Under the terms of the agreement, Opus Bank will pay approximately $16.25m to retire Cascade Financial’s $39m in preferred stock and associated warrants issued to the US Department of the Treasury under the Treasury’s Capital Purchase Program, and $5.5m in cash to the holders of Cascade Financial’s common stock.
Since July of 2010, Cascade Bank has been operating under a Consent Order with the FDIC under which Cascade Bank is required to increase its capital ratios.
As of 31 December 2010, Cascade Bank required approximately $68m in new capital to meet the minimum Tier 1 leverage ratio requirement of 10% under the Consent Order.
Cascade Financial had total assets of $1.5bn and total deposits of $1.1bn at December 31, 2010.
As a result of the proposed transaction, Cascade Bank expects to benefit from Opus Bank’s capital position. Last year, Opus Bank completed a recapitalization, infusing a total of $460m of new capital into the bank.
Opus Bank’s growth goals include the creation of a strong super-regional banking franchise in the Western United States, encompassing the states of Washington, Oregon, California, Arizona and Nevada.
Upon completion of the transaction Cascade’s 218 employees will join Opus Bank.
The merger is subject to the approval of Cascade Financial’s shareholders, and is expected to close in the latter part of the second quarter of 2011.
