Cascade Bancorp (CACB)

F&M Merger Related Information:

              F&M financial condition and results of operations are included in Cascade’s June 30, 2006 financial statements effective with the closing of the transaction April 20, 2006.  Customer banking systems and processes were converted in late May.  F&M is the largest deposit market share community bank in the greater Boise, Idaho area with eleven existing branches and a twelfth scheduled to open during the third quarter of 2006.  F&M loan volumes increased at a 52.6% (annualized) pace between March 31 and June 30, 2006 reflecting the underlying strength of the Boise economy, as well as the benefit of higher lending limits arising from the transaction.  While non-interest bearing deposits at F&M increased from the preceding quarter, total Idaho deposits at June 30, 2006 were down 2.3% (annualized) as a result of the expected runoff in relatively higher priced time deposits during the period.  Cascade replaced this runoff with a combination of brokered CDs and borrowings as an interim strategy until anticipated gains in customer relationship deposits comes to fruition.  Management expects these funding trends will remain in place for the next several quarters. 

              Updating other merger related activities, Cascade sold approximately $34 million of F&M investment securities at closing as part of a strategy to replace investment securities with higher yielding loans.  Cascade had estimated a 10% annualized cost savings mainly from elimination of duplicate back office functions.  Management has increased its estimate of cost savings and synergies to nearly 20% of F&M’s 2006 projected annualized non-interest expense.  A significant portion of these savings are reflected in second quarter results and management estimates additional savings of $.01 to $.02 per share will be realized in the 3^rd quarter non-interest expense run-rate.  Offsetting some of these cost savings going forward are planned additions to staff appropriate to support Cascade’s infrastructure and ongoing growth goals.  It should also be noted that June 30, 2006 operating results include approximately $.01 per share of one-time costs arising from the transaction, while total capitalized merger costs appear to be approximately $1.7 million less than the $6.5 million estimated at the time the deal was announced. 

F&M Merger Related Information:

              F&M financial condition and results of operations are included in Cascade’s June 30, 2006 financial statements effective with the closing of the transaction April 20, 2006.  Customer banking systems and processes were converted in late May.  F&M is the largest deposit market share community bank in the greater Boise, Idaho area with eleven existing branches and a twelfth scheduled to open during the third quarter of 2006.  F&M loan volumes increased at a 52.6% (annualized) pace between March 31 and June 30, 2006 reflecting the underlying strength of the Boise economy, as well as the benefit of higher lending limits arising from the transaction.  While non-interest bearing deposits at F&M increased from the preceding quarter, total Idaho deposits at June 30, 2006 were down 2.3% (annualized) as a result of the expected runoff in relatively higher priced time deposits during the period.  Cascade replaced this runoff with a combination of brokered CDs and borrowings as an interim strategy until anticipated gains in customer relationship deposits comes to fruition.  Management expects these funding trends will remain in place for the next several quarters. 

              Updating other merger related activities, Cascade sold approximately $34 million of F&M investment securities at closing as part of a strategy to replace investment securities with higher yielding loans.  Cascade had estimated a 10% annualized cost savings mainly from elimination of duplicate back office functions.  Management has increased its estimate of cost savings and synergies to nearly 20% of F&M’s 2006 projected annualized non-interest expense.  A significant portion of these savings are reflected in second quarter results and management estimates additional savings of $.01 to $.02 per share will be realized in the 3^rd quarter non-interest expense run-rate.  Offsetting some of these cost savings going forward are planned additions to staff appropriate to support Cascade’s infrastructure and ongoing growth goals.  It should also be noted that June 30, 2006 operating results include approximately $.01 per share of one-time costs arising from the transaction, while total capitalized merger costs appear to be approximately $1.7 million less than the $6.5 million estimated at the time the deal was announced.