So what’s up with Bank of the Cascades as it hits the deadline this week to raise its capital levels per an August order from state and federal regulators?

It’s still working on it, says Patricia Moss, president and CEO of Cascade Bancorp, the bank’s parent company.

“We’ve met many of the provisions” contained in the regulators’ consent order,” she said. “We have not met the capital provision.” But regulators recognize the bank’s efforts to accomplish that, she said. “They’re working with us through the process.”

The bank, like others in Oregon and nationwide, has struggled under losses from the collapse of the real estate industry, especially real estate development loans that went south. At the same time, land collateral values plummeted.

Among numerous provisions in the regulators’ order, the bank must have plans to maintain a primary liquidity ratio of at least 15 percent. The bank’s done that, Moss said.

Liquidity and capital are important measures of bank health.

On Sept. 30, the bank’s last financial report, that liquidity ratio was 20.25 percent and it continues to exceed 20 percent, Moss said. “We’re well over the requirements in the consent agreement.”

The bank, in an attempt to raise capital, had filed a registration statement for a public offering of $93 million in common stock before withdrawing it last month, citing unfavorable market conditions. The bank, because of a quiet period, can’t discuss a future offering. However, a $65 million securities purchase agreement by Lightyear Capital, a New York City hedge fund, and David Bolger, the bank’s largest individual shareholder, has been extended. Their deal is contingent on the bank raising enough money to trigger their investment. “They continue to want to be participants,” Moss said, calling the agreement an advantage other capital-seeking banks don’t have.

The bank’s end goal is to raise about $150 million. Counting Bolger and Lightyear’s contributions, the difference could be raised through a public offering or additional private investments.

Joey Warmenhoven, a Nasdaq trader with McAdams Wright Ragen in Portland who specializes in banks, said there are investors looking to put money into banks that want to grow and play offense, but it’s harder for banks trying to raise money to plug holes.

“It’s just a tough time for these struggling banks right now,” he said, hopeful Cascade Bancorp can raise its money. “There is a lot of capital out there on the sidelines, but it’s very picky with where they’re investing.”

The bank’s struggles show in its stock price. It’s closed below $1 since Nov. 9.

Reports nationally indicate community banks, which hold large chunks of their portfolios in commercial real estate loans, could be in for a rough road in 2010. Some reports suggest more banks could fail this year than last, when 140 were closed, because commercial real estate will be the next shoe to drop, hammering banks already weakened by the residential real estate implosion.

Bank of the Cascades’ commercial real estate portfolio comprises 40 percent of its loans, according to third-quarter data. Of those, 88 percent are less than $5 million and the average loan is $600,000. The ratio of those loans more than 30 days past due is 0.12 percent.

“That is very, very low,” Moss said. So the portfolio “is actually performing very well.”

It’s interesting, too, that while regulators called for a Tier 1 leverage capital ratio of 10 percent, the bank on Sept. 30 was at 5.76 percent, higher than the regulatory minimum to be “well-capitalized,” which is 5 percent. So regulators asked the bank to double that ratio.

On its total risk-based capital ratio, the bank was at 8.76 percent, exceeding the regulatory minimum to be “adequately capitalized” but under the minimum to be “well-capitalized.”

So will the bank be able to raise its capital? Time will tell. Investors might be inclined to wait until the bank releases its audited year-end financial results, expected in March, to see the bank’s latest health reading.

“It’s still a challenging period of time for banks,” Moss said. “We do believe we have recognized the challenges.”