TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company
of Tri Counties Bank (the “Bank”), today announced quarterly
earnings of $2,771,000 for the quarter ended June 30, 2011. These
earnings represent a $1,451,000 (110%) increase when compared to
earnings of $1,320,000 reported for the quarter ended June 30,
2010. Diluted earnings per share for the quarter ended June 30,
2011 was $0.17 compared to diluted earnings per share of $0.08 for
the quarter ended June 30, 2010. Diluted earnings per share for the
six months ended June 30, 2011 and 2010 were $0.35 and $0.18,
respectively, on earnings of $5,571,000 and $2,878,000,
respectively.
Total assets of the Company decreased $48,461,000 (2.2%) to
$2,176,184,000 at June 30, 2011 from $2,224,645,000 at June 30,
2010. Total loans of the Company decreased $104,878,000 (7.0%) to
$1,396,062,000 at June 30, 2011 from $1,500,940,000 at June 30,
2010. During the three months ended June 30, 2011, loans increased
$8,402,000, or 2.4% on an annualized basis. Excluding the Granite
acquisition during the quarter ended June 30, 2010, this most
recent quarterly increase in loans represents the first quarterly
increase in loans since the quarter ended December 31, 2008. Total
deposits of the Company decreased $53,218,000 (2.8%) to
$1,836,731,000 at June 30, 2011 from $1,889,949,000 at June 30,
2010. Excluding a $70,000,000 decrease in certificates of deposit
issued to the State of California that occurred during the fourth
quarter of 2010, total deposits would have increased $16,782,000
during the twelve months ended June 30, 2011. The following is a
summary of the components of net income for the periods
indicated:
Three months ended June
30, (in thousands) 2011 2010
$ Change
% Change
Net Interest Income $ 21,753 $ 22,134 ($381 ) (1.7 %) Provision for
loan losses (5,561 ) (10,000 ) 4,439 (44.4 %) Noninterest income
8,251 8,104 147 1.8 % Noninterest expense (20,095 ) (18,408 )
(1,687 ) 9.2 % Provision for income taxes (1,577 )
(510 ) (1,067 ) 209.2 % Net income $ 2,771 $ 1,320
$ 1,451 109.9 %
Net interest income during the three months ended June 30, 2011
decreased $381,000 (1.7%) from the same period in 2010 to
$21,753,000. The decrease in net interest income was due to a 0.10%
(ten basis points) decrease in net interest margin on a fully
tax-equivalent basis to 4.31% and a $69,486,000 (4.7%) decrease in
average balance of loans. Much of the ten basis point decrease in
net interest margin was due to the fact that despite historically
low deposit rates, the ability to deploy deposits into some
interest-earning asset other than short-term low-yield
interest-earning cash at the Federal Reserve Bank has been limited.
This limitation is the result of weak loan demand and investment
yields that have been unattractive given their interest rate risk
profile.
The following table details the components of the net interest
income and net interest margin on a fully tax-equivalent (FTE)
basis for the periods indicated:
Three months ended Three months ended June 30,
2011 June 30, 2010 Average Income/
Yield/ Average Income/ Yield/ Balance
Expense Rate Balance
Expense Rate Assets: Loans $ 1,393,989
$ 21,735 6.24 % $ 1,463,475 $ 22,701 6.20 % Investment securities -
taxable 271,089 2,354 3.47 % 278,799 2,733 3.92 % Investment
securities - nontaxable 11,839 216 7.31 % 15,502 299 7.71 % Cash at
Federal Reserve and other banks 351,512 242 0.28 %
261,910 154 0.24 % Total earning assets 2,028,429
24,547 4.84 % 2,019,686 25,887 5.13 % Other assets
164,222 171,974 Total $ 2,192,651 $ 2,191,660
Liabilities and shareholders' equity: Interest-bearing demand
deposits 408,109 358 0.35 % 386,788 586 0.61 % Savings deposits
613,924 372 0.24 % 541,710 613 0.45 % Time deposits 406,436 1,072
1.06 % 544,320 1,528 1.12 % Other borrowings 59,139 600 4.06 %
61,629 602 3.91 % Junior subordinated debt 41,238 312
3.03 % 41,238 313 3.04 % Total interest-bearing
liabilities 1,528,846 2,714 0.71 % 1,575,685 3,642
0.92 % Noninterest-bearing deposits 424,331 376,300 Other
liabilities 33,711 36,147 Shareholders' equity 205,763
203,528 Total liabilities and shareholders' equity $
2,192,651 $ 2,191,660 Net interest rate spread(1) 4.13 %
4.21 % Net interest income and interest margin(2) $ 21,833 4.31 % $
22,245 4.41 %
The Company provided $5,561,000 for loan losses during the three
months ended June 30, 2011 versus $10,000,000 during the three
months ended June 30, 2010. The allowance for loan losses increased
$738,000 from $43,224,000 at March 31, 2011 to $43,962,000 at June
30, 2011. The provision for loan losses and increase in the
allowance for loan and lease losses during the three months ended
June 30, 2011 were primarily the result of changes in the make-up
of the loan portfolio and the Bank’s loss factors in reaction to
losses in the construction, commercial real estate, commercial
& industrial (C&I), home equity and auto indirect loan
portfolios.
Noninterest income increased $147,000 (1.8%) to $8,251,000
during the three months ended June 30, 2011 when compared to the
three months ended June 30, 2010. The following table presents the
key components of noninterest income for the periods indicated:
Three months ended June 30, (in
thousands) 2011 2010
$ Change
% Change Service charges on deposit accounts $ 3,700 $ 4,443 ($743
) (16.7 %) ATM fees and interchange 1,776 1,531 245 16.0 % Other
service fees 437 362 75 20.7 % Mortgage banking service fees 370
315 55 17.5 % Change in value of mortgage servicing rights
(162 ) (569 ) 407 (71.5 %) Total service
charges and fees 6,121 6,082 39
0.6 % Gain on sale of loans 495 577 (82 ) (14.2 %)
Commission on NDIP 648 362 286 79.0 % Increase in cash value of
life insurance 450 426 24 5.6 % Change in indemnification asset 144
- 144 Gain (loss) on sale of foreclosed assets 185 310 (125 ) (40.3
%) Bargain purchase gain - 232 (232 ) (100.0 %) Sale of customer
checks 67 54 13 24.1 % Lease brokerage income 95 21 74 352.4 % Gain
(loss) on disposal of fixed assets (6 ) (15 ) 9 (60.0 %) Commission
rebates (16 ) (17 ) 1 (5.9 %)
Other noninterest income
68 72 (4 ) (5.6 %) Total other
noninterest income 2,130 2,022
108 5.3 % Total noninterest income $ 8,251 $ 8,104
$ 147 1.8 %
Service charges on deposit accounts were down $743,000 (16.7%)
due to new overdraft regulations that became effective on July 1,
2010 and caused a decrease in non-sufficient funds fees. ATM fees
and interchange income was up $245,000 (16.0%) due to increased
customer point-of-sale transactions that are the result of
incentives for such usage. Overall, mortgage banking activities,
which includes mortgage banking servicing fees, change in value of
mortgage servicing rights, and gain on sale of loans, accounted for
$703,000 of noninterest income during the three months ended June
30, 2011 compared to $323,000 during the three months ended June
30, 2010. Commissions on sale of nondeposit investment products
increased $286,000 (79.0%) during the three months ended June 30,
2011. The change in indemnification asset of $144,000 recorded
during the three months ended June 30, 2011 is primarily due to an
increase in estimated loan losses from the loan portfolio and
foreclosed assets acquired in the Granite acquisition on May 28,
2010, and the fact that such losses are generally “covered” at the
rate of 80% by the FDIC. The actual increase in estimated losses is
reflected in decreased interest income, increased provision for
loan losses and/or increased provision for foreclosed asset losses.
The Company recorded a bargain purchase gain of $232,000 related to
the Granite acquisition during the three months ended June 30,
2010.
Noninterest expense for the three months ended June 30, 2011 was
$20,095,000, an increase of $1,687,000 (9.2%), as compared to the
same period in 2010. The following table presents the key
components of noninterest expense for the periods indicated:
Three months ended June 30, (in
thousands) 2011 2010
$ Change
% Change
Salaries $ 7,198 $ 6,990 $ 208 3.0 % Commissions and incentives 783
526 257 48.9 % Employee benefits 2,734 2,469
265 10.7 % Total salaries and benefits expense
10,715 9,985 730 7.3 %
Occupancy 1,402 1,407 (5 ) (0.4 %) Equipment 880 1,060 (180
) (17.0 %) Change in reserve for unfunded commitments (50 ) (800 )
750 (93.8 %) Data processing and software 956 661 295 44.6 %
Telecommunications 520 461 59 12.8 % ATM network charges 507 446 61
13.7 % Professional fees 573 704 (131 ) (18.6 %) Advertising and
marketing 739 627 112 17.9 % Postage 219 311 (92 ) (29.6 %) Courier
service 221 201 20 10.0 % Intangible amortization 20 72 (52 ) (72.2
%) Operational losses 118 120 (2 ) (1.7 %) Provision for foreclosed
asset losses 638 55 583 1060.0 % Foreclosed asset expense 115 66 49
74.2 % Assessments 518 812 (294 ) (36.2 %) Other 2,004
2,220 (216 ) (9.7 %) Total other
noninterest expense 9,380 8,423
957 11.4 % Total noninterest expense $ 20,095 $
18,408 $ 1,687 9.2 %
Salary and benefit expenses increased $730,000 (7.3%) to
$10,715,000 during the three months ended June 30, 2011 compared to
the three months ended June 30, 2010. Base salaries increased
$208,000 (3.0%) to $7,198,000 during the three months ended June,
2011. The increase in base salaries was mainly due to a 2.6%
increase in average full time equivalent staff to 672. Incentive
and commission related salary expenses increased $257,000 (48.9%)
to $783,000 during three months ended June 30, 2011 due primarily
to increases in production related incentives and incentives tied
to net income. Benefits expense, including retirement, medical and
workers’ compensation insurance, and taxes, increased $265,000
(10.7%) to $2,734,000 during the three months ended June 30, 2011
primarily due to increases in stock option vesting, supplemental
retirement plan expenses, and employer taxes related to option
exercises.
Other noninterest expenses increased $957,000 (11.4%) to
$9,380,000 during the three months ended June 30, 2011 when
compared to the three months ended June 30, 2010. Changes in the
various categories of other noninterest expense are reflected in
the table above. The changes are indicative of the economic
environment which has led to increases, or fluctuations, in
professional loan collection expenses, provision for foreclosed
asset losses, and foreclosed asset expenses.
The effective tax rate on income was 36.3% and 27.9% for the
three months ended June 30, 2011 and 2010, respectively. The
effective tax rate was greater than the federal statutory tax rate
due to state tax expense of $384,000 and $108,000, respectively, in
these periods. Tax-exempt income of $136,000 and $188,000,
respectively, from investment securities, and $450,000 and
$426,000, respectively, from increase in cash value of life
insurance in these periods, along with relatively low levels of net
income before taxes, helped to reduce the effective tax rate.
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, 2010. 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 36-year history in the
banking industry. It operates 34 traditional branch locations and
27 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 69 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, March 31,
December 31, September 30, June
30, 2011 2011 2010 2010
2010
Statement of Income Data Interest income
$ 24,467 $ 24,434 $ 25,627 $ 27,233 $ 25,776 Interest expense 2,714
2,730 3,036 3,497 3,642 Net interest income $ 21,753 $ 21,704
22,591 23,736 22,134 Provision for loan losses 5,561 7,001 8,144
10,814 10,000 Noninterest income: Service charges and fees 6,121
5,782 6,045 5,237 6,082 Other income 2,130 3,568 3,836 1,926 2,022
Total noninterest income 8,251 9,350 9,881 7,163 8,104 Noninterest
expense: Base salaries net of deferred loan origination costs $
7,198 $ 7,004 7,160 7,131 6,990 Incentive compensation expense 783
916 478 294 526 Employee benefits and other compensation expense
2,734 2,873 2,434 2,473 2,469 Total salaries and benefits expense $
10,715 $ 10,793 10,072 9,898 9,985 Other noninterest expense 9,380
8,878 9,398 10,626 8,423 Total noninterest expense $ 20,095 19,671
19,470 20,524 18,408 Income (loss) before taxes $ 4,348 $ 4,382
4,858 (439 ) 1,830 Net income $ 2,771 $ 2,800 $ 3,126 $ 1 $ 1,320
Share Data Basic earnings per share $ 0.17 $ 0.18 $ 0.20 $
0.00 $ 0.08 Diluted earnings per share $ 0.17 $ 0.17 $ 0.20 $ 0.00
$ 0.08 Book value per common share $ 12.82 $ 12.72 $ 12.64 $ 12.66
$ 12.76 Tangible book value per common share $ 11.82 $ 11.71 $
11.62 $ 11.64 $ 11.74 Shares outstanding 15,978,958 15,860,138
15,860,138 15,860,138 15,860,138 Weighted average shares 15,922,228
15,860,138 15,860,138 15,860,138 15,860,138 Weighted average
diluted shares 15,953,572 16,023,589 16,009,538 15,972,826
16,107,909
Credit Quality Nonperforming loans $ 73,720 $
71,053 $ 75,987 $ 84,983 $ 72,708 Guaranteed portion of
nonperforming loans(2) 3,496 3,736 3,937 4,131 4,674 Foreclosed
assets, net of allowance 9,337 8,983 9,913 11,172 9,945 Loans
charged-off 5,230 7,049 6,040 11,163 8,424 Loans recovered 407 701
1,698 689 513 Allowance for losses to total loans(1) 3.34 % 3.31 %
3.18 % 2.86 % 2.75 % Allowance for losses to NPLs(1) 63 % 65 % 59 %
49 % 57 % Allowance for losses to NPAs(1) 56 % 57 % 53 % 43 % 50 %
Selected Financial Ratios Return on average total assets
0.51 % 0.51 % 0.56 % 0.00 % 0.24 % Return on average equity 5.39 %
5.50 % 6.14 % 0.00 % 2.61 % Average yield on loans 6.24 % 6.22 %
6.39 % 6.61 % 6.20 % Average yield on interest-earning assets 4.84
% 4.84 % 4.88 % 5.31 % 5.13 % Average rate on interest-bearing
liabilities 0.71 % 0.72 % 0.76 % 0.87 % 0.92 % Net interest margin
(fully tax-equivalent) 4.31 % 4.31 % 4.30 % 4.63 % 4.41 % (1 )
Allowance for losses includes allowance for loan losses and reserve
for unfunded commitments. (2 )
Portion of nonperforming loans guaranteed
by the U.S. Government, including its agencies and its
government-sponsored agencies.
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands) Three months
ended June 30, March 31, December 31,
September 30, June 30,
Balance Sheet
Data 2011 2011 2010
2010 2010 Cash and due from banks $ 391,054 $ 406,294
$ 371,066 $ 398,191 $ 322,644 Securities, available-for-sale
264,992 279,824 277,271 250,012 275,783 Federal Home Loan Bank
Stock 9,199 9,133 9,133 9,157 9,523 Loans held for sale 4,379 2,834
4,988 9,455 4,153 Loans: Commercial loans 140,531 131,242 141,902
149,743 162,898 Consumer loans 382,864 388,142 423,238 436,597
434,943 Real estate mortgage loans 828,757 823,563 807,482 821,562
860,615 Real estate construction loans 43,910 44,713 46,949 44,890
42,484 Total loans, gross 1,396,062 1,387,660 1,419,571 1,452,792
1,500,940 Allowance for loan losses (43,962 ) (43,224 ) (42,571 )
(38,770 ) (38,430 ) Foreclosed assets 9,337 8,983 9,913 11,172
9,945 Premises and equipment 20,142 18,552 19,120 18,947 19,001
Cash value of life insurance 51,441 50,991 50,541 49,972 49,546
Goodwill 15,519 15,519 15,519 15,519 15,519 Intangible assets 475
495 580 665 750 Mortgage servicing rights 4,818 4,808 4,605 3,905
4,033 FDIC indemnification asset 4,545 6,689 5,640 5,098 7,515
Accrued interest receivable 6,549 6,941 7,131 7,318 7,472 Other
assets 41,634 40,239 37,282 36,185 36,251 Total assets 2,176,184
2,195,738 2,189,789 2,229,618 2,224,645 Deposits:
Noninterest-bearing demand deposits 419,391 427,116 424,070 389,315
386,617 Interest-bearing demand deposits 401,040 406,060 395,413
383,859 383,578 Savings deposits 618,413 608,582 585,845 577,603
552,616 Time certificates 397,887 418,154 446,845 537,764 567,138
Total deposits 1,836,731 1,859,912 1,852,173 1,888,541 1,889,949
Accrued interest payable 1,865 2,044 2,151 2,368 2,487 Reserve for
unfunded commitments 2,640 2,690 2,640 2,840 2,840 Other
liabilities 29,561 30,262 29,170 26,721 25,257 Other borrowings
59,234 57,781 62,020 67,182 60,452 Junior subordinated debt 41,238
41,238 41,238 41,238 41,238 Total liabilities 1,971,269 1,993,927
1,989,392 2,028,890 2,022,223 Total shareholders' equity 204,915
201,811 200,397 200,728 202,422 Accumulated other comprehensive
gain (loss) 2,644 1,086 1,310 3,606 4,132 Average loans 1,393,989
1,396,331 1,443,603 1,481,497 1,463,473 Average interest-earning
assets 2,028,429 2,024,285 2,107,499 2,060,108 2,019,684 Average
total assets 2,192,651 2,189,363 2,235,471 2,237,670 2,191,660
Average deposits 1,852,800 1,851,606 1,895,006 1,893,677 1,849,118
Average total equity $ 205,763 $ 203,535 $ 203,712 $ 205,324 $
203,528 Total risk based capital ratio 14.6 % 14.5 % 14.2 % 13.8 %
13.6 % Tier 1 capital ratio 13.3 % 13.2 % 12.9 % 12.6 % 12.3 % Tier
1 leverage ratio 10.4 % 10.3 % 10.0 % 9.9 % 10.2 % Tangible capital
ratio 8.7 % 8.5 % 8.5 % 8.3 % 8.4 %
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