Cascade Bancorp's shares plunged Friday on news that the Bend, Ore., company expects to report weak fourth-quarter earnings due to losses on bad residential construction loans.
The $2.4 billion-asset Cascade said late Thursday that it expects to record a $7.5 million, fourth-quarter loan-loss provision and charge off about $3.8 million on loans affected by the housing downturn. As a result the company estimated that fourth-quarter net income would be $5.4 million, or 19 cents per share, down 47% from the year earlier.
For the full year, it is projecting net income of $35.2 million, compared to $35.7 million in 2006.
The company also said that nonperforming assets would probably rise by $20 million, to $41 million, or 2% of total loans at yearend, compared with $3 million, or 0.16% of total loans a year earlier. Cascade also said that its margin was likely to decline to 4.94%, compared to 5.24% in the previous quarter.
"The softness in our real estate markets has worsened in the past quarter, putting increased pressure on cash flows of developers and builders of new homes and subdivisions," president and chief executive officer Patricia L. Moss said in a press release.
The company expects to release its fourth-quarter results on Jan. 23. Cascade's stock was trading at $12.05 late Friday, down 9.2% from Thursday's closing price and 61% from its 52-week high.
