon State chartered bank, opened for business in 1977 and now operates 33 branches serving communities in Central, Southwest and Northwest Oregon, as well as in the greater Boise, Idaho area. The Bank offers a broad range of commercial and retail banking services to its customers. Lending activities serve small to medium-sized businesses, municipalities and public organizations, professional and consumer relationships. The Bank provides commercial real estate loans, real estate construction and development loans, commercial and industrial loans as well as consumer installment, line-of-credit, credit card, and home equity loans. It originates and services residential mortgage loans that are typically sold on the secondary market. The Bank provides consumer and business deposit services including checking, money market, and time deposit accounts and related payment services, internet banking, electronic bill payment and remote deposits. In addition, the Bank serves business customer deposit needs with a suite of cash management services. The Bank also provides investment and trust related services to its clientele.
With the sustained increase in population and economy within its Oregon markets, the Company has enjoyed rapid growth in assets and profitability over the past decade. More recently, the Company has diversified its geographic footprint by expanding into growth markets in the greater Boise, Idaho area with its April 2006 acquisition of F&M (see “Completed Acquisition of F&M Holding Company” below.)
The principal office of the Bank is at 1100 NW Wall Street, Bend, Oregon 97701, 541-385-6205.
Cascade Bancorp Statutory Trusts I, II, III and IV
Cascade Bancorp Statutory Trusts I, II, III and IV are wholly-owned subsidiary trusts of Bancorp formed to facilitate the issuance of pooled trust preferred securities (“trust preferred securities”). The trusts were organized in December 2004, March 2006, and June 2006, respectively, in connection with four offerings of trust preferred securities. For more information regarding Bancorp’s issuance of trust preferred securities, see Note 12 “Junior Subordinated Debentures” to the Company’s audited consolidated financial statements included in Item 8 of this report.
The Company views its employees as an integral resource in achieving its strategies and long term goals, and considers its relationship with its employees to be strong. Bancorp has no employees other than its executive officers, who are also employees of the Bank. The Company had 545 full-time equivalent employees as of December 31, 2008, down from 559 at the prior year-end. This modest decrease primarily resulted from attrition of non-essential staff positions and realignment of positions to respond to current market conditions.