TCBK TriCo Bancshares

TriCo Bancshares (NASDAQ:TCBK), parent company of Tri Counties Bank, today announced quarterly earnings of $2,274,000 for the quarter ended June 30, 2008. This represents a 66.3% decrease when compared with earnings of $6,755,000 for the quarter ended June 30, 2007. Diluted earnings per share for the quarter ended June 30, 2008 decreased 65.8% to $0.14 from $0.41 for the quarter ended June 30, 2007. The decrease in earnings from the prior year quarter was primarily due to the Company's decision to increase by $8,300,000 the provision for loan losses to $8,800,000 and a $476,000 increase in the provision for credit losses on unfunded commitments to $550,000 for the quarter ended June 30, 2008. Total assets of the Company increased $93,463,000 (5.0%) to $1,980,490,000 at June 30, 2008 from $1,887,027,000 at June 30, 2007. Total loans of the Company increased $35,696,000 (2.4%) to $1,543,324,000 at June 30, 2008 from $1,507,628,000 at June 30, 2007. Total deposits of the Company increased $174,000 (0.01%) to $1,511,053,000 at June 30, 2008 from $1,510,879,000 at June 30, 2007. Diluted earnings per share for the six months ended June 30, 2008 and 2007 were $0.39 and $0.80, respectively, on earnings of $6,322,000 and $13,199,000, respectively. Net interest income (FTE) during the second quarter of 2008 increased $721,000 (3.2%) from the same period in 2007 to $23,029,000. The increase in net interest income (FTE) was due to a $120,602,000 (7.1%) increase in average balances of interest-earning assets to $1,819,222,000 that was partially offset by a 0.19% decrease in net interest margin (FTE) to 5.06% from the second quarter of 2007. The Company provided $8,800,000 for loan losses in the second quarter of 2008 versus $500,000 in the second quarter of 2007. In the second quarter of 2008, the Company recorded $3,902,000 of net loan charge-offs versus $396,000 of net loan charge-offs in the second quarter of 2007. During the second quarter of 2008, the Company re-appraised all of its larger residential development projects. As a result of this effort, the Company charged-off $1,007,000 on a twenty-eight unit residential condominium project and $640,000 on a twenty-seven lot residential construction project. In addition, net charge-offs of $950,000 on home equity lines and loans and $554,000 on auto indirect loans were taken during the second quarter of 2008. During the second quarter of 2008, the Company also increased its allowance for loan losses by $4,898,000 from the first quarter of 2008 with such additional reserves allocated primarily to consumer loans, residential real estate and construction lending. At June 30, 2008, the sum of the Company�s allowance for loan losses of $24,281,000 and the reserve for unfunded commitments of $3,465,000 represented 187% of non-performing loans net of government agency guarantees. Non-performing loans, defined as non-accruing loans and accruing loans delinquent 90 days or more, net of government guarantees at June 30, 2008 increased $4,958,000 (50.3%) to $14,808,000 from $9,850,000 at March 31, 2008. Noninterest income for the second quarter of 2008 increased $251,000 (3.6%) from the second quarter of 2007, mainly due to a $241,000 increase in value of mortgage servicing rights to a positive $168,000 from a negative $73,000 for the second quarter of 2007. Also contributing to this increase in noninterest income was a $105,000 (2.7%) increase in service charges on deposit accounts to $3,963,000 and a $122,000 (11.7%) increase in ATM fees and interchange to $1,168,000. The increases in service charges on deposit accounts and ATM fees and interchange revenue were primarily due to increased number of customers. The improvement in change in value of mortgage servicing rights was primarily due to a slowdown in refinance activity which extends the estimated life of existing mortgages and enhances the value of the related mortgage servicing rights. The following table summarizes the components of noninterest income for the quarters ended June 30, 2008 and 2007 (dollars in thousands). � Three months ended June 30, 2008 � 2007 � Service charges on deposit accounts $ 3,963 � $ 3,858 ATM fees and interchange revenue 1,168 1,046 Other service fees 527 544 Change in value of mortgage servicing rights 168 (73 ) Gain on sale of loans 316 279 Commissions on sale of nondeposit investment products 525 550 Increase in cash value of life insurance 360 405 Other noninterest income � 253 � � 420 � Total noninterest income $ 7,280 � $ 7,029 � Noninterest expense for the second quarter of 2008 increased $401,000 (2.3%) compared to the second quarter of 2007. Salaries and benefits expense increased $26,000 (0.3%) in the second quarter of 2008 compared to $9,645,000 in the second quarter of 2007, mainly due to annual salary increases and increased benefit costs that were substantially offset by reduced incentive compensation. Other noninterest expense increased $375,000 (4.8%) in the second quarter of 2008 primarily due to a $476,000 increase in provision for credit losses on unfunded commitments. The following table summarizes the components of noninterest expense for the quarters ended June 30, 2008 and 2007 (dollars in thousands). � Three months ended June 30, 2008 � 2007 Base salaries, net of deferred loan origination costs $ 6,316 $ 5,940 Incentive compensation 830 1,281 Benefits and other compensation costs � 2,499 � � � 2,398 � Total salaries and benefits expense � 9,645 � � � 9,619 � Occupancy 1,228 1,178 Equipment 998 1,072 Telecommunications 630 419 Data processing and software 596 499 Provisions for losses - unfunded commitments 550 74 ATM network charges 529 498 Professional fees 509 462 Advertising and marketing 434 600 Courier service 275 284 Postage 216 203 Intangible amortization 133 122 Operational losses 92 125 Assessments 83 84 Other � 1,926 � � � 2,204 � Total other noninterest expense � 8,199 � � � 7,824 � Total noninterest expense $ 17,844 � � $ 17,443 � Average full time equivalent staff 626 630 Noninterest expense to revenue (FTE) 58.87 % 59.46 % As of June 30, 2008, the Company had repurchased 166,600 shares of its common stock under its stock repurchase plan announced on August 21, 2007, which left 333,400 shares available for repurchase under the plan. Richard Smith, President and Chief Executive Officer commented, �Due to the continued economic uncertainty in California, during the second quarter of 2008 we remained focused upon building our loan loss reserves to position ourselves in managing through this difficult economic cycle. Since the beginning of the year our allowance for losses to total loans has increased from 1.25% to 1.80% at June 30, 2008. Although this has lowered our earnings per share, we believe that operating with higher loan loss reserves combined with our strong capital position best serves the interest of our shareholders and customers in the long term. Our net interest income and noninterest income have remained strong during the second quarter of 2008 and exceeded the levels during the second quarter of 2007. We continue to add new bank customers as we execute our core business strategies.� 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, 2007. 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 33-year history in the banking industry. Tri Counties Bank operates 32 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 64 ATMs and a 24-hour, seven days a week telephone customer service center. Brokerage services are provided at the Bank�s offices by the Bank�s association with Raymond James Financial, 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, � March 31, � December 31, � September 30, � June 30, 2008 � 2008 � 2007 � 2007 � 2007 Statement of Income Data Interest income $30,332 $31,130 $32,179 $32,442 $31,986 Interest expense 7,471 9,765 10,869 10,602 9,895 Net interest income 22,861 21,365 21,310 21,840 22,091 Provision for loan losses 8,800 4,100 1,350 700 500 Noninterest income: Service charges and fees 5,826 5,128 5,546 5,218 5,375 Other income 1,454 1,722 1,568 1,629 1,654 Total noninterest income 7,280 6,850 7,114 6,847 7,029 Noninterest expense: Base salaries net of deferred loan origination costs 6,316 6,333 6,504 6,142 5,940 Incentive compensation expense 830 560 873 452 1,281 Employee benefits and other compensation expense 2,499 2,587 2,353 2,381 2,398 Total salaries and benefits expense 9,645 9,480 9,730 8,975 9,619 Intangible amortization 133 122 122 122 122 Provision for losses - unfunded commitments 550 825 50 - 74 Other expense 7,516 7,146 7,849 7,655 7,628 Total noninterest expense 17,844 17,573 17,751 16,752 17,443 Income before taxes 3,497 6,542 9,323 11,235 11,177 Net income $2,274 $4,048 $5,701 $6,793 $6,755 Share Data Basic earnings per share $0.14 $0.26 $0.36 $0.43 $0.42 Diluted earnings per share 0.14 0.25 0.35 0.42 0.41 Book value per common share 11.86 12.02 11.87 11.50 11.22 Tangible book value per common share $10.81 $10.97 $10.82 $10.44 $10.16 Shares outstanding 15,744,881 15,744,950 15,911,550 15,891,300 15,917,291 Weighted average shares 15,744,881 15,842,085 15,908,151 15,889,061 15,916,313 Weighted average diluted shares 15,953,288 16,081,722 16,265,571 16,310,631 16,463,389 Credit Quality Non-performing loans, net of government agency guarantees $14,808 $9,850 $7,511 $7,507 $13,360 Other real estate owned 1,178 836 187 187 187 Loans charged-off 4,176 2,385 1,425 843 751 Loans recovered $274 $337 $267 $283 $355 Allowance for losses to total loans(1) 1.80% 1.44% 1.25% 1.25% 1.26% Allowance for losses to NPLs(1) 187% 226% 259% 255% 143% Allowance for losses to NPAs(1) 174% 209% 252% 249% 141% Selected Financial Ratios Return on average total assets 0.46% 0.81% 1.17% 1.44% 1.44% Return on average equity 4.74% 8.37% 12.08% 14.92% 15.11% Average yield on loans 6.99% 7.22% 7.64% 7.93% 7.93% Average yield on interest-earning assets 6.71% 6.80% 7.29% 7.58% 7.58% Average rate on interest-bearing liabilities 2.11% 2.78% 3.16% 3.18% 3.02% Net interest margin (fully tax-equivalent) 5.06% 4.74% 4.85% 5.12% 5.25% Total risk based capital ratio 12.3% 12.1% 11.9% 11.7% 11.8% Tier 1 Capital ratio 11.0% 10.9% 10.9% 10.7% 10.8% � (1)�� Allowance for losses includes allowance for loan losses and reserve for unfunded commitments. TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA (Unaudited. Dollars in thousands) � � Three months ended June 30, � March 31, � December 31, � September 30, � June 30, 2008 � � 2008 � � 2007 � � 2007 � � 2007 � Balance Sheet Data Cash and due from banks $76,658 $74,713 $88,798 $70,791 $93,636 Federal funds sold - - - 488 1,715 Securities, available-for-sale 253,129 272,276 232,427 239,242 175,891 Federal Home Loan Bank Stock 9,010 8,885 8,766 8,652 8,543 Loans Commercial loans 178,104 157,832 164,815 165,559 159,822 Consumer loans 518,200 525,065 535,819 542,875 526,575 Real estate mortgage loans 751,651 729,704 716,013 697,670 687,744 Real estate construction loans 95,369 135,343 135,319 128,972 133,487 Total loans, gross 1,543,324 1,547,944 1,551,966 1,535,076 1,507,628 Allowance for loan losses (24,281 ) (19,383 ) (17,331 ) (17,139 ) (16,999 ) Premises and equipment 19,580 20,069 20,492 20,804 20,891 Cash value of life insurance 45,701 45,341 44,981 44,751 44,346 Goodwill 15,519 15,519 15,519 15,519 15,519 Intangible assets 920 1,053 1,176 1,298 1,421 Other assets 40,930 32,933 33,827 34,041 34,436 Total assets 1,980,490 1,999,350 1,980,621 1,953,523 1,887,027 Deposits Noninterest-bearing demand deposits 347,336 358,684 378,680 345,467 366,321 Interest-bearing demand deposits 215,530 216,478 216,952 214,726 226,591 Savings deposits 382,918 398,763 383,226 386,866 387,422 Time certificates 565,269 554,550 566,365 585,083 530,545 Total deposits 1,511,053 1,528,475 1,545,223 1,532,142 1,510,879 Federal funds purchased 123,750 102,300 56,000 66,000 80,500 Reserve for unfunded commitments 3,465 2,915 2,090 2,040 2,040 Other liabilities 29,250 31,355 31,066 29,382 28,878 Other borrowings 85,048 103,767 116,126 99,996 44,892 Junior subordinated debt 41,238 41,238 41,238 41,238 41,238 Total liabilities 1,793,804 1,810,050 1,791,743 1,770,798 1,708,427 Total shareholders' equity 186,686 189,300 188,878 182,725 178,600 Accumulated other comprehensive gain (loss) (2,980 ) 25 (1,552 ) (3,628 ) (4,779 ) Average loans 1,546,257 1,535,357 1,530,729 1,517,419 1,506,913 Average interest-earning assets 1,819,222 1,817,212 1,776,770 1,721,547 1,698,620 Average total assets 1,986,674 1,988,666 1,949,096 1,891,992 1,871,260 Average deposits 1,507,252 1,511,604 1,545,369 1,499,793 1,500,733 Average total equity $192,005 $193,449 $188,753 $182,080 $178,836