Costs associated with its recent acquisition pushed Cascade Bancorp, in Bend, Ore., into the red in the second quarter.
Cascade reported a loss of $4.7 million for the quarter after it recorded $10 million in charges related to its May acquisition of Home Federal Bancorp in Nampa, Idaho.
The loss compares to a $46.4 million profit in the same quarter last year. That quarter's results were lifted by the reversal of the company's valuation allowance against its deferred tax asset. In the first quarter, the company reported earnings of $900,000.
The $2.3 billion-asset company completed Home Federal's conversion a week after the deal was completed. Most conversions, which include things like system changes and branch closures, are stretched out over months or longer, depending on the size of the deal. The quick conversion likely consolidated much of the costs into one quarter. The company said in a press release on Thursday that the acquisition-related expenses that led to the loss included severance, branch consolidation costs, disposal of excess equipment and payment of legal and professional services.
The company expedited the conversion in an effort to quickly show the deal's value, based on its cost saves, to the market and then focus on the revenue-building opportunities. Home was initially set to sell itself to Banner Corp. for $197 million, but the deal included a go-shop provision and Cascade offered Home $266 million soon thereafter. Banner declined to match it.
"We are extremely pleased with having both closed and integrated Home Federal Bancorp during the last two weeks of May," said Terry Zink, president and chief executive of Cascade, in a press release. "While there is still more to do, we expect the third and fourth quarters of 2014 will demonstrate the potential earnings power of the combined banks as we build momentum."
The addition of Home increased Cascade's deposits by 66.4% from the end of 2013, to $1.9 billion, and it pushed loans up 41%, to $1.4 billion.
Organic loan growth was "muted" in the quarter, the company said in a press release, because production was offset by a "top 10" customer who used excess liquidity to pay off a loan.
The company's net interest income was $15.7 million, up 37% a year earlier, while its noninterest income was $4.8 million, also up 37%.