Cascade Bancorp (CACB) in Bend, Ore., reported a surge in quarterly earnings because of a large tax-related gain.
The $1.3 billion-asset company earned $46.4 million in the second quarter, compared with $1.8 million in the second quarter of 2012, it reported Friday. The large increase stemmed from Cascade's release of a deferred tax asset benefit of $51.7 million.
Net interest income fell 8%, to $11.5 million, as net interest margin fell by 43 basis points, to 3.75%. Cascade's loan portfolio grew by 4%, to $888 million. It made a $1 million provision for loan losses after making no provision in the second quarter of 2012, and net chargeoffs were $2.9 million, 49% lower.
Noninterest income rose 2%, to $3.5 million, as an increase in card and merchant fees made up for declining mortgage banking revenue.
Noninterest expense rose 36%, to $19.3 million, as Cascade paid a $3.8 million penalty for the prepayment of Federal Home Loan Bank advances. Cascade expects the prepayment to reduce its future borrowing costs by $500,000 per quarter, it said.
In March, the company's banking unit, Bank of the Cascades, entered into a memorandum of understanding with the Federal Deposit Insurance Corp. that prevents the company from paying dividends without the regulator's permission and requires it to maintain higher capital levels. The order replaced a memorandum of understanding that the bank signed in 2009.
Cascade held Tier 1 capital of 10.90% and total risk-based capital of 14.60% as of June 30, it reported.
Cascade agreed last month to buy one branch and assume the customer relationships of two other branches from AmericanWest Bank, based in Spokane, Wash.