In reporting a $12.6 million third-quarter loss, Cascade Bancorp of Bend, Ore., also announced it has a second regulatory order — and a private-equity firm willing to give it an infusion.
The $2.27 billion-asset Cascade announced Thursday after the market closed that a fund managed by Donald Marron's Lightyear Capital had agreed to invest $40 million in the company. That agreement, in turn, allowed Cascade to finally strike a deal with David F. Bolger, its largest shareholder. For six months, Bolger had discussed investing $25 million in Cascade, provided it line up additional capital.
Still, both the Lightyear and Bolger agreements depend on Cascade's ability to raise an additional $85 million through a public offering. Cascade filed a shelf registration last month, and last week it asked shareholders to increase the number of shares outstanding from 45 million to 300 million.
The company said the combined $150 million would put its Bank of the Cascades well in excess of regulatory capital requirements. In August, the Federal Deposit Insurance Corp. ordered the bank to boost its Tier 1 leverage ratio to 10% by late January. The ratio dropped from 6.55% at June 30 to 4.22% at Sept. 30 as credit costs continued to eat away at capital.
On top of the FDIC order, Cascade said last week it had an agreement with the Federal Reserve that requires the company to submit a capital plan within 60 days.
The net loss for the third quarter compared with a $300,000 profit a year earlier. The loss was attributed primarily to a $22 million provision for loan losses, up 43% from a year earlier.