Back in March I reviewed Cascade Bancorp’s annual report in a piece titled, “Credit Quality Cascading at Bend’s CACB.” After reviewing the company’s recently-released quarterly report it’s safe to safe to say that the cascading loan portfolio is dramatically worsening.
From September 30 to December 31, 2006, non-performing assets (delinquent loans) grew from $1.8 million to $3.0 million. In the latest quarter ending March 31, 2007, NPA ballooned again to $7.7 million. This is an annualized growth rate percentage in the thousands.
Bottom line: The fastest growth the company now reports, parabolic growth in fact, is in the deterioration of its core business.
Ironically, however, it looks as if the stock has already priced the bad news in for now and is primed for at least a bounce:
With a short ratio of nearly 36 days, I’d actually be surprised if we don’t soon see a short squeeze. (The short ratio is the number of days it would take for short-sellers to cover if they accounted for all the volume traded every day. A short ratio of a week is usually troublesome to short-sellers. A short ratio over a month, as is the case for CACB, is nearly unheard of.)
Ah, the vagaries of volatility; the ironies of investing.