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Exhibit 99.1

UNAUDITED PRO FORMA

COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed consolidated financial statements are based on the separate historical financial statements of TriCo Bancshares (“TriCo”) and FNB Bancorp (“FNB”) after giving effect to the merger of FNB into TriCo (the “Merger”) and the issuance of TriCo common stock in connection therewith, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2018 is presented as if the Merger had occurred on March 31, 2018. The unaudited pro forma condensed consolidated income statements for the year ended December 31, 2017 and the three months ended March 31, 2018 are presented as if the Merger had occurred on January 1, 2017. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the Merger and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.

In connection with the integration of the operations of TriCo and FNB following the completion of the Merger, TriCo has incurred nonrecurring charges, such as costs associated with systems implementation, data conversion, severance, professional fees, and other costs related to exit or disposal activities. These charges will affect the results of operations of TriCo in the periods in which they are incurred. The unaudited pro forma combined condensed consolidated statements of earnings do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction, as they are nonrecurring in nature. Additionally, the unaudited pro forma adjustments do not give effect to any nonrecurring or unusual restructuring charges that may be incurred as a result of the integration of the two companies or any anticipated disposition of assets that may result from such integration. However, the unaudited pro forma combined condensed consolidated balance sheets reflect the payment of merger costs specified therein as a reduction in cash and pro forma shareholders’ equity.

The unaudited pro forma combined condensed consolidated financial statements are provided for informational purposes only. The unaudited pro forma combined condensed consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The actual amounts recorded may differ materially from the information presented in these unaudited pro forma condensed consolidated financial statements as a result of material and significant information becoming known that was previously not expected or known; and changes in the financial results of the combined company, which could change the future discounted cash flow projections. The preparation of the unaudited pro forma combined condensed consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined condensed consolidated financial statements should be read together with:

 

   

The accompanying notes to the unaudited pro forma combined condensed consolidated financial statements;

 

   

TriCo’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2017 included in TriCo’s Annual Report on Form 10-K for the year ended December 31, 2017;

 

   

TriCo’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2018 included in TriCo’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018;

 

   

FNB’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2017 included in FNB’s Annual Report on Form 10-K for the year ended December 31, 2017;

 

   

FNB’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2018 included in FNB’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018;

 

   

Other information pertaining to TriCo and FNB contained in or incorporated by reference into the joint proxy statement/prospectus included in TriCo’s amended registration statement on Form S-4 filed on April 18, 2018. See “Selected Historical Consolidated Financial Data for TriCo” and “Selected Historical Consolidated Financial Data for FNB” in the joint proxy statement/prospectus.


Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet

as of March 31, 2018

(Dollars in Thousands)

 

     TriCo
Bancshares
    FNB
Bancorp
    Pro forma
adjustments
    Pro forma
combined
 

ASSETS

        

Noninterest-bearing cash

   $ 87,138     $ 5,733       (6,695 )(a)    $ 86,176  

Interest-bearing cash

     95,841       15,630         111,471  
  

 

 

   

 

 

     

 

 

 

Cash and due from banks

     182,979       21,363         197,647  

Marketable Equity Securities

     2,890       —           2,890  

Debt Securities—AFS

     735,895       348,264         1,084,159  

Debt Securities—HTM

     496,035       —           496,035  

Restricted equity securities

     16,956       7,567         24,523  

Loans held for sale

     2,149       —           2,149  

Loans, gross

     3,069,733       841,235       (32,962 )(b)      3,878,006  

Loan loss reserve

     (29,973     (10,186     10,186 (c)      (29,973
  

 

 

   

 

 

     

 

 

 

Loans, net

     3,039,760       831,049         3,848,033  

Foreclosed assets, net

     1,564       1,817         3,381  

Premises and equipment, net

     58,558       9,159       21,590 (d)      89,307  

Cash value of life insurance

     98,391       16,736         115,127  

Accrued interest

     12,407       4,914         17,321  

Goodwill

     64,311       4,580       149,336 (e)      218,227  

Other intangible assets, net

     4,835       278       27,327 (f)      32,440  

Other assets

     63,227       14,239       (5,093 )(g)      72,373  
  

 

 

   

 

 

     

 

 

 

Total assets

   $ 4,779,957     $ 1,259,966       $ 6,203,612  
  

 

 

   

 

 

     

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

     

Deposits

        

Noninterest-bearing demand

   $ 1,359,996     $ 333,681       $ 1,693,677  

Interest-bearing

     2,724,408       684,772       161 (h)      3,409,341  
  

 

 

   

 

 

     

 

 

 

Total deposits

     4,084,404       1,018,453         5,103,018  

Accrued interest payable

     958       641         1,599  

Reserve for unfunded commitments

     3,864       177         4,041  

Other liabiities

     63,529       16,637       (451 )(i)      79,715  

Other borrowings

     65,041       103,600         168,641  

Junior subordinated debt

     56,905       —           56,905  
  

 

 

   

 

 

     

 

 

 

Total liabilities

     4,274,701       1,139,508         5,413,919  

Shareholders’ Equity:

        

Common stock

     256,226       85,854       198,583 (j)      540,663  

Retained earnings

     266,235       37,866       (37,866 )(j)      266,235  

Accumulated other comprehensive income

     (17,205     (3,262     3,262 (j)      (17,205
  

 

 

   

 

 

     

 

 

 

Total shareholders’ equity

     505,256       120,458         789,693  
  

 

 

   

 

 

     

 

 

 

Total liabilities and shareholders’ equity

   $ 4,779,957     $ 1,259,966       $ 6,203,612  
  

 

 

   

 

 

     

 

 

 


Unaudited Pro Forma Combined Condensed Consolidated Statement of Earnings

Three Months Ended March 31, 2018

(In thousands, except per share amounts)

The unaudited pro forma condensed combined statement of income for the three months ended March 31, 2018 presents the consolidated financial results as if the merger had occurred on January 1, 2017.

 

     TriCo
Bancshares
    FNB
Bancorp
     Pro forma
merger
adjustments
    Pro forma
combined
 

Interest and dividend income:

         

Loans

   $ 38,049     $ 10,399        392 (k)    $ 48,840  

Investments:

            —    

Taxable securities

     7,322       1,364          8,686  

Nontaxable securities

     1,041       726          1,767  

Other

     709       72          781  
  

 

 

   

 

 

      

 

 

 

Total interest and dividend income

     47,121       12,561          60,074  

Interest expense:

         

Deposits

     1,096       737          1,833  

Junior subordinated debt

     342       —            342  

Other borrowings

     697       402          1,099  
  

 

 

   

 

 

      

 

 

 

Total interest expense

     2,135       1,139          3,274  
  

 

 

   

 

 

      

 

 

 

Net interest income

     44,986       11,422          56,800  

Benefit from reversal of provision for loan losses

     (236     —            (236

Noninterest income:

         

Service charges and fees

     9,356       529          9,885  

Gain on sale of loans

     626       —            626  

Commissions on sale of non-deposit investment products

     876       —            876  

Increase in cash value of life insurance

     608       99          707  

Gain on sale of foreclosed assets

     371       392          763  

Other noninterest income

     453       214          667  
  

 

 

   

 

 

      

 

 

 

Total noninterest income

     12,290       1,234          13,524  

Noninterest expense:

         

Salaries and benefits

     21,652       4,121          25,773  

Occupancy

     2,681       657        89 (l)      3,427  

Data processing and software

     2,514       143          2,657  

Equipment

     1,551       523          2,074  

ATM network charges

     1,226       77          1,303  

Advertising and marketing

     838       100          938  

Professional fees

     773       116          889  

Telecommunications

     701       214          915  

Change in reserve for unfunded commitments

     700       —            700  

Merger related expenses

     476       —          (476 )(n)      —    

Assessments

     430       165          595  

Postage

     358       29          387  

Intangible amortization

     339       33        1,139 (o)      1,511  

Operational losses

     294       9          303  

Courier service

     267       28          295  

Provision for foreclosed asset losses

     90       —            90  

Foreclosed assets expense

     24       59          83  

Other

     3,248       539          3,787  
  

 

 

   

 

 

      

 

 

 

Total noninterest expense

     38,162       6,813          45,727  
  

 

 

   

 

 

      

 

 

 

Income before income tax expense

     19,350       5,843          24,833  

Income tax expense

     5,440       1,655        (106 )(p)      6,989  
  

 

 

   

 

 

      

 

 

 

Net income

   $ 13,910     $ 4,188        $ 17,844  
  

 

 

   

 

 

      

 

 

 

Weighted average shares outstanding:

         

Basic

     22,956,000       7,463,000        (58,000 )(q)      30,361,000  

Diluted

     23,283,000       7,685,000        (280,000 )(q)      30,688,000  

Earnings per common share:

         

Basic

   $ 0.61     $ 0.56        $ 0.59  

Diluted

   $ 0.60     $ 0.54        $ 0.58  


Unaudited Pro Forma Combined Condensed Consolidated Statement of Earnings

Year Ended December 31, 2017

(In thousands, except per share amounts)

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2017 presents the consolidated financial results as if the merger had occurred on January 1, 2017.

 

     TriCo
Bancshares
     FNB
Bancorp
    Pro forma
merger
adjustments
    Pro forma
combined
 

Interest and dividend income:

         

Loans

     146,794        41,956       756 (k)      189,506  

Investments

     31,937        8,136         40,073  

Other

     2,671        126         2,797  
  

 

 

    

 

 

     

 

 

 

Total interest and dividend income

     181,402        50,218         232,376  

Interest expense:

         

Deposits

     3,958        2,807       (161 )(m)      6,604  

Junior subordinated debt

     2,535        —           2,535  

Other borrowings

     305        1,064         1,369  
  

 

 

    

 

 

     

 

 

 

Total interest expense

     6,798        3,871         10,508  
  

 

 

    

 

 

     

 

 

 

Net interest income

     174,604        46,347         221,868  

Provision (benefit from reversal of provision) for loan

     89        (360       (271

Noninterest income:

         

Service charges and fees

     37,423        2,264         39,687  

Gain on sale of loans

     3,109        94         3,203  

Commissions on sale of non-deposit investment pro

     2,729        —           2,729  

Increase in cash value of life insurance

     2,685        390         3,075  

Change in indemnification asset

     490        —           490  

Gain on sale of foreclosed assets

     711        —           711  

Gain on sale of securities

     961        210         1,171  

Other noninterest income

     1,913        902         2,815  
  

 

 

    

 

 

     

 

 

 

Total noninterest income

     50,021        3,860         53,881  

Noninterest expense:

         

Salaries and benefits

     82,930        19,366         102,296  

Occupancy

     10,894        2,747       356 (l)      13,997  

Equipment

     7,141        1,061         8,202  

Data processing and software

     10,448        585         11,033  

Assessments

     1,676        692         2,368  

ATM network charges

     4,752        344         5,096  

Advertising and marketing

     4,101        451         4,552  

Professional fees

     3,745        1,482         4,911  

Telecommunications

     2,713        772         3,485  

Postage

     1,296        132         1,428  

Courier service

     1,035        92         1,127  

Foreclosed assets expense

     231        80         311  

Intangible amortization

     1,389        171       4,555 (o)      6,115  

Operational losses

     1,394        101         1,495  

Provision for foreclosed asset losses

     162        —           162  

Change in reserve for unfunded commitments

     445        —           445  

Merger and acquisition expense

     530        —         (530 )(n)      —    

Other

     12,142        2,473         14,784  
  

 

 

    

 

 

     

 

 

 

Total noninterest expense

     147,024        30,549         181,807  
  

 

 

    

 

 

     

 

 

 

Income before income tax expense

     77,512        20,018         94,213  

Income tax expense

     36,958        9,307       (1,457 )(p)      44,808  
  

 

 

    

 

 

     

 

 

 

Net income

     40,554        10,711         49,405  
  

 

 

    

 

 

     

 

 

 

Weighted average shares outstanding:

         

Basic

     22,912,000        7,361,000       44,000 (q)      30,317,000  

Diluted

     23,250,000        7,607,000       (202,000 )(q)      30,655,000  

Earnings per common share:

         

Basic

   $ 1.77      $ 1.46       $ 1.62  

Diluted

   $ 1.74      $ 1.41       $ 1.61  


Note 1—Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting giving effect to the merger involving TriCo and FNB. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position had the merger been consummated at March 31, 2018 or the results of operations had the merger been consummated at January 1, 2017, nor is it necessarily indicative of the results of operation in future periods or the future financial position of the combined entities. The merger was completed on July 6, 2018. The merger consideration included the issuance of approximately $284.4 million in equity consideration as well as cash consideration of approximately $6.7 million.

Under the acquisition method of accounting, the assets and liabilities of FNB will be recorded at their respective fair values on the merger date. The fair value on the merger date represents management’s best estimates based on available information and facts and circumstances in existence on the merger date. Although the purchase price is indicative of the actual purchase price, the pro forma adjustments reflected in the unaudited pro forma condensed combined financial information is subject to change and may vary from the actual purchase price allocation that will be recorded when the accounting for the merger is completed. Adjustments may include, but not be limited to, changes in (i) FNB’s balance sheet through the effective time of the merger; (ii) total merger related expenses if consummation and/or implementation costs vary from currently estimated amounts; and (iii) the underlying values of assets and liabilities if market conditions differ from current assumptions.

The accounting policies of both TriCo and FNB are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments or financial statement reclassification may be determined necessary.

Note 2—Estimated Merger and Integration Costs

In connection with the merger, the integration of TriCo’s and FNB’s operations is underway, with the system conversion occurring during the month of acquisition. Trico expects to incur merger-related expenses and other expenditures including system implementation, data conversion, employee retention and severance, communications with customers and vendors, facility upgrades, and other potentially significant costs. To the extent there are costs associated with these actions, the costs will be recorded based on the nature and timing of these integration actions. Most acquisition costs are recognized separately from a business combination and generally will be expensed as incurred. We expect that the majority of merger related costs will be incurred during 2018.

Note 3—Pro Forma Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All taxable adjustments to deferred tax assets and liabilities were calculated using a 29.56% effective tax rate. Adjustments to the income tax provision were calculated using a 29.56% effective tax rate for the period ending March 31, 2018, and a 42.05% effective tax rate for the period ending December 31, 2017. All adjustments are based on current assumptions and valuations, which are subject to change.

Notes to Pro Forma Balance Sheet Adjustments (dollars in thousands)

 

(a)

   Adjustment to cash and cash equivalents   
  

Payment of cash consideration to FNB common stock option holders.

   $ (6,689
  

Payment of cash consideration to FNB common stock shareholders for fractional shares.

     (6
     

 

 

 
  

Total adjustments to cash and cash equivalents

   $ (6,695
     

 

 

 

(b)

   Adjustment to loans   
  

To reflect fair value of loans acquired.

   $ (32,962
     

 

 

 

(c)

  

Adjustment to allowance for loan losses

  
  

Since the acquired FNB loans are carried at fair value at the acquisition date, there is no carryover of FNB’s allowance for loan losses.

   $ 10,186  
     

 

 

 

(d)

   Adjustment to premises and equipment, net   
  

To reflect fair value of premises and equipment acquired.

   $ 21,590  
     

 

 

 


(e)

   Calculation of Goodwill for FNB merger   
  

Represents the recognition of goodwill resulting from the difference between the net fair value of the acquired assets and assumed liabilities and the value of consideration paid to FNB shareholders.

  
  

The excess of the value of the consideration paid over the fair vaue of net assets acquired will be recorded as goodwil and can be summarized as follows:

  
  

TriCo shares to be issued to FNB shareholders.

     7,405,000
  

Value of stock consideration to FNB shareholders.

   $ 284,437  
  

Cash consideration to FNB stock option holders for cancelled  options.

     6,689
  

Cash consideration to FNB common shareholders for fractional  shares.

     6
     

 

 

 
  

Total consideration paid

   $ 291,132  
     

 

 

 
  

Carrying value of FNB’s net assets at March 31, 2018

   $ 120,458  
  

Fair value adjustments:

  
  

Loans, net

     (22,776
  

Premises and equipment

     21,590
  

Core deposits

     27,327
  

Favorable leases

     1,226
  

Deposits

     (161
  

Other liabilities

     451
  

Deferred taxes, net

     (6,319
     

 

 

 
  

Total fair value adjustments

     21,338
     

 

 

 
  

Fair value of net assets acquired as of March 31, 2018

     141,796
     

 

 

 
  

Excess of consideration paid over fair value  of net assets acquired - (Goodwill)

   $ 149,336  
     

 

 

 

(f)

  

Adjustment to core deposit intangible

  
  

To record fair value of core deposit intangible related to FNB’s  nonmaturity deposits.

   $ 27,327  
     

 

 

 

(g)

  

Adjustment to other assets

  
  

To record the fair value of favorable leases related to FNB’s operating  leases.

   $ 1,226  
  

To reflect the net deferred tax liability created in the merger.

     (6,319
     

 

 

 
      $ (5,093
     

 

 

 
  

Calculation of the net deferred tax liability:

  
  

Adjustments:

  
  

Loans, net

     (22,776
  

Premises and equipment

     21,590
  

Core deposits

     27,327
  

Favorable leases

     1,226
  

Time deposits

     (161
  

Other deferred tax adjustments

     (5,825
     

 

 

 
  

Total adjustments

     21,381
     

 

 

 
  

Calculated net deferred tax liability created at TriCo’s estimated tax rate  of 29.56%

   $ (6,319
     

 

 

 

(h)

  

Adjustment to certificates of deposit

  
  

To reflect the estimated increase in the fair value of the certificates  of deposit.

   $ (161
     

 

 

 

(i)

  

Adjustment to other liabilities for miscellaneous items

   $ 451  
     

 

 

 

(j)

  

Adjustment to equity

  
  

To eliminate FNB’s common equity.

   $ (120,458
  

To reflect the issuance of TriCo ’s stock to FNB shareholders.

     284,437
     

 

 

 
      $ 163,979  
     

 

 

 


          3 months ended
March 31, 2018
     12 months ended
December 31, 2017
 

(k)

   Adjustment to loan interest income      
  

To reflect accretion of the loan discount resulting from the loan fair value pro forma adjustment based on weighted average remaining life of 5 years.

   $ 392      $ 756  

(l)

   Adjustment to depreciation and amortization expense of property, premises and equiment      
  

To reflect depreciation expense on adjusted values and amortization of favorable leases.

   $ 89      $ 356  

(m)

   Adjustment to interest expense on deposits to reflect accretion of the fair value adjustment on time deposits based on weighted average remaining life of 1 year.    $ —        $ (161

(n)

   Adjustment to remove acquisition expenses incurred    $ (476    $ (530

(o)

   Adjustment due to amortization of intangibles      
  

To reflect amortization of acquired core deposit intangibles based on weighted average remaining life of 6 years.

   $ 1,139      $ 4,555  

(p)

  

Adjustment to income tax provision based on pro forma adjustments

   $ (106    $ (1,457

(q)

   Adjustment to weighted average number of common shares and      
  

Shares issued by TriCo to FNB shareholders

     7,405,000      7,405,000
  

Removal of FNB weighted average number of common shares

     (7,463,000      (7,361,000
     

 

 

    

 

 

 
  

Adjustment to weighted average number of common shares

     (58,000      44,000
     

 

 

    

 

 

 
  

Shares issued by TriCo to FNB shareholders

     7,405,000      7,405,000
  

Removal of FNB weighted average number of diluted common shares

     (7,685,000      (7,607,000
     

 

 

    

 

 

 
  

Adjustment to weighted average number of diluted common shares

     (280,000      (202,000