Cascade Bancorp : Reports Third Quarter 2016 Earnings

Bend, Ore. - October 26, 2016 - Cascade Bancorp (NASDAQ: CACB) ("Company" or "Cascade"), the holding company for Bank of the Cascades ("Bank"), today announced its financial results for the three and nine months ended September 30, 2016.

Third Quarter 2016 Financial Highlights

• Net income for the third quarter of 2016 was $4.1 million, or $0.06 per share, compared to $4.8 million, or $0.07 per share, for the second quarter of 2016 ("linked quarter"). The current quarter included non-recurring expense items of $2.6 million (pre-tax), or approximately $0.02 per share (post tax), primarily related to the acquisition of Prime Pacific Financial Services, Inc. ("PPFS"), located in the Seattle-metro market, which was completed on August 1, 2016.

• Net interest income was $23.8 million for the third quarter of 2016, up $1.6 million, or 7.1%, from the linked quarter. Stronger interest revenue is due to higher average earning assets from both organic growth and the PPFS acquisition.

• Non-interest income was $7.9 million, comparable to the linked quarter.

• Non-interest expense was $25.2 million for the third quarter, up $2.9 million from the linked quarter mainly due to costs incurred in the PPFS acquisition.

• The cost of funds remained stable at 0.08% for the third quarter.

• At September 30, 2016, gross loans were $2.1 billion, up $158.7 million, or 8.4%, from the linked quarter. Third quarter organic loan growth1 was $69.7 million, or 18.0% annualized, excluding PPFS.

• At September 30, 2016, total deposits were $2.7 billion, up $185.1 million, or 7.2%, from the linked quarter. The increase was attributable to both the acquired PPFS deposits and organic growth.

• Net interest margin ("NIM") was 3.43% for the third quarter, up from the linked quarter's 3.40% resulting from an improving earning asset mix.

• The allowance for loan losses ("ALLL") at the end of the third quarter end was 1.23% of gross loans. No provision or credit for loan losses was recorded in the third quarter. Credit quality metrics remained stable.

• At September 30, 2016, stockholders' equity increased to $367.0 million, primarily due to the purchase accounting effects of the PPFS acquisition. Book value per share and tangible book value per share2 were $4.81 and $3.53, respectively.

• Return on average assets and return on average tangible assets3 in the third quarter were 0.53% and 0.54%, respectively, compared to 0.65% and 0.68% in the linked quarter, respectively. The change was mainly a result of non-recurring expense items in the third quarter.

"The Cascade banking team continued to drive strong results for both our customers and our stockholders through the third quarter as we delivered double-digit loan, deposit and revenue growth," commented Terry Zink, President and CEO of Cascade Bancorp. "Our results clearly highlight the successful execution of our strategy to build Cascade into a valuable Pacific Northwest bank through both organic growth and strategic acquisitions. The Bank of America branches acquired in the first quarter continue to perform well as transaction volumes remain robust and customer satisfaction levels remain high, as evidenced by our 98.5% core deposit retention rate. We also welcomed Prime Pacific's customers, employees and stockholders to the Cascade family in August. Prime Pacific is an important component of our strategy of building a $1 billion bank in the vibrant Seattle market over the next several years. PPFS will complement our recently opened downtown Seattle commercial banking center, as well as expand our Small Business Administration lending strategy in this market."

1Organic loan growth is a non-GAAP measure defined as total loan growth less acquired loans during the period. See the last page of this release for a reconciliation of organic loan growth.

2 Tangible book value per common share is a non-GAAP measure defined as total stockholders' equity, less the sum of core deposit intangible ("CDI") and goodwill, divided by total number of shares outstanding. See the last page of this release for a reconciliation of tangible book value per common share.

3 Return on average tangible assets is a non-GAAP measure defined as net income divided by average total assets, less the sum of average CDI and goodwill.

See the last page of this release for a reconciliation of return on average tangible assets.

Chip Reeves, Bank of the Cascades President, continued, "The third quarter's strong organic loan and deposit production was evident across Cascade's footprint, reflecting not only the solid economic underpinnings of our markets but also the investments that we have made to attract talented in-market bankers. We are extremely pleased with the positive leadership and clear progress that our newly hired banking teams have demonstrated since joining the bank as they have quickly delivered healthy organic growth in our core markets led by Portland, Boise and Seattle. Looking forward, Cascade's new business pipeline remains strong, indicating we are likely to sustain organic loan growth above the level of our peer banks. Additionally, we will continue to invest in experienced bankers and teams to help expand Cascade's first- class community banking franchise in the Pacific Northwest."

Financial Review

Cascade completed its acquisition of PPFS on August 1, 2016, with customer system conversion accomplished in late October. PPFS is headquartered in Lynnwood, Washington at the northern intersection of the major I-5 and I-405 traffic corridors. This location complements Cascade Bancorp's existing downtown Seattle commercial banking location. The financial statements and results of operations as of September 30, 2016 are affected by this acquisition, including charges recorded in connection with the transaction. Total acquired loans and deposits were approximately $102.8 million and $101.5 million, respectively.

The financial statements and results of operations as of September 30, 2016 are inclusive of deposit liabilities assumed in connection with the acquisition of 15 Bank of America branches. The transaction closed on March 4, 2016, with the assumption of approximately $469.9 million in Oregon and Washington deposits of which approximately 96.9% have been retained. Approximately 98.5% of core deposits have been retained (excluding certificate of deposit ("CD") runoff).

At September 30, 2016 as compared to December 31, 2015 and September 30, 2015

Total assets at September 30, 2016 were $3.2 billion compared to $2.5 billion as of December 31, 2015 and $2.5 billion as of September 30, 2015, with the increase over prior periods due to assets assumed in the aforementioned 2016 acquisitions plus organic growth in loans and deposits.

Cash equivalents at September 30, 2016 were $152.4 million, compared to $77.8 million and $125.1 million as of December 31, 2015 and September 30, 2015, respectively. Increased cash equivalents is due primarily to deposits assumed in the recent 2016 acquisitions.

Investment securities classified as available-for-sale and held-to-maturity totaled $664.6 million at September 30, 2016 as compared to $449.7 million at December 31, 2015 and $439.9 million at September 30, 2015. The increase is attributable to the deployment of excess cash assumed in the recent 2016 acquisitions into investment securities.

Gross loans at September 30, 2016 were $2.1 billion, up $373.0 million year-to-date and $413.7 million year-over-year. Year-to-date and year-over-year loan growth is evident across all segments of the portfolio. Organic loan growth, excluding PPFS, was 18.0% (annualized) for the third quarter and was largely centered in our commercial real estate, construction and residential portfolios. Organic loan growth was achieved across all regions of the Bank's footprint.

Year-to-date organic loan growth has been augmented by deployment of deposits acquired from Bank of America into certain fixed and floating rate securities as well as whole loan adjustable-rate mortgage ("ARM") purchases. The expected average yield on 2016 acquired wholesale assets is targeted at approximately 2.25%. Wholesale loan portfolios are designed to diversify the Company's overall loan portfolio by geography, industry and loan type. To that end, the purchased ARM portfolio totaled $206.3 million at September 30, 2016 compared to $211.4 million at June 30, 2016 and

$80.9 million at September 30, 2015. The wholesale shared national credit portfolio decreased to $136.4 million at September 30, 2016 compared to $146.6 million at June 30, 2016 and $176.5 million at September 30, 2015 due to continued payoffs.

The Bank's credit quality remained strong in the third quarter. The ALLL at September 30, 2016 was steady at $25.2 million as compared to December 31, 2015 with net recoveries of $0.6 million during the third quarter. See additional discussion in "Asset Quality" below.

Year-to-date total deposits as of September 30, 2016 increased 31.8% to $2.7 billion compared to $2.1 billion as of December 31, 2015, and $2.1 billion as of September 30, 2015, mainly due to the recent 2016 acquisitions. Total deposits were up $185.1 million, or 7.2%, over the linked quarter. Core deposit retention rates are at 98.5% for the Bank of America branch acquisition and 98.8% for PPFS, both excluding the effect of planned CD runoff. Aggregate non- interest bearing deposits were $946.3 million at September 30, 2016, or 34.5% of total deposits. Combined with interest checking balances, total checking balances were 56.6% of total deposits. Money market and saving accounts were 34.9% of total deposits while CDs were 8.5% of total deposits.

The overall cost of funds for the third quarter of 2016 was 0.08%, including the cost of deposits from the Bank of America branch acquisition and PPFS acquisition.

Total stockholders' equity at September 30, 2016 was $367.0 million compared to $336.8 million at December 31, 2015 and $331.6 million at September 30, 2015. Tangible common stockholders' equity4 was $269.5 million, or $3.53 per share, at September 30, 2016, as compared to $251.3 million, or $3.45 per share, at December 31, 2015 and $245.9 million, or

$3.38 per share, at September 30, 2015. The ratios of common stockholders' equity to total assets and tangible common stockholders' equity to total assets5 were 11.56% and 8.49% at September 30, 2016, respectively, 13.65% and 10.18% at

December 31, 2015, respectively, and 13.43% and 9.96% at September 30, 2015, respectively. The changes in these capital measures are primarily a result of the increased net income for the periods, as well as the purchase accounting entries and the fair value of Cascade stock issued in the PPFS acquisition, less non-recurring costs in the aforementioned 2016 acquisitions.

Quarter ended September 30, 2016 as compared to the quarters ended June 30, 2016 and September 30, 2015

Net income for the third quarter of 2016 was $4.1 million, or $0.06 per share, compared to $4.8 million, or $0.07 per share, for the linked quarter and $5.1 million, or $0.07 per share, for the third quarter of 2015. The third quarter earnings were negatively impacted by non-recurring expense items of $2.6 million (pre-tax), or $0.02 per share (post tax), mainly related to the PPFS acquisition and certain branch consolidation costs.

Net interest income was $23.8 million for the third quarter of 2016, up $1.6 million, or 7.1%, compared to $22.2 million for the linked quarter and $20.4 million for the third quarter of 2015. Stronger interest revenue is due to higher average earning assets from both organic loan growth and the PPFS acquisition. In addition, interest income from investments is higher compared to prior periods due to the deployment of cash received from the Bank of America branch acquisition into securities.

NIM was 3.43% for the third quarter of 2016, an improvement over the 3.40% NIM in the linked quarter mainly attributable to an improving earning asset mix as the Company continues to deploy excess fed funds that arose from the Bank of America branch acquisition. The NIM for the third quarter of 2015 was 3.72%. The NIM has declined from September 30, 2015 because of the deployment of acquired funds into lower yielding securities and wholesale loans which will be replaced with originated loans over time. Sustained low market interest rates have also contributed to NIM compression.

Non-interest income for the third quarter of 2016 totaled $7.9 million, compared to $7.8 million in the linked quarter and

$6.4 million in the third quarter of 2015. Recent quarterly improvement in non-interest revenue is mainly due to higher customer transaction volumes arising from the 2016 acquisitions. Customer swap and SBA revenues were stronger in the third quarter, offset by modest declines in card and other revenues.

Non-interest expense in the third quarter of 2016 was $25.2 million compared to $22.3 million in the linked quarter and

$19.1 million in the third quarter of 2015. The increase was primarily attributable to non-recurring costs, which impacted expense levels in human resources and professional services, among other categories, and include investment banker

4 Tangible stockholders' equity is a non-GAAP measure defined as total stockholders' equity, less the sum of CDI and goodwill. See the last page of this release for a reconciliation of tangible stockholders' equity.

5 Tangible common stockholders' equity to total assets is a non-GAAP measure defined as total stockholders' equity, less the sum of core deposit intangible ("CDI") and goodwill, divided by total assets. See the last page of this release for a reconciliation of tangible common stockholders' equity to total assets.

fees, legal and accounting support, as well as severance, IT and certain branch consolidation items. HR expense also included higher sales incentives related to strong production activity and above target 2016 performance bonus accruals.

There was no provision for loan loss in the third quarter of 2016, linked quarter or third quarter of 2015.

The income tax provision for the third quarter of 2016 was $2.4 million, representing a 37.1% effective tax rate for the period. Management expects the full year effective rate to be approximately 37.0%.

Nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015

Net income for the nine months ended September 30, 2016 was $10.9 million, or $0.15 per share, compared to $15.0 million, or $0.21 per share, for the comparable 2015 period. The change in income is largely due to higher revenue arising from the recent 2016 acquisitions offset by non-recurring costs and increased expense run rates related to these transactions.

Net interest income for the nine months ended September 30, 2016 was $68.2 million, an increase of 16.1% compared to

$58.7 million for the nine months ended September 30, 2015 (the "year ago period"). This improvement is primarily due to net revenues arising from higher earning assets arising from recent acquisitions, as well as $1.5 million from interest on called securities in the first quarter of 2016.

Non-interest income for the nine months ended September 30, 2016 was $21.2 million, up from $19.2 million during the year ago period. Year-over-year organic changes include higher revenues on transaction volumes related to services fees and card activity mainly related to an increase in the Bank's customer base as a result of the Bank of America branch acquisition and the PPFS acquisition. SBA and other income declined slightly as compared to the year ago period. In addition, the year ago period included a contractual arrangement for future revenue-sharing of merchant services totaling

$1.1 million.

Non-interest expense in the nine months ended September 30, 2016 was $72.1 million compared to $56.3 million in the year ago period. Higher expense during the nine months ended September 30, 2016 compared to the year ago period relate primarily to non-recurring costs incurred in connection with the 2016 acquisitions. In addition, these acquisitions increased salaries and occupancy costs compared to the year ago period.

Income tax expense in the nine months ended September 30, 2016 was $6.4 million as compared to $8.6 million in the year ago period.

Asset Quality

For the quarter ended September 30, 2016, net recoveries were approximately $0.6 million and the reserve for loan losses was $25.2 million, compared to $24.7 million for the linked quarter and $26.6 million a year ago. The ratio of loan loss reserve to total loans was 1.23% at September 30, 2016 compared to 1.30% at June 30, 2016 and 1.62% at September 30, 2015. The lower ratio is related to an increase in total loan balances.

Non-performing assets as a percentage of total assets was 0.46% at September 30, 2016, as compared to 0.51% at June 30, 2016 and 0.36% at September 30, 2015. At September 30, 2016, delinquent loans were 0.21% of the loan portfolio.

This compares to 0.19% at June 30, 2016 and 0.31% at September 30, 2015.

Year-to-date net recoveries include a first quarter 2016 $3.3 million recovery on a previously charged off loan that was partially offset by a $2.7 million charge off related to downgrades in the shared national credit portfolio with exposure to the oil and mining sector at September 30, 2016. The Company's aggregate mining and energy exposure remained less than 1.0% of total loans, and management believes it has adequately reserved for such risks.

Conference Call

As previously announced, a conference call and webcast discussing the third quarter 2016 results will be held today, October 26, 2016 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Stockholders, analysts and other interested parties are invited to join the webcast by registering at http://public.viavid.com/index.php?id=121294 or the live conference call by dialing (877) 407-4018 prior to 2:00 p.m. Pacific Time.