SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For the fiscal year ended: December 31, 2000

For the transition period from __________ to __________

Commission file number: 0-23322

CASCADE BANCORP
(Name of registrant as specified in its charter)

(541) 385-6205
(Registrant’s telephone number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, no par value
(Title of Class)

     Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No___

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [___]

     State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. $91,177,161 aggregate market value as of March 5, 2001, based on the average bid and asked price.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 6,886,543 shares of no par value Common Stock on March 5, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Part III is incorporated by reference from the issuer’s definitive proxy statement for the annual meeting of shareholders to be held on April 23, 2001.

CASCADE BANCORP
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS

PART I

PART III

2

PART I

ITEM 1.      BUSINESS

Company

     Cascade Bancorp (Bancorp) is an Oregon chartered Financial Holding Company formed in 1990 and headquartered in Bend, Oregon. Bancorp’s principal subsidiary is Bank of the Cascades (the Bank). The Holding Company has an inactive subsidiary, Cascade Bancorp Financial Services, Inc (collectively, the Company). At December 31, 2000 the Company had total consolidated assets of approximately $423 million, net loans of approximately $353 million and deposits of approximately $358 million.

Bank of the Cascades

     The Bank was chartered as an Oregon State bank in March 1976 and opened for business in February 1977. Bank of the Cascades is a community bank offering the full range of financial services to its business and consumer clients, including trust and investments. The Bank has a network of eleven branches, nine located in Central Oregon, and two in the Salem area, of Oregon. In Deschutes County, its largest market concentration, the Company is the market share leader in customer deposits, holding over 30% share. It also is the market share leader in construction and commercial real estate lending as well as in residential mortgage origination and home equity lending. Owing to in-migration and a flourishing tourism industry, the population of Deschutes County has grown at a rate faster than any County in the Northwest during the past decade. The Bank’s headquarters is located in Bend, Oregon.

     With a relationship banking strategy, the Bank offers a broad range of commercial and personal banking services to its customers. Lending activities serve small to medium-sized business and consumer accounts. The Bank provides commercial real estate loans, real estate construction and development loans, commercial and industrial loans as well as consumer installment, line-of-credit, credit card, and home equity loans. The Bank originates residential mortgage loans that are typically sold on the secondary market. The Bank provides consumer and business deposit services including checking, money market, and time deposit accounts and related payment services such as cash management, lock box, internet banking and bill payment. In addition, the Bank purchases used vehicle installment contracts from local dealerships and also offers direct consumer finance loans.

     In mid-1999 the Company began offering Trust and Investment services. Trust services focus on the personal trust needs of existing and prospective clients by providing living and testamentary trust, asset and financial management, and fiduciary services. Investment services are provided by a licensed on-site broker through a broker/dealer agent relationship.

Cascade Bancorp Financial Services

     The Company formerly engaged in the dealer vehicle installment contracts business through Cascade Bancorp Financial Services, Inc (CBFS). Those activities as well as the assets, liabilities and capital of CBFS became a division of the Bank in 2000, and the subsidiary is now inactive.

Employees

     The Company views its employees as an integral resource in achieving its strategies and long term goals, and considers its relationship with its employees to be good. Bancorp has no employees other than its executive officers, who are also employees of the Bank. As of December 31, 2000, the Company had 207 full-time equivalent employees compared to 205 a year earlier. None of the employees of the Company are subject to a collective bargaining agreement.

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Business Strategy

     Cascade Bancorp has established the following key performance goals: 1) Consistently exceed 20% return on equity, 2) Consistently exceed 12% growth in earnings per share, 3) Identify and prudently manage credit and business risk and 4) Strive to profitably diversify revenue and continuously seek efficiency improvements in all its activities. There can be no assurance as to the ongoing achievement of these goals due to the inherent uncertainty of future events, competitive forces, the vitality of the local, regional and national economy and other unforeseen circumstances.

     For nearly a quarter of a century, Bank of the Cascades has focused on delivering the best in hometown banking services to the Oregon communities it serves. Its strategy is to profitably grow its business by attracting and retaining high value relationship customers. This is accomplished by providing the personal touch customer service while offering a broad array of products and financial services. The Company is committed to providing customer choice in delivery channels by implementing advanced technology and delivery systems. Such channels include traditional branches, ATMs, Internet banking, and telephonic access.

     In addition to targeting growth and increased market share in its existing locations, the Company may also consider future expansion by de novo branching where it identifies market opportunities. The Company expects to open its third office in the Salem area in mid 2001. The Company may also consider strategic partnerships or making selective business acquisitions to expand its market opportunities.

     The Company’s broad risk management objectives are to develop loan policies and underwriting practices designed to prudently manage credit risk. Funding policies are designed to maintain an appropriate volume and mix of core deposits and time deposit balances to efficiently fund its loan and investment activities. The Company may complement its deposit gathering strategies with wholesale funding from reliable counterparties such as the Federal Home Loan Bank. The Company monitors its sensitivity to changing interest rates primarily by utilizing simulation analysis in addition to traditional interest rate gap calculations.

Competition

     Commercial and consumer banking in Central Oregon, as well as in the State of Oregon and nation as a whole, is highly competitive. The Company competes principally with other commercial banks, savings and loan associations, credit unions, mortgage companies, brokers and other non-bank financial service providers. In addition to traditional competition in interest rates paid on deposits and pricing of loans, competition exists with respect to the scope and type of services offered, customer service levels, convenience as well as in fees and service charges. In addition, improvements in technology, communications and the Internet have intensified delivery channel competition. Certain competitors may have greater resources than the Company resulting in heightened competition for banking and financial services.

     The Company competes for customers principally through its commitment to customer service, the relative attractiveness of its products and services, and by ensuring customer convenience and functionality in accessing those products and services. The Company believes its hometown banking philosophy, technology and focus on small and medium-sized business, professional and consumer accounts, enables it to compete effectively with other financial service providers. In addition, the Company’s lending officers and senior managers have significant experience in their respective marketplaces. This enables them to maintain close working relationships with their customers. To serve customers whose borrowing requirements exceed its lending limits, the Bank may participate loans to other financial institutions.

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Consolidated Statistical Information

     The following tables present certain financial and statistical information with respect to the Company for the periods indicated. Most of the information is required by Guide 3, “Statistical Disclosure by Bank Holding Companies”, published by the Securities and Exchange Commission. At the beginning of each table, information is presented as to the nature of data disclosed in the table.

     For most financial institutions, including the Company, the primary component of earnings is net interest income. Net interest income is the difference between interest income earned, principally from loans and investment securities portfolio, and interest paid, principally on customer deposits and borrowings. Changes in net interest income result from changes in volume, spread and margin. Volume refers to the dollar level of interest-earning assets and interest-bearing liabilities. Spread refers to the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. Margin refers to net interest income divided by interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities.

Analysis of Changes in Interest Differential

     The following table shows the dollar amount of the increase (decrease) in the Company’s consolidated interest income and expense, and attributes such variance to “volume” or “rate” changes. Variances that were immaterial have been allocated equally between rate and volume categories. (Dollars in thousands):

5

Average Balances and Average Rates Earned and Paid

     The following table sets forth for 2000, 1999, and 1998 information with regard to average balances of assets and liabilities, as well as total dollar amounts of interest income from interest-earning assets and interest expense on interest-bearing liabilities, resultant average yields or rates, net interest income, net interest spread, net interest margin and the ratio of average interest-earning assets to average interest-bearing liabilities for the Company. (Dollars in thousands):

6

Loan Portfolio Composition

     Interest earned on the loan portfolio is the primary source of income for the Company. Net loans represent 83% of total assets as of December 31,2000. The Company makes substantially all of its loans to customers located within the Company’s service area. Due to the rapid growth in population and the tourism and service nature of the economy in its primary markets, the Bank loan concentration has historically been in real estate construction and commercial real estate. The Company has no loans defined as highly leveraged transactions by the Federal Reserve Bank. The Company has no significant agricultural loans.

     The following table presents the composition of the Company’s loan portfolio, at the dates indicated (dollars in thousands):

     At December 31, 2000, the maturities of all loans by category were as follows (dollars in thousands):

     Variable rate loans due after one year totaled $115,870 at December 31, 2000 and loans with predetermined or fixed rates due after one year totaled $85,934 at December 31, 2000.

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Lending and Credit Management

     The Company has a comprehensive risk management process to control, underwrite, monitor and manage credit risk in lending. The underwriting process relies principally on historical and prospective cash flow analysis augmented by collateral assessment, credit bureau information, as well as business plan assessment. Ongoing loan portfolio monitoring is performed by a centralized credit administration function including review and testing of compliance to loan policies and procedures. Internal and external auditors periodically sample and test certain credit files as well.

     Risk of nonpayment exists with respect to all loans, although certain specific types of risks are associated with different types of loans. Due to the nature of the Company’s customer base and the growth experienced in the Company’s market area, real estate is frequently a material component of collateral for the Company’s loans. The expected source of repayment of these loans is generally the operations of the borrower’s business, or the obligor’s personal income. However, real estate collateral provides an additional measure of security. Risks associated with real estate loans include fluctuating land values, local economic conditions, changes in tax policies, and a concentration of loans within the Bank’s market area. The Company mitigates risks on construction loans by generally lending funds to customers that have been prequalified for long term financing and who are using experienced contractors approved by the Company. Making the majority of commercial real estate loans to owner-occupied users of the property mitigates, but does not eliminate, commercial real estate risk.

     The following table presents information with respect to non-performing assets (dollars in thousands):

     The accrual of interest on a loan is discontinued when, in management’s judgment, the future collectibility of principal or interest is in doubt. Loans placed on nonaccrual status may or may not be contractually past due at the time of such determination, and may or may not be secured. When a loan is placed on nonaccrual status, it is the Bank’s policy to reverse, and charge against current income, interest previously accrued but uncollected. Interest subsequently collected on such loans is credited to loan principal if, in the opinion of management, full collectibility of principal is doubtful. If interest on nonaccrual loans had been accrued, such income would have been insignificant for the periods presented.

     At December 31, 2000, there were no potential problem loans, except as discussed above, where known information about possible credit problems of the borrower caused management to have serious doubts as to the ability of such borrower to comply with the present loan repayment terms and which may result in such loans being placed on a non-accrual basis.

8

Reserve for Loan Losses

     The reserve for loan losses is maintained at a level consistent with the known and inherent risks within the loan portfolio. The reserve is increased by provisions charged to operations and reduced by loans charged-off, net of recoveries. In evaluating the adequacy of the Reserve for Loan Losses, management considers such factors as historic and current loss experience, portfolio quality characteristics, specific evaluation of problem loans, assessment of current and prospective economic conditions, risk and collateral profiles, risk characteristics and concentration of loan types. However, this assessment cannot preclude unforeseen loan losses that are sizable in relation to the amount reserved.

     The following table summarizes the Company’s reserve for loan losses and charge-off and recovery activity for each of the last five years (dollars in thousands):