CASCADE BANCORP - 10-K filing on 2015-03-10

Loans and reserve for credit losses (Tables)

12 Months Ended

Dec. 31, 2014

Loans receivable at December 31, 2014 and 2013 consisted of the following (dollars in thousands):



	2014					2013
	Amount			Percent		Amount			Percent
Originated loans (a):
Commercial real estate:
Owner occupied	$	198,845		16.8	%	$	204,998		20.6	%
Non-owner occupied	383,287			32.4	%	347,014			34.8	%
Total commercial real estate loans	582,132			49.2	%	552,012			55.4	%
Construction	100,437			8.5	%	52,503			5.3	%
Residential real estate	122,478			10.4	%	101,557			10.2	%
Commercial and industrial	342,746			29.0	%	254,170			25.5	%
Consumer	34,897			2.9	%	35,990			3.6	%
Total loans	1,182,690			100.0	%	996,232			100.0	%

Less:
Deferred loan fees, net	(1,703		)			(1,757		)
Reserve for loan losses	(22,053		)			(20,857		)
Loans, net	$	1,158,934				$	973,618

Acquired loans (b):
Commercial real estate:
Owner occupied	$	48,413		18.0	%
Non-owner occupied and other	102,890			38.2	%
Total commercial real estate loans	151,303			56.2	%
Construction	22,564			8.4	%
Residential real estate	71,385			26.5	%
Commercial and industrial	22,444			8.3	%
Consumer	1,963			0.6	%
Total loans	269,659			100.0	%

Acquired covered loans (c):
Commercial real estate:
Owner occupied	$	11,851		29.5	%
Non-owner occupied and other	11,366			28.3	%
Total commercial real estate loans	23,217			57.8	%
Construction	2,427			6.0	%
Residential real estate	10,824			26.9	%
Commercial and industrial	3,285			8.2	%
Consumer	438			1.1	%



Total loans	40,191			100.0	%

Total loans:
Commercial real estate:
Owner occupied	$	259,109		17.4	%
Non-owner occupied and other	497,543			33.3	%
Total commercial real estate loans	756,652			50.7	%
Construction	125,428			8.4	%
Residential real estate	204,687			13.7	%
Commercial and industrial	368,475			24.7	%
Consumer	37,298			2.5	%
Total loans	1,492,540			100.0	%

Less:
Deferred loan fees	(1,703		)
Reserve for loan losses	(22,053		)
Loans, net	$	1,468,784

(a) Originated loans are loans organically made through the Company's normal and customary origination process
(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report, less acquired covered loans
(c) Acquired covered loans acquired in the acquisition of Home that are covered under FDIC loss share agreements

Changes in loss share payable associated with covered loans

Changes in the loss share payable (receivable) associated with covered loans for the three month period ended December 31, 2014 were as follows (dollars in thousands):



	Three months ended
	December 31, 2014
Balance at beginning of period	$	(319	)
Paid to FDIC	319
Increase due to impairment	144
FDIC reimbursement	(677		)
Shared loss expenses	84
Balance at end of period	$	(449	)

Allowance for credit losses on financing receivables

Transactions and allocations in the reserve for loan losses and unfunded loan commitments, by portfolio segment, for the years ended December 31, 2014, 2013 and 2012 were as follows (dollars in thousands):



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated		Total
2014
Reserve for loan losses
Balance at beginning of year	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714	$	20,857
Loan loss provision (credit)	(4,484		)	(348		)	(315		)	(12		)	579			4,580		—
Recoveries	1,801			1,242			929			2,158			309			—		6,439
Loans charged off	(1,268		)	(296		)	(874		)	(1,563		)	(1,242		)	—		(5,243		)
Balance at end of year	$	5,614		$	1,133		$	2,121		$	6,844		$	1,047		$	5,294	$	22,053

Reserve for unfunded lending commitments
Balance at beginning of year	$	48		$	268		$	25		$	75		$	24		$	—	$	440
Provision (credit) for unfunded loan commitments	—			—			—			—			—			—		—
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—	$	440

Reserve for credit losses
Reserve for loan losses	$	5,614		$	1,133		$	2,121		$	6,844		$	1,047		$	5,294	$	22,053
Reserve for unfunded lending commitments	48			268			25			75			24			—		440
Total reserve for credit losses	$	5,662		$	1,401		$	2,146		$	6,919		$	1,071		$	5,294	$	22,493



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated			Total
2013
Reserve for loan losses
Balance at beginning of year	$	11,596		$	1,583		$	3,551		$	7,267		$	2,177		$	1,087		$	27,261
Loan loss provision (credit)	203			159			(1,013		)	1,808			216			(373		)	1,000
Recoveries	1,034			708			433			2,694			263			—			5,132
Loans charged off	(3,268		)	(1,915		)	(590		)	(5,508		)	(1,255		)	—			(12,536		)
Balance at end of year	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714		$	20,857

Reserve for unfunded lending commitments
Balance at beginning of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440
Provision (credit) for unfunded loan commitments	—			—			—			—			—			—			—
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440

Reserve for credit losses
Reserve for loan losses	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714		$	20,857
Reserve for unfunded lending commitments	48			268			25			75			24			—			440
Total reserve for credit losses	$	9,613		$	803		$	2,406		$	6,336		$	1,425		$	714		$	21,297



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated		Total
2012
Reserve for loan losses
Balance at beginning of year	$	21,648		$	5,398		$	3,259		$	11,291		$	2,292		$	17	$	43,905
Loan loss provision (credit)	2,829			(4,135		)	2,650			(2,094		)	780			1,070		1,100
Recoveries	198			584			262			3,094			311			—		4,449
Loans charged off	(13,079		)	(264		)	(2,620		)	(5,024		)	(1,206		)	—		(22,193		)
Balance at end of year	$	11,596		$	1,583		$	3,551		$	7,267		$	2,177		$	1,087	$	27,261

Reserve for unfunded lending commitments
Balance at beginning of year	$	28		$	29		$	184		$	487		$	822		$	—	$	1,550
Provision (credit) for unfunded loan commitments	20			239			(159		)	(412		)	(798		)	—		(1,110		)
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—	$	440

Reserve for credit losses
Reserve for loan losses	$	11,596		$	1,583		$	3,551		$	7,267		$	2,177		$	1,087	$	27,261
Reserve for unfunded lending commitments	48			268			25			75			24			—		440
Total reserve for credit losses	$	11,644		$	1,851		$	3,576		$	7,342		$	2,201		$	1,087	$	27,701

The following table presents the reserve for loan losses and the recorded investment in loans by portfolio segment and impairment evaluation method at December 31, 2014 and 2013 (dollars in thousands):



	Reserve for loan losses						Recorded investment in loans
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
2014
Commercial real estate	$	60	$	5,554	$	5,614	$	28,947	$	727,705	$	756,652
Construction	—		1,133		1,133		963		124,465		125,428
Residential real estate	—		2,121		2,121		317		204,370		204,687
Commercial and industrial	25		6,819		6,844		3,495		364,980		368,475
Consumer	—		1,047		1,047		—		37,298		37,298
	$	85	$	16,674	16,759		$	33,722	$	1,458,818	$	1,492,540
Unallocated					5,294
					$	22,053

2013
Commercial real estate	$	665	$	8,900	$	9,565	$	32,227	$	519,785	$	552,012
Construction	—		535		535		1,987		50,516		52,503
Residential real estate	62		2,319		2,381		430		101,127		101,557
Commercial and industrial	56		6,205		6,261		5,823		248,347		254,170
Consumer	—		1,401		1,401		—		35,990		35,990
	$	783	$	19,360	20,143		$	40,467	$	955,765	$	996,232
Unallocated					714
					$	20,857

Financing receivable credit quality indicators

The following table presents, by portfolio class, the recorded investment in loans by internally assigned grades at December 31, 2014 and 2013 (dollars in thousands):



	Loan grades
	Acceptable		Pass-Watch		Special Mention		Substandard		Total
2014
Originated loans (a):
Commercial real estate:
Owner occupied	$	167,509	$	8,749	$	4,035	$	18,552	$	198,845
Non-owner occupied	350,420		10,383		16,145		6,339		383,287
Total commercial real estate loans	517,929		19,132		20,180		24,891		582,132
Construction	95,440		3,086		1,850		61		100,437
Residential real estate	119,280		1,380		552		1,266		122,478
Commercial and industrial	306,030		18,721		14,676		3,319		342,746
Consumer	34,852		—		—		45		34,897
	$	1,073,531	$	42,319	$	37,258	$	29,582	$	1,182,690

Acquired loans (b):
Commercial real estate:
Owner occupied	$	42,673	$	1,125	$	4,352	$	263	$	48,413
Non-owner occupied	75,340		11,019		12,265		4,266		102,890
Total commercial real estate loans	118,013		12,144		16,617		4,529		151,303
Construction	22,448		—		—		116		22,564
Residential real estate	70,002		—		—		1,383		71,385



Commercial and industrial	22,236		151		—		57		22,444
Consumer	1,907		—		—		56		1,963
	$	234,606	$	12,295	$	16,617	$	6,141	$	269,659

Acquired covered loans (c):
Commercial real estate:
Owner occupied	$	10,363	$	—	$	1,048	$	440	$	11,851
Non-owner occupied	5,668		361		4,641		696		11,366
Total commercial real estate loans	16,031		361		5,689		1,136		23,217
Construction	48		2,332		—		47		2,427
Residential real estate	9,601		—		—		1,223		10,824
Commercial and industrial	2,779		—		—		506		3,285
Consumer	438		—		—		—		438
	$	28,897	$	2,693	$	5,689	$	2,912	$	40,191

Total loans:
Commercial real estate:
Owner occupied	$	220,545	$	9,874	$	9,435	$	19,255	$	259,109
Non-owner occupied	431,428		21,763		33,051		11,301		497,543
Total commercial real estate loans	651,973		31,637		42,486		30,556		756,652
Construction	117,936		5,418		1,850		224		125,428
Residential real estate	198,883		1,380		552		3,872		204,687
Commercial and industrial	331,045		18,872		14,676		3,882		368,475
Consumer	37,197		—		—		101		37,298
	$	1,337,034	$	57,307	$	59,564	$	38,635	$	1,492,540

(a) Originated loans are loans organically made through the Company's normal and customary origination process
(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report, less acquired covered loans
(c) Acquired covered loans acquired in the acquisition of Home that are covered under FDIC loss share agreements

2013
Commercial real estate:
Owner occupied	$	147,865	$	19,798	$	14,730	$	22,605	$	204,998
Non-owner occupied	278,854		33,827		24,188		10,145		347,014
Total commercial real estate loans	426,719		53,625		38,918		32,750		552,012
Construction	46,274		2,772		2,131		1,326		52,503
Residential real estate	98,633		1,570		147		1,207		101,557
Commercial and industrial	242,053		3,518		2,694		5,905		254,170
Consumer	35,984		—		—		6		35,990
	$	849,663	$	61,485	$	43,890	$	41,194	$	996,232

Past due financing receivables

The following table presents, by portfolio class, an age analysis of past due loans, including loans placed on non-accrual at December 31, 2014 and 2013 (dollars in thousands):



	30-89 days past due		90 days or more past due		Total past due		Current		Total loans
2014
Originated loans (a):
Commercial real estate:
Owner occupied	$	732	$	3,716	$	4,448	$	194,397	$	198,845
Non-owner occupied	1,718		971		2,689		380,598		383,287
Total commercial real estate loans	2,450		4,687		7,137		574,995		582,132
Construction	—		100		100		100,337		100,437
Residential real estate	662		110		772		121,706		122,478
Commercial and industrial	288		334		622		342,124		342,746
Consumer	139		45		184		34,713		34,897
	$	3,539	$	5,276	$	8,815	$	1,173,875	$	1,182,690

Acquired loans (b):
Commercial real estate:
Owner occupied	$	24	$	—	$	24	$	48,389	$	48,413
Non-owner occupied	—		120		120		102,770		102,890
Total commercial real estate loans	24		120		144		151,159		151,303
Construction	—		—		—		22,564		22,564
Residential real estate	1,361		288		1,649		69,736		71,385
Commercial and industrial	—		—		—		22,444		22,444
Consumer	55		—		55		1,908		1,963
	$	1,440	$	408	$	1,848	$	267,811	$	269,659

Acquired covered loans (c):
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	11,851	$	11,851
Non-owner occupied	—		27		27		11,339		11,366
Total commercial real estate loans	—		27		27		23,190		23,217
Construction	—		—		—		2,427		2,427
Residential real estate	375		—		375		10,449		10,824
Commercial and industrial	—		—		—		3,285		3,285
Consumer	11		—		11		427		438
	$	386	$	27	$	413	$	39,778	$	40,191

Total loans:
Commercial real estate:
Owner occupied	$	756	$	3,716	$	4,472	$	254,637	$	259,109
Non-owner occupied	1,718		1,118		2,836		494,707		497,543
Total commercial real estate loans	2,474		4,834		7,308		749,344		756,652
Construction	—		100		100		125,328		125,428
Residential real estate	2,398		398		2,796		201,891		204,687
Commercial and industrial	288		334		622		367,853		368,475
Consumer	205		45		250		37,048		37,298
	$	5,365	$	5,711	$	11,076	$	1,481,464	$	1,492,540

(a) Originated loans are loans organically made through the Company's normal and customary origination process



(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report, less acquired covered loans
(c) Acquired covered loans acquired in the acquisition of Home that are covered under FDIC loss share agreements

2013
Commercial real estate:
Owner occupied	$	959	$	2,905	$	3,864	$	201,134	$	204,998
Non-owner occupied	—		—		—		347,014		347,014
Total commercial real estate loans	959		2,905		3,864		548,148		552,012
Construction	215		119		334		52,169		52,503
Residential real estate	436		163		599		100,958		101,557
Commercial and industrial	597		2,077		2,674		251,496		254,170
Consumer	53		6		59		35,931		35,990
	$	2,260	$	5,270	$	7,530	$	988,702	$	996,232

Impaired financing receivables

The following table presents, by portfolio class, the average recorded investment in impaired loans for the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):



	2014		2013		2012
Commercial real estate:
Owner occupied	$	6,115	$	12,922	$	15,521
Non-owner occupied	22,699		25,655		33,267
Total commercial real estate loans	28,814		38,577		48,788
Construction	1,157		2,283		7,272
Residential real estate	381		1,596		5,685
Commercial and industrial	4,015		7,039		10,500
Consumer	—		485		1,465
	$	34,367	$	49,980	$	73,710

The following table presents information related to impaired loans, by portfolio class, at December 31, 2014 and 2013 (dollars in thousands):



	Impaired loans
	With a related allowance		Without a related allowance		Total recorded balance		Unpaid principal balance		Related allowance
2014
Commercial real estate:
Owner occupied	$	436	$	5,624	$	6,060	$	8,699	$	41
Non-owner occupied	1,087		21,800		22,887		22,943		19
Total commercial real estate loans	1,523		27,424		28,947		31,642		60
Construction	—		963		963		963		—
Residential real estate	—		317		317		353		—
Commercial and industrial	2,702		793		3,495		3,962		25
Consumer	—		—		—		—		—
	$	4,225	$	29,497	$	33,722	$	36,920	$	85

2013
Commercial real estate:
Owner occupied	$	2,772	$	6,582	$	9,354	$	12,707	$	652
Non-owner occupied	1,116		21,757		22,873		22,904		13
Total commercial real estate loans	3,888		28,339		32,227		35,611		665
Construction	751		1,236		1,987		2,029		—
Residential real estate	174		256		430		515		62
Commercial and industrial	4,074		1,749		5,823		6,701		56
Consumer	—		—		—		—		—
	$	8,887	$	31,580	$	40,467	$	44,856	$	783

Schedule of financing receivables, non accrual status

Information with respect to the Company’s non-accrual loans, by portfolio class, at December 31, 2014 and 2013 is as follows (dollars in thousands):



	2014		2013
Commercial real estate:
Owner occupied	$	5,564	$	4,443
Non-owner occupied	1,940		280
Total commercial real estate loans	7,504		4,723
Construction	216		236
Residential real estate	3,165		399
Commercial and industrial	744		1,868
Consumer	56		—
Total non-accrual loans	$	11,685	$	7,226

Accruing loans which are contractually past due 90 days or more:
Commercial real estate:
Non-owner occupied	$	—	$	—
Total commercial real estate loans	—		—
Residential real estate	—		—
Commercial and industrial	9		1,077
Consumer	45		6
Total accruing loans which are contractually past due 90 days or more	$	54	$	1,083

Troubled debt restructuring on financing receivables

The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the year ended December 31, 2013 and 2012 and by the primary type of concession granted (dollars in thousands). There were no TDRs restructured during the year ended December 31, 2014.



2013	Rate reduction		Term extension		Rate reduction and term extension		Total
Commercial real estate	$	3,809	$	2,368	$	21,500	$	27,677
Construction	—		1,243		—		1,243
Commercial and industrial	174		1,063		—		1,237
	$	3,983	$	4,674	$	21,500	$	30,157



2012	Rate reduction		Term extension		Rate reduction and term extension		Total
Commercial real estate	$	1,299	$	462	$	—	$	1,761
Construction	—		4,797		35		4,832
Residential real estate	—		579		99		678
Commercial and industrial	2,526		965		489		3,980
Consumer	—		623		30		653
	$	3,825	$	7,426	$	653	$	11,904

The following table presents, by portfolio segment, the TDRs which had payment defaults during the years ended December 31, 2013 and 2012 that had been previously restructured within the last twelve months prior to December 31, 2013 and 2012 (dollars in thousands). There were no TDRs which had payment defaults during the year ended December 31, 2014 that had been previously restructured within the last twelve months prior to December 31, 2014.



	2013			2012
	Number of loans	TDRs restructured in the period with a payment default		Number of loans	TDRs restructured in the period with a payment default
Commercial real estate	2	$	3,500	—	$	—
Commercial and industrial	—	—		1	193
Consumer loans	—	—		2	12
	2	$	3,500	3	$	205

The following table presents, by portfolio segment, information with respect to the Company’s loans that were modified and recorded as TDRs during the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):



	2014			2013			2012
	Number of loans	TDR outstanding recorded investment		Number of loans	TDR outstanding recorded investment		Number of loans	TDR outstanding recorded investment
Commercial real estate	—	$	—	5	$	27,677	5	$	1,761
Construction	—	—		1	1,243		6	4,832
Residential real estate	—	—		—	—		12	678
Commercial and industrial	—	—		4	1,237		32	3,980
Consumer	—	—		—	—		55	653
	—	$	—	10	$	30,157	110	$	11,904