Attached files

file filename
8-K - FORM 8-K - TRICO BANCSHARES /d575951d8k.htm

Exhibit 99.1

 

PRESS RELEASE    

Contact:Richard P. Smith

For Immediate Release     President & CEO (530) 898-0300

TRICO BANCSHARES ANNOUNCES QUARTERLY RESULTS

CHICO, Calif. – (July 25, 2013) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank (the “Bank”), today announced earnings of $6,325,000, or $0.39 per diluted share, for the three months ended June 30, 2013. These results compare to earnings of $5,321,000, or $0.33 per diluted share reported by the Company for the three months ended June 30, 2012.

Total assets of the Company increased $62,313,000 (2.5%) to $2,587,931,000 at June 30, 2013 from $2,525,618,000 at June 30, 2012. Total loans increased $99,558,000 (6.4%) to $1,652,040,000 at June 30, 2013 from $1,552,482,000 at June 30, 2012. Total investment securities increased $10,313,000 (5.1%) to $213,162,000 at June 30, 2013 from $202,849,000 at June 30, 2012. Total deposits increased $100,925,000 (4.7%) to $2,266,702,000 at June 30, 2013 from $2,165,777,000 at June 30, 2012. Other borrowings decreased $54,256,000 (89.2%) to $6,575,000 at June 30, 2013 from $60,831,000 at June 30, 2012.

The following is a summary of the components of the Company’s consolidated net income for the periods indicated:

 

     Three months ended
June 30,
             
(dollars in thousands)    2013     2012     $ Change     % Change  

Net Interest Income

   $ 24,589      $ 25,934      ($ 1,345     (5.2 %) 

Provision for loan losses

     (614     (3,371     2,757        (81.8 %) 

Noninterest income

     10,131        10,577        (446     (4.2 %) 

Noninterest expense

     (23,509     (24,367     858        (3.5 %) 

Provision for income taxes

     (4,272     (3,452     (820     23.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 6,325      $ 5,321      $ 1,004        18.9
  

 

 

   

 

 

   

 

 

   

 

 

 


The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the periods indicated:

ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS

(unaudited, dollars in thousands)

 

     Three Months Ended     Three Months Ended     Three Months Ended  
     June 30, 2013     March 31, 2013     June 30, 2012  
     Average
Balance
     Income/
Expense
    Yield/
Rate
    Average
Balance
     Income/
Expense
    Yield/
Rate
    Average
Balance
     Income/
Expense
    Yield/
Rate
 

Assets

                     

Earning assets

                     

Loans

   $ 1,608,511       $ 23,883        5.94   $ 1,548,565       $ 24,072        6.22   $ 1,534,006       $ 25,792        6.73

Investments - taxable

     164,907         1,229        2.98     156,057         1,187        3.04     208,417         1,615        3.10

Investments - nontaxable

     17,108         240        5.61     8,884         162        7.29     9,561         171        7.15

Federal funds sold

     632,292         494        0.31     721,424         446        0.25     579,164         430        0.30
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

   

Total earning assets

     2,422,818         25,846        4.27     2,434,930         25,867        4.25     2,331,148         28,008        4.81
     

 

 

     

 

 

    

 

 

        

 

 

   

Other assets, net

     161,916             174,864             177,951        
  

 

 

        

 

 

        

 

 

      

Total assets

   $ 2,584,734           $ 2,609,794           $ 2,509,099        
  

 

 

        

 

 

        

 

 

      

Liabilities and shareholders’ equity

                     

Interest-bearing

                     

Demand deposits

   $ 518,961         125        0.10   $ 520,507         141        0.11   $ 473,124         197        0.17

Savings deposits

     782,339         246        0.13     782,173         271        0.14     731,988         296        0.16

Time deposits

     322,668         484        0.60     333,556         513        0.62     380,943         584        0.61

Other borrowings

     7,596         1        0.05     8,188         1        0.05     62,300         601        3.86

Trust preferred securities

     41,238         311        3.02     41,238         311        3.02     41,238         332        3.22
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

   

Total interest-bearing liabilities

     1,672,802         1,167        0.28     1,685,662         1,237        0.29     1,689,593         2,010        0.48
     

 

 

        

 

 

        

 

 

   

Noninterest-bearing deposits

     635,503             651,303             562,909        

Other liabilities

     36,444             39,150             33,569        

Shareholders’ equity

     239,985             233,679             223,028        
  

 

 

        

 

 

        

 

 

      

Total liabilities and shareholders’ equity

   $ 2,584,734           $ 2,609,794           $ 2,509,099        
  

 

 

        

 

 

        

 

 

      

Net interest rate spread

          3.99          3.96          4.33

Net interest income/net interest margin (FTE)

        24,679        4.07        24,630        4.05        25,998        4.46
     

 

 

        

 

 

        

 

 

   

FTE adjustment

        (90          (61          (64  
     

 

 

        

 

 

        

 

 

   

Net interest income (not FTE)

      $ 24,589           $ 24,569           $ 25,934     
     

 

 

        

 

 

        

 

 

   

Net interest income (FTE) during the second quarter of 2013 decreased $1,319,000 (5.1%) from the same period in 2012 to $24,679,000. The decrease in net interest income (FTE) was due primarily to a 79 basis point decrease in average yield on loans that was partially offset by a $74,505,000 increase in the average balance of loans, and a $54,704,000 decrease in the average balance of other borrowings. The 79 basis point decrease in average loan yields reduced net interest income by $3,163,000 from the year ago period. The increase in average loan balances added $1,254,000 to net interest income, and the decrease in average other borrowings added $528,000 to net interest income when compared to the year ago period. Accretion of loan purchase discounts totaling $1,676,000 and $2,385,000 are included in net interest income for the three months ended June, 2013 and 2012, respectively. The Company purchased $60,647,000 of residential real estate mortgage loans during the second quarter of 2013.

Loans acquired through purchase or acquisition of other banks are classified as Purchased Not Credit Impaired (PNCI), Purchased Credit Impaired – cash basis (PCI – cash basis), or Purchased Credit Impaired – other (PCI – other). Loans not acquired in an acquisition or otherwise “purchased” are classified as “originated”. Often, such purchased loans are purchased at a discount to face value, and part of this discount is accreted into (added to) interest income over the remaining life of the loan. Generally, as time goes on, the effect of this discount accretion becomes less and less as these purchased loans mature or payoff early. Further details regarding interest income from loans, including fair value discount accretion, may be found under the heading “Supplemental Loan Interest Income Data” in the Consolidated Financial Data table at the end of this announcement.


The Company provided $614,000 for loan losses in the second quarter of 2013 versus a benefit of $1,108,000 in the first quarter of 2013, and a $3,371,000 provision for loan losses in the second quarter of 2012. The level of provision for loan losses during the second quarter of 2013 was due primarily to a decrease in the required allowance for loan losses as of June 30, 2013 when compared to the required allowance for loan losses as of March 31, 2013 less net charge-offs during the three months ended June 30, 2013, and the effect of a change in the methodology for calculating the allowance for loan losses that occurred during the three months ended June 30, 2013. The decrease in the required allowance for loan losses during the quarter ended June 30, 2013 was due primarily to reduced impaired loans, improvements in estimated cash flows and collateral values for the remaining and new impaired loans, and reductions in historical loss factors that, in part, determine the required loan loss allowance for performing loans in accordance with the Company’s allowance for loan losses methodology.

During the three months ended June 30, 2013, the Company modified its loss migration analysis methodology used in its allowance for loan loss calculation. When the Company originally established its loss migration analysis methodology during the quarter ended March 31, 2012, it reviewed the loss experience of each quarter over the most recent three years in order to calculate an annualized loss rate by loan category and risk rating. The use of three years of loss experience data was originally used because that was the extent of the detailed loss data by loan category and risk rating that was available at the time. This three year historical look-back period was used until this most recent quarter ended June 30, 2013. Starting with the quarter ended June 30, 2013 the Company will review all available detailed loss experience data, and not limit it to the most recent three years of historical loss data. This change in methodology resulted in the allowance for loan losses as of June 30, 2013 being $1,314,000 more than it would have been without this change in methodology. Excluding the effect of this change in allowance methodology, the provision for loan losses during the three months ended June 30, 2013 would have been a benefit of $700,000.

The following table presents the key components of noninterest income for the periods indicated:

 

     Three months ended
June 30,
             
(dollars in thousands)    2013     2012     $ Change     % Change  

Service charges on deposit accounts

     3,277        3,644      ($ 367     (10.1 %) 

ATM fees and interchange

     2,233        2,026        207        10.2

Other service fees

     562        570        (8     (1.4 %) 

Mortgage banking service fees

     430        379        51        13.5

Change in value of mortgage servicing rights

     191        (464     655        (141.2 %) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total service charges and fees

     6,693        6,155        538        8.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Gain on sale of loans

     1,590        1,237        353        28.5

Commission on NDIP

     841        842        (1     (0.1 %) 

Increase in cash value of life insurance

     380        450        (70     (15.6 %) 

Change in indemnification asset

     (314     662        (976     (147.4 %) 

Gain on sale of foreclosed assets

     615        304        311        102.3

Other noninterest income

     326        927        (601     (64.8 %) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other noninterest income

     3,438        4,422        (984     (22.3 %) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     10,131        10,577      ($ 446     (4.2 %) 
  

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income decreased $446,000 (4.2%) to $10,131,000 in the three months ended June 30, 2013 when compared to the three months ended June 30, 2012. The decrease in noninterest income was due primarily to a $976,000 decrease in change in indemnification asset to a loss of $314,000, and a $600,000 decrease in gain on life insurance death benefit, included in other noninterest income, to zero that were partially offset by a $655,000 increase in change in value of mortgage servicing rights to $191,000, a $353,000 increase in gain on sale of loans to $1,590,000, and a $311,000 increase in gain on sale of foreclosed assets to $615,000. The decrease in change in indemnification asset was due to increased real estate collateral values that resulted in lower expected losses on covered impaired loans. The increase in change in value of mortgage servicing rights was due to a sharp increase in mortgage rates that occurred near the end of the quarter ended June 30, 2013 that reduced the rate of mortgage refinancing that in turn increased the expected future life and cash flow stream of our existing mortgage servicing portfolio. The increase in gain on sale of loans was due to decreased mortgage rates that existed for much of the quarter ended June 30, 2013 when compared to the quarter ended June 30, 2012, and our focus of additional resources in this area when compared to the year-ago quarter. The increase in gain on sale of foreclosed assets was due to increased real estate values.


The following table presents the key components of the Company’s noninterest expense for the periods indicated:

 

     Three months ended
June 30,
              
(dollars in thousands)    2013      2012      $ Change     % Change  

Salaries

   $ 8,508       $ 8,273       $ 235        2.8

Commissions and incentives

     1,299         1,347         (48     (3.6 %) 

Employee benefits

     3,083         2,870         213        7.4
  

 

 

    

 

 

    

 

 

   

 

 

 

Total salaries and benefits expense

     12,890         12,490         400        3.2
  

 

 

    

 

 

    

 

 

   

 

 

 

Occupancy

     1,753         1,857         (104     (5.6 %) 

Equipment

     913         1,126         (213     (18.9 %) 

Change in reserve for unfunded commitments

     35         40         (5     (12.5 %) 

Data processing and software

     1,280         1,278         2        0.2

Telecommunications

     587         567         20        3.5

ATM network charges

     679         532         147        27.6

Professional fees

     658         691         (33     (4.8 %) 

Advertising and marketing

     415         863         (448     (51.9 %) 

Postage

     133         218         (85     (39.0 %) 

Courier service

     255         256         (1     (0.4 %) 

Intangible amortization

     53         52         1        1.9

Operational losses

     122         143         (21     (14.7 %) 

Provision for foreclosed asset losses

     546         1,004         (458     (45.6 %) 

Foreclosed asset expense

     163         267         (104     (39.0 %) 

Assessments

     543         590         (47     (8.0 %) 

Other

     2,484         2,393         91        3.8
  

 

 

    

 

 

    

 

 

   

 

 

 

Total other noninterest expense

     10,619         11,877         (1,258     (10.6 %) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Total noninterest expense

   $ 23,509       $ 24,367       ($ 858     (3.5 %) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Salary and benefit expenses increased $400,000 (3.2%) to $12,890,000 during the three months ended June 30, 2013 compared to the three months ended June 30, 2012. Base salaries increased $235,000 (2.8%) to $8,508,000 due mainly to annual merit increases. Incentive and commission related salary expenses decreased $48,000 (3.6%) to $1,299,000 due primarily to decreases in production related incentives. Benefits expense, including retirement, medical and workers’ compensation insurance, and taxes, increased $213,000 (7.4%) to $3,083,000 due primarily to increased health and workers’ compensation insurance expenses.

Other noninterest expenses decreased $1,258,000 (10.6%) to $10,619,000 during the three months ended June 30, 2013 when compared to the three months ended June 30, 2012. The decrease in other noninterest expense was due primarily a $562,000 (44.2%) decrease in the provision for, and expenses related to, foreclosed assets, a $448,000 (51.9%) decrease in advertising and marketing expense, and a $317,000 (10.6%) decrease in occupancy and equipment expenses. The decrease in foreclosed asset provision and expenses was due to increased property values and a reduction in foreclosed assets from $12,743,000 at June 30, 2012 to $5,054,000 at June 30, 2013. The decrease in advertising and marketing expense from the year ago period was due to cost savings efforts in this area. The decrease in occupancy and equipment expense was primarily due to reduced furniture and equipment expense as the Bank focused on its new campus and operations center that came into service at the end of June 2013.

In addition to the historical information contained herein, this press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The reader of this press release should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company’s actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, interest rate fluctuations, economic conditions in the Company’s primary market area, demand for loans, regulatory and accounting changes, loan

losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, competition effects,


fee and other noninterest income earned as well as other factors detailed in the Company’s reports filed with the Securities and Exchange Commission which are incorporated herein by reference, including the Form 10-K for the year ended December 31, 2012. These reports and this entire press release should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company’s business. Any forward-looking statement may turn out to be wrong and cannot be guaranteed. The Company does not intend to update any of the forward-looking statements after the date of this release.

TriCo Bancshares and Tri Counties Bank are headquartered in Chico, California. Tri Counties Bank has a 38-year history in the banking industry. It operates 41 traditional branch locations and 25 in-store branch locations in 23 California counties. Tri Counties Bank offers financial services and provides a diversified line of products and services to consumers and businesses, which include demand, savings and time deposits, consumer finance, online banking, mortgage lending, and commercial banking throughout its market area. It operates a network of 72 ATMs and a 24-hour, seven days-a-week telephone customer service center. Brokerage services are provided by the Bank’s investment services affiliate, Raymond James Financial Services, Inc. For further information please visit the Tri Counties Bank web site at http://www.tricountiesbank.com.


TRICO BANCSHARES—CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

 

     Three months ended  
     June 30,
2013
    March 31,
2013
    December 31,
2012
    September 30,
2012
    June 30,
2012
 

Statement of Income Data

          

Interest income

   $ 25,756      $ 25,806      $ 26,143      $ 27,465      $ 27,944   

Interest expense

     1,167        1,237        1,372        1,834        2,010   

Net interest income

     24,589        24,569        24,771        25,631        25,934   

(Benefit from) provision for loan losses

     614        (1,108     1,524        532        3,371   

Noninterest income:

          

Service charges and fees

     6,693        5,929        6,035        5,783        6,155   

Other income

     3,438        4,289        3,976        3,344        4,422   

Total noninterest income

     10,131        10,218        10,011        9,127        10,577   

Noninterest expense:

          

Base salaries net of deferred loan origination costs

     8,508        8,348        8,324        8,337        8,273   

Incentive compensation expense

     1,299        1,286        1,162        1,254        1,347   

Employee benefits and othercompensation expense

     3,083        3,327        2,852        2,771        2,870   

Total salaries and benefits expense

     12,890        12,961        12,338        12,362        12,490   

Other noninterest expense

     10,619        8,640        12,788        13,228        11,877   

Total noninterest expense

     23,509        21,601        25,126        25,590        24,367   

Income before taxes

     10,597        14,294        8,132        8,636        8,773   

Net income

   $ 6,325      $ 8,477      $ 4,722      $ 5,020      $ 5,321   

Share Data

          

Basic earnings per share

   $ 0.39      $ 0.53      $ 0.30      $ 0.31      $ 0.33   

Diluted earnings per share

   $ 0.39      $ 0.53      $ 0.29      $ 0.31      $ 0.33   

Book value per common share

   $ 14.90      $ 14.75      $ 14.33      $ 14.21      $ 13.96   

Tangible book value per common share

   $ 13.87      $ 13.71      $ 13.30      $ 13.16      $ 12.91   

Shares outstanding

     16,065,469        16,005,191        16,000,838        15,992,893        15,992,893   

Weighted average shares

     16,027,557        16,002,482        15,996,137        15,992,893        15,985,922   

Weighted average diluted shares

     16,134,510        16,091,150        16,064,685        16,051,876        16,047,344   

Credit Quality

          

Nonperforming originated loans

   $ 52,661      $ 54,763      $ 61,769      $ 66,654      $ 69,749   

Total nonperforming loans

     61,466        63,963        72,516        81,611        82,877   

Guaranteed portion of nonperforming loans

     106        108        131        218        218   

Foreclosed assets, net of allowance

     5,054        6,124        7,498        10,185        12,743   

Loans charged-off

     1,947        2,771        4,006        3,368        4,188   

Loans recovered

     1,065        1,098        983        1,133        1,214   

Selected Financial Ratios

          

Return on average total assets

     0.98     1.30     0.74     0.80     0.85

Return on average equity

     10.54     14.51     8.20     8.85     9.54

Average yield on loans

     5.94     6.22     6.16     6.49     6.73

Average yield on interest-earning assets

     4.27     4.25     4.40     4.68     4.81

Average rate on interest-bearing liabilities

     0.28     0.29     0.33     0.44     0.48

Net interest margin (fully tax-equivalent)

     4.07     4.05     4.17     4.37     4.46

Supplemental Loan Interest Income Data:

          

Discount accretion PCI—cash basis loans

     129        167        42        24        108   

Discount accretion PCI—other loans

     732        597        979        1,192        886   

Discount accretion PNCI loans

     815        766        841        591        1,391   

Regular interest Purchased loans

     3,234        3,074        3,226        3,251        3,439   

All other loan interest income

     18,973        19,468        19,157        20,472        19,968   

Total loan interest income

     23,883        24,072        24,245        25,530        25,792   


TRICO BANCSHARES—CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

 

     Three months ended  
     June 30,
2013
    March 31,
2013
    December 31,
2012
    September 30,
2012
    June 30,
2012
 

Balance Sheet Data

          

Cash and due from banks

   $ 592,155      $ 802,271      $ 748,899      $ 622,494      $ 644,102   

Securities, available for sale

     127,519        144,454        163,027        183,432        202,849   

Securities, held to maturity

     85,643        —          —          —          —     

Federal Home Loan Bank Stock

     9,163        9,647        9,647        9,647        9,990   

Loans held for sale

     6,582        7,931        12,053        14,937        5,321   

Loans:

          

Commercial loans

     128,410        115,483        135,528        145,469        139,733   

Consumer loans

     387,217        376,063        386,111        388,844        393,248   

Real estate mortgage loans

     1,097,446        1,010,249        1,010,130        1,007,432        984,147   

Real estate construction loans

     38,967        30,567        33,054        33,902        35,354   

Total loans, gross

     1,652,040        1,532,362        1,564,823        1,575,647        1,552,482   

Allowance for loan losses

     (39,599     (39,867     (42,648     (44,146     (45,849

Foreclosed assets

     5,054        6,124        7,498        10,185        12,743   

Premises and equipment

     31,194        29,468        26,985        24,083        22,595   

Cash value of life insurance

     51,388        51,008        50,582        50,742        50,292   

Goodwill

     15,519        15,519        15,519        15,519        15,519   

Intangible assets

     987        1,040        1,092        1,144        1,196   

Mortgage servicing rights

     5,571        4,984        4,552        4,485        4,757   

FDIC indemnification asset

     1,441        1,807        1,997        2,485        4,046   

Accrued interest receivable

     7,339        7,201        6,636        7,638        7,545   

Other assets

     35,935        38,484        38,607        37,189        38,030   

Total assets

   $ 2,587,931        2,612,433        2,609,269        2,515,481        2,525,618   

Deposits:

          

Noninterest-bearing demand deposits

     645,461        639,420        684,833        592,529        578,010   

Interest-bearing demand deposits

     514,088        531,695        503,465        483,557        480,337   

Savings deposits

     791,978        786,352        762,919        767,244        737,433   

Time certificates

     315,175        328,083        338,485        358,309        369,997   

Total deposits

     2,266,702        2,285,550        2,289,702        2,201,639        2,165,777   

Accrued interest payable

     944        975        1,036        1,139        1,415   

Reserve for unfunded commitments

     3,210        3,175        3,615        2,555        2,590   

Other liabilities

     29,936        37,340        35,122        32,449        30,538   

Other borrowings

     6,575        8,125        9,197        9,264        60,831   

Junior subordinated debt

     41,238        41,238        41,238        41,238        41,238   

Total liabilities

     2,348,605        2,376,403        2,379,910        2,288,284        2,302,389   

Total shareholders’ equity

     239,326        236,030        229,359        227,197        223,229   

Accumulated other comprehensive gain

     49        1,538        2,159        3,635        3,537   

Average loans

     1,608,511        1,548,565        1,574,329        1,573,816        1,534,006   

Average interest-earning assets

     2,422,818        2,434,920        2,383,226        2,351,164        2,331,148   

Average total assets

     2,584,734        2,609,794        2,565,307        2,519,259        2,509,099   

Average deposits

     2,259,471        2,287,539        2,247,776        2,174,085        2,148,964   

Average total equity

   $ 239,985      $ 233,679      $ 230,296      $ 226,857      $ 223,028   

Total risk based capital ratio

     14.7     15.2     14.5     14.4     14.3

Tier 1 capital ratio

     13.5     13.9     13.3     13.1     13.0

Tier 1 leverage ratio

     10.2     9.9     9.8     9.9     9.7

Tangible capital ratio

     8.7     8.5     8.2     8.4     8.2