Thursday, April 12, 2007

Cascade Bancorp Misses Earnings

Cascade Bancorp earnings are out, and they were $.33 vs $.35 estimates.

What's strange is the news at CACB seems pretty good overall. The dip in deposits last quarter was temporary, as deposits roared ahead 32% on a "linked-quarter basis" (don't ask, I don't know what "linked-quarter" means). Excerpts:

- Net Income: up 60.6% year-over-year at $9.5 million compared to $10.2 million for the immediately preceding linked-quarter

- Loan Growth: loans up 70.6% year-over-year and 9.5% on linked-quarter basis (annualized)

- Deposit Growth: deposits up 60.8% year-over-year and 32.0% on a linked-quarter basis (annualized)

- Net Interest Margin: decreased to 5.34% vs. 5.85% year-over-year and 5.54% for the linked-quarter

- Credit Quality: delinquent loans at .05% of total loans; net charge-offs at .12% (annualized)

Then you see the notes, and you see why things "look" so rosy:

The year-over-year increase was largely due to Cascade's inclusion of Farmers & Merchants State Bank (F&M) of Idaho which was acquired on April 20, 2006.

Non-performing assets (NPA's) were at $7.7 million or 0.33% of total assets, compared to $3.0 million at year-end 2006. The increase in NPA's is concentrated in three real estate development loans in the Southern Oregon region where real estate has softened more than in other markets within Cascade's footprint.

"Loan and deposit volumes turned upward towards the end of the first quarter of 2007, indicating we may be emerging from our seasonal slow period that has been exacerbated by the nationwide downturn in real estate," said Patricia L. Moss, President and CEO. "It is a great advantage that Cascade's markets are expected to have sustained population in-migration underpinning the economic vitality of the regions into the next decade."

"Credit quality in our loan portfolio is performing relatively well despite the real estate downturn," said Frank R. Weis, EVP and Chief Credit Officer. "We expect that the nationwide correction in real estate will ultimately benefit our markets by virtue of a more sustainable rate of economic growth in the months and years ahead."

"Can someone hand a napkin to the President and Chief Credit Officers, PLEASE!"

Oh crap! Now we see the problem. It seems the Kool-Aid stains around the mouth and dribbling down the suits of the CACB President and Chief Credit Officer are rather of a permanent nature. And all the Shout in the World ain't going to get those stains out.

"the nationwide correction in real estate will ultimately benefit our markets"
"Cascade's markets are expected to have sustained population in-migration underpinning the economic vitality of the regions into the next decade"

Whoa, did they get the freakin memo? The "correction" in RE is going to BENEFIT them? "In-bound migration" will take care of their problems? What the hell are they talking about? That sounds suspiciously close to the river of bullshit put out by area Realtors. CACB, here's what it sounds like to the OUTSIDE WORLD:

Wall St Analyst: "You got loan quality problems creeping up. How you going to solve that?"
Patricia Moss: "We expect population in-migration over the next decade to take care of that. We'll GROW our way out of our problems!"
Frank Weis: "Right, we expect the imploding real estate market to HELP us!"
Wall St. Analyst: "sell, Sell, SELL, SELL!!"

See Frank & Patricia, bullshit like predicting population growth a full decade ahead only flies in Kool-Aid comafied places like Bend. That sort of soft-headed bullshit don't fly elsewhere. Homes, those pesky little things underpinning their loan portfolio, have started heading DOWN in their biggest market. Wow, these people must be True Believers (did they work at the Bulletin?). And the reaction of Wall Street types (NYC, not Bend), who could give a crap about the divine nature of Central Oregon, is they don't like to hear delusional BULLSHIT.

Maybe CACB Short shouldn't cover...


Anonymous said...

Lots of companies do acquisitions purely because they know their organic growth rates are turning bad. CACB's buying F&M makes it pretty much impossible to figure out how they're really doing.

That's why Wall St hates acquirers usually

Adhor said...

It seems the Kool-Aid stains around the mouth and dribbling down the suits of the CACB President and Chief Credit Officer are rather of a permanent nature. And all the Shout in the World ain't going to get those stains out.

Dang, thats funny and scary at the same time. I bank there!

Anonymous said...

Wow, I wouldn't exactly call it a crash, but they are punishing CACB, down 4% today.

Anonymous said...

Looking at an intraday chart shows a spike down right around when this post came out, someone dumping a huge number of shares.

Probably a coincidence, but... Maybe someones listening! It's down $1.00 now and falling

Anonymous said...

DAMMIT! I own shares.

Can you say something good? I got a family to feed!

IHateToBurstYourBubble said...

We should all be comforted by the fact that CEO Patricia Moss has bravely stepped up, and in 3 transactions BOUGHT 25,726 shares in the past few months for a whopping $347,105!

Hmmmm... actually once I do the math, it seems her average cost was $13.49/share, just a smidge lower than todays price in the mid $23 area. Seems like she had pretty much built in profits well over a quarter million dollars.

Which just proves my motto: If you want to make money on stocks, just make sure you work somewhere where they will grant you a buttload of options at 1/5th the current stock price.

Although she does own 82,000 shares, so she's hurting a little too.

long-term said...

She's gone into freefall.

down 5%

Anonymous said...

Hurrah. CACB settled at $23.55, up from the $23.29 lows.

Oh joy. I can finally start work on that dream house.

"It's TOP RAMEN kids!"

MIsstrade said...

The weekly chart shows the breech of the early 06 high @ 24.53 and trending downward now. Folks this is a true leading indicator of where prices are going for housing in Bend. If the lender ain't lending and loans it has are stinky, prices will come down in the hard asset. Simple as simon. The stock is now down 25% from its early 07 highs and there is no looking back for this pig. Put some lipstick on it cause it has been the short of the 2007 trading campaign.

Next stop is 20 bucks by some point in 2007 is my guess. I would cover some of your short from your 30's here and sell all rallies to 27.5 it may see. Reduce your size, but this pig is going lower. The Chart don't lie.

IHateToBurstYourBubble said...

Next stop is 20 bucks by some point in 2007 is my guess.

Yup, I called this thing "fair" in the mid-high teens, when CACB Shorter sold in the 30's. I, of course, did not & could not short this (or anything really), cuz I have enough real World experience to know the stock can stay irrational longer than I can stay solvent.

I also think it looks to be a short term spike higher here, cuz stocks rarely bottom on Big Mo. They spike hard lower, retrace, meander lower, and usually put in a boring double bottom.

MIsstrade said...

Real world experience would tell you to short away as its just a small regional bank and they don't have a cure for cancer. Short on all rallies as I said earlier, now's when it gets easy to short after the first leg down then you get the dead cat boingo.

IHateToBurstYourBubble said...

CACB's lower net covered in The Bend Bull-shit'n today.

Patricia Moss: "So we're really quite pleased with these results in a typically weak time of year."

"Overall, (Cascade's) trends are slightly disappointing," said Joe Morford, equity analyst with RBC Capital Markets in San Francisco.

CEO is pleased, the Real World is disappointed. If you go to the article and look at Patricia Moss' picture, you can clearly see signs that Kool-Aid has gotten in her hair, eyes, and has obstructed her hearing.

Attention Bend True Believers: The Kool-Aid is meant for drinking. DO NOT bob for apples in the Kool-Aid. Kool-Aid in the ears has been known to cause Perma-Grin Psychosis. You will LOOK CRAZY, and can lose your Kool-Aid vendors permit.

Bend Economy Man said...

What can Ms. Moss say? More from Moss in the Bulletin article:

Cascade's Moss said her company continues to benefit from being in growth markets such as Central Oregon and Boise, Idaho, where the company gained entry through the acquisition of Farmers & Merchants State Bank last April.

In such markets, where real estate prices had been escalating in the past few years, the slowdown is beneficial, she said, because people continue to move into those cities.

"The impact of the housing market slowdown can really be seen in the fourth quarter (last year)," Moss said, adding that Cascade has experienced some upward deposit and loan volumes toward the end of first quarter 2007. "But we believe the Bend market is at a more sustainable level than before."

Slowdown is beneficial because people continue to move in? Huh? Try slowdown is happening because people aren't moving in.

Problem is, through BOTC, Moss has huge gambles in Bend real estate so her predictions are no more rational or unbiased than those of Becky Breeze. It's like asking a person who's just jumped out of a plane whether he thinks his parachute will open.

Texas Teabagger said...

Now we have comedians doing HOUSING BUBBLE STANDUP ROUTINES.

Sorry real estate hustlers, the boom's been bagged and tagged.

Anonymous said...

Interesting to note that Columbia River Bank (CBBO) also had to issue a special guidance that it would miss its Q1 numbers, and its stock plunged even more than CACB's. As a result, CACB continues to trade at a premium to CBBO, despite CACB's decline.
The issues that hit CBBO may catch up with CACB. I find it hard to see how CACB can go up. Another analyst downgraded it, and the sentiment on the stock is now highly negative.
Bend sneezes and CACB catches the flu.
Watch the building permit data carefully in the next few months. Unless that rebounds strongly, don't expect CACB stock to move up.
Of course I could be wrong.
-CACB Shorter