TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company
of Tri Counties Bank (the “Bank”), today announced earnings of
$4,722,000, or $0.29 per diluted share, for the three months ended
December 31, 2012. These results compare to earnings of $6,549,000,
or $0.41 per diluted share reported by the Company for the three
months ended December 31, 2011. Included in the results for the
three months ended December 31, 2012 and 2011 were life insurance
benefits of $75,000 and $789,000, respectively. Excluding these
life insurance benefits, earnings for the three months ended
December 31, 2012 and 2011 would have been approximately $4,647,000
and $5,760,000, respectively, or $0.29 and $0.36 per diluted share,
respectively.
Diluted earnings per share for the years ended December 31, 2012
and 2011 were $1.18 and $1.16, respectively, on earnings of
$18,944,000 and $18,590,000, respectively. Included in the results
for the year ended December 31, 2012 is a legal settlement expense
of $2,090,000 that was previous disclosed on September 27, 2012,
and $675,000 of life insurance benefits. Included in the results
for the year ended December 31, 2011 was a $7,575,000 bargain
purchase gain related to the Company’s acquisition of the banking
operations of Citizens Bank of Northern California on September 23,
2011, and $789,000 of life insurance benefits. Excluding the
$2,090,000 legal settlement expense, and the $675,000 of life
insurance benefits, earnings for the year ended December 31, 2012
would have been approximately $19,530,000, or approximately $1.22
per diluted share. Excluding the $7,575,000 bargain purchase gain,
and the $789,000 of life insurance benefits, earnings for the year
ended December 31, 2011 would have been approximately $13,411,000,
or $0.84 per diluted share.
Total assets of the Company increased $53,672,000 (2.1%) to
$2,609,269,000 at December 31, 2012 from $2,555,597,000 at December
31, 2011. Total loans of the Company increased $13,791,000 (0.9%)
to $1,564,823,000 at December 31, 2012 from $1,551,032,000 at
December 31, 2011. Total deposits of the Company increased
$99,166,000 (4.5%) to $2,289,702,000 at December 31, 2012 from
$2,190,536,000 at December 31, 2011.
The following is a summary of the components of the Company’s
consolidated net income for the periods indicated:
Three months ended December 31,
(dollars in thousands) 2012 2011
$ Change
% Change
Net Interest Income $ 24,771 $ 27,280 ($2,509 ) (9.2 %) Provision
for loan losses (1,524 ) (5,429 ) 3,905 (71.9 %) Noninterest income
10,011 10,489 (478 ) (4.6 %) Noninterest expense (25,126 ) (22,076
) (3,050 ) 13.8 % Provision for income taxes (3,410 )
(3,715 ) 305 (8.2 %) Net income $ 4,722 $
6,549 ($1,827 ) (27.9 %)
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
December 31,
2012
September 30,
2012
December 31,
2011
Average Income/ Yield/ Average Income/
Yield/ Average Income/ Yield/ Balance Expense Rate
Balance Expense Rate Balance Expense Rate Assets Earning assets
Loans $ 1,574,329 $ 24,245 6.16 % $ 1,573,816 $ 25,530 6.49 % $
1,570,648 $ 27,247 6.94 % Investments - taxable 174,954 1,348 3.08
% 195,951 1,455 2.97 % 245,683 1,887 3.07 % Investments -
nontaxable 9,433 168 7.12 % 9,561 173 7.24 % 10,128 181 7.15 %
Federal funds sold 624,510 445 0.29 %
571,837 372 0.26 % 493,746
361 0.29 % Total earning assets 2,383,226
26,206 4.40 % 2,351,164 27,530 4.68 %
2,320,205 29,676 5.12 % Other assets, net
182,081 168,095 193,429 Total assets $ 2,565,307 $
2,519,259 $ 2,513,634
Liabilities and shareholders' equity
Interest-bearing Demand deposits $ 494,259 174 0.14 % $ 479,565 196
0.16 % $ 424,109 235 0.22 % Savings deposits 772,233 305 0.16 %
757,491 314 0.17 % 800,035 351 0.18 % Time deposits 347,714 570
0.66 % 359,507 596 0.66 % 433,844 801 0.74 % Other borrowings 9,024
2 0.09 % 41,852 395 3.78 % 75,179 617 3.28 % Trust preferred
securities 41,238 321 3.11 %
41,238 333 3.23 % 41,238
325 3.15 % Total interest-bearing liabilities 1,664,468
1,372 0.33 % 1,679,652 1,834 0.44 %
1,774,405 2,329 0.53 % Noninterest-bearing deposits
633,570 577,523 491,434 Other liabilities 36,973 35,227 32,816
Shareholders' equity 230,296 226,857 214,979
Total liabilities and shareholders'
equity
$ 2,565,307 $ 2,519,259 $ 2,513,634 Net interest rate spread 4.07 %
4.24 % 4.59 % Net interest income/net interest margin (FTE)
24,834 4.17 % 25,696 4.37 % 27,347
4.71 % FTE adjustment (63 ) (65 ) (67 )
Net interest income (not FTE) $ 24,771 $ 25,631 $
27,280
Net interest income (FTE) during the three months ended December
31, 2012 decreased $862,000 (3.4%) when compared to the three
months ended September 30, 2012, and decreased $2,513,000 (9.2%)
when compared to the three months ended December 31, 2011. These
decreases in net interest income (FTE) are primarily due to
decreases in the average yield on loans that are primarily due to
decreases in market yields on new and renewed loans, and from
decreased discount amortization from purchased loans. 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 $1,524,000 for loan losses in the fourth
quarter of 2012 versus $532,000 in the third quarter of 2012 and
$5,429,000 in the fourth quarter of 2011. The decrease in provision
for loan losses during the fourth quarter of 2012 compared to the
fourth quarter of 2011 was primarily the result of improvement in
collateral values and estimated cash flows related to nonperforming
and purchased credit impaired loans, and a reduction in
nonperforming loans.
The following table presents the key components of noninterest
income for the periods indicated:
Three months ended December 31,
(dollars in thousands) 2012 2011
$ Change
% Change
Service charges on deposit accounts 3,502 3,877 ($375 ) (9.7 %) ATM
fees and interchange 2,040 1,857 183 9.9 % Other service fees 483
419 64 15.3 % Mortgage banking service fees 512 389 123 31.6 %
Change in value of mortgage servicing rights (502 ) (85 )
(417 ) 490.6 % Total service charges and fees 6,035 6,457
(422 ) (6.5 %) Gain on sale of loans 2,493
1,219 1,274 104.5 % Commission on NDIP 745 555 190 34.2 % Increase
in cash value of life insurance 470 535 (65 ) (12.1 %) Change in
indemnification asset (501 ) 512 (1,013 ) (197.9 %) Gain on sale of
foreclosed assets 422 213 209 98.1 % Gain on life insurance death
benefit 75 789 (714 ) (90.5 %) Other noninterest income 272
209 63 30.1 % Total other noninterest income
3,976 4,032 (56 ) (1.4 %) Total noninterest
income 10,011 10,489 ($478 ) (4.6 %)
The $375,000 decrease in service charges on deposit accounts is
due to decreased nonsufficient funds fees. The $183,000 increase in
ATM fees and interchange revenue is primarily due to increased
interchange revenue as a result of additional resources focused on
growing that line of business. The $123,000 increase in mortgage
banking service fees, and the $1,274,000 increase in gain on sale
of loans are due to a significant increase in residential real
estate mortgage loans originated and sold by the Bank for which the
Bank remains as the loan servicer. The increase in residential real
estate mortgage loans originated by the Bank is primarily due to
historically low interest rates, and an increase in resources
focused in this area. These same historically low interest rates
have shortened the estimated life of the loans that the Bank
services, thus shortening and reducing the estimated cash flow
stream of servicing revenue from such loans, and thus, reducing the
value the Bank’s mortgage servicing rights. This decrease in
mortgage servicing rights negatively impacted service charge and
fee revenue by $417,000 when compared to the year-ago quarter. The
$190,000 increase in commission on sale of non-deposit investment
products (NDIP) is due to increase resources focused in that area.
The $1,013,000 negative impact from change in indemnification asset
is due to improved (lessened) future loss estimates related to
loans covered by FDIC loss-sharing agreements. While this item has
a negative impact on this revenue item, it is more than offset by a
reduction in the Bank’s loan loss provision.
Salary and benefit expenses increased $1,573,000 (14.6%) to
$12,338,000 during the three months ended December 31, 2012
compared to the three months ended December 31, 2011. Base salaries
increased $253,000 (3.1%) to $8,324,000 during the three months
ended December 31, 2012. The increase in base salaries was mainly
due to annual merit increases. Incentive and commission related
salary expenses increased $974,000 (518%) to $1,162,000 during
three months ended December 31, 2012 due primarily to large net
income related bonus accrual reversals made during the three months
ended December 31, 2011. These reversals were made in the year-ago
period when it became apparent that certain production targets
would not be achieved. Benefits expense, including retirement,
medical and workers’ compensation insurance, and taxes, increased
$346,000 (13.8%) to $2,852,000 during the three months ended
December 31, 2012 primarily due to increased medical insurance
costs.
Other noninterest expenses increased $1,477,000 (13.1%) to
$12,788,000 during the three months ended December 31, 2012 when
compared to the three months ended December 31, 2011. The increase
in other noninterest expense is primarily due to a $960,000
increase in change in reserve for unfunded commitments to
$1,060,000 for the three months ended December 31, 2012. This
increase in change in reserve for unfunded commitments is primarily
due to an increase in unfunded construction loan commitments during
the three months ended December 31, 2012. Other changes in the
various categories of other noninterest expense are reflected in
the table below. 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 following table presents the key components of the Company’s
noninterest expense for the periods indicated:
Three months ended December 31,
(dollars in thousands) 2012 2011 $Change % Change Salaries $
8,324 $ 8,071 $ 253 3.1 % Commissions and incentives 1,162 188 974
518.1 % Employee benefits 2,852 2,506 346
13.8 % Total salaries and benefits expense 12,338
10,765 1,573 14.6 % Occupancy 1,839
1,815 24 1.3 % Equipment 1,063 1,020 43 4.2 % Change in reserve for
unfunded commitments 1,060 100 960 Data processing and software
1,204 1,232 (28 ) (2.3 %) Telecommunications 575 567 8 1.4 % ATM
network charges 762 525 237 45.1 % Professional fees 763 682 81
11.9 % Advertising and marketing 805 871 (66 ) (7.6 %) Postage 216
337 (121 ) (35.9 %) Courier service 298 302 (4 ) (1.3 %) Intangible
amortization 52 52 0 0.0 % Operational losses 357 207 150 72.5 %
Provision for foreclosed asset losses 208 592 (384 ) (64.9 %)
Foreclosed asset expense 398 258 140 54.3 % Assessments 607 589 18
3.1 % Other 2,581 2,162 419 19.4 %
Total other noninterest expense 12,788 11,311
1,477 13.1 % Total noninterest expense $ 25,126 $ 22,076 $
3,050 13.8 %
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, 2011. 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 37-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 December 31, September 30, June 30,
March 31, December 31, 2012 2012 2012
2012 2011
Statement of Income Data Interest
income $ 26,143 $ 27,465 $ 27,944 $ 27,164 $ 29,609 Interest
expense 1,372 1,834 2,010 2,128 2,329 Net interest income 24,771
25,631 25,934 25,036 27,280 Provision for loan losses 1,524 532
3,371 3,996 5,429 Noninterest income: Service charges and fees
6,035 5,783 6,155 5,952 6,457 Other income 3,976 3,344 4,422 2,313
4,032 Total noninterest income 10,011 9,127 10,577 8,265 10,489
Noninterest expense:
Base salaries net of deferred loan
origination costs
8,324 8,337 8,273 8,159 8,071 Incentive compensation expense 1,162
1,254 1,347 1,375 188
Employee benefits and other compensation
expense
2,852 2,771 2,870 3,228 2,506 Total salaries and benefits expense
12,338 12,362 12,490 12,762 10,765 Other noninterest expense 12,788
13,228 11,877 10,153 11,311 Total noninterest expense 25,126 25,590
24,367 22,915 22,076 Income before taxes 8,132 8,636 8,773 6,390
10,264 Net income $ 4,722 $ 5,020 $ 5,321 $ 3,931 $ 6,549
Share
Data Basic earnings per share $ 0.30 $ 0.31 $ 0.33 $ 0.25 $
0.41 Diluted earnings per share $ 0.29 $ 0.31 $ 0.33 $ 0.25 $ 0.41
Book value per common share $ 14.33 $ 14.21 $ 13.96 $ 13.71 $ 13.55
Tangible book value per common share $ 13.30 $ 13.16 $ 12.91 $
12.66 $ 12.49 Shares outstanding 16,000,838 15,992,893 15,992,893
15,978,958 15,978,958 Weighted average shares 15,996,137 15,992,893
15,985,922 15,978,958 15,978,958 Weighted average diluted shares
16,064,685 16,051,876 16,047,344 16,042,765 16,015,312
Credit
Quality Nonperforming originated loans $ 61,769 $ 66,654 $
69,749 $ 70,764 $ 75,775 Total nonperforming loans 72,516 81,611
82,877 82,575 85,731 Guaranteed portion of nonperforming loans 131
218 218 218 3,061 Foreclosed assets, net of allowance 7,498 10,185
12,743 14,789 16,332 Loans charged-off 4,006 3,368 4,188 4,922
5,340 Loans recovered 983 1,133 1,214 464 525
Selected Financial
Ratios Return on average total assets 0.74 % 0.80 % 0.85 % 0.63
% 1.04 % Return on average equity 8.20 % 8.85 % 9.54 % 7.14 % 12.19
% Average yield on loans 6.16 % 6.49 % 6.73 % 6.53 % 6.94 % Average
yield on interest-earning assets 4.40 % 4.68 % 4.81 % 4.66 % 5.12 %
Average rate on interest-bearing liabilities 0.33 % 0.44 % 0.48 %
0.49 % 0.53 % Net interest margin (fully tax-equivalent) 4.17 %
4.37 % 4.46 % 4.30 % 4.71 %
Supplemental Loan Interest Income
Data: Discount accretion PCI - cash basis loans 42 24 108 18
418 Discount accretion PCI - other loans 979 1,192 886 776 949
Discount accretion PNCI loans 841 591 1,391 1,286 1,738 Regular
interest Purchased loans 3,226 3,251 3,439 3,420 3,651 All other
loan interest income 19,157 20,472 19,968 19,429 20,491 Total loan
interest income 24,245 25,530 25,792 24,929 27,247
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA (Unaudited.
Dollars in thousands) Three months ended December 31,
September 30, June 30, March 31, December 31,
Balance Sheet Data 2012 2012 2012 2012
2011 Cash and due from banks $ 748,899 $ 622,494 $ 644,102 $
681,760 $ 637,275 Securities, available-for-sale 163,027 183,432
202,849 212,157 229,223 Federal Home Loan Bank Stock 9,647 9,647
9,990 10,508 10,610 Loans held for sale 12,053 14,937 5,321 5,869
10,219 Loans: Commercial loans 135,528 145,469 139,733 129,906
139,131 Consumer loans 386,111 388,844 393,248 419,539 406,330 Real
estate mortgage loans 1,010,130 1,007,432 984,147 924,336 965,922
Real estate construction loans 33,054 33,902 35,354 37,304 39,649
Total loans, gross 1,564,823 1,575,647 1,552,482 1,511,085
1,551,032 Allowance for loan losses (42,648 ) (44,146 ) (45,849 )
(45,452 ) (45,914 ) Foreclosed assets 7,498 10,185 12,743 14,789
16,332 Premises and equipment 26,985 24,083 22,595 19,814 19,893
Cash value of life insurance 50,582 50,742 50,292 50,853 50,403
Goodwill 15,519 15,519 15,519 15,519 15,519 Intangible assets 1,092
1,144 1,196 1,248 1,301 Mortgage servicing rights 4,552 4,485 4,757
4,784 4,603 FDIC indemnification asset 1,997 2,485 4,046 3,405
4,405 Accrued interest receivable 6,636 7,638 7,545 7,095 7,312
Other assets 38,607 37,189 38,030 39,474 43,384 Total assets
2,609,269 2,515,481 2,525,618 2,532,908 2,555,597 Deposits:
Noninterest-bearing demand deposits 684,833 592,529 578,010 564,143
541,276 Interest-bearing demand deposits 503,465 483,557 480,337
488,573 431,565 Savings deposits 762,919 767,244 737,433 724,449
797,182 Time certificates 338,485 358,309 369,997 392,581 420,513
Total deposits 2,289,702 2,201,639 2,165,777 2,169,746 2,190,536
Accrued interest payable 1,036 1,139 1,415 1,587 1,674 Reserve for
unfunded commitments 3,615 2,555 2,590 2,550 2,740 Other
liabilities 35,122 32,449 30,538 29,675 30,427 Other borrowings
9,197 9,264 60,831 69,074 72,541 Junior subordinated debt 41,238
41,238 41,238 41,238 41,238 Total liabilities 2,379,910 2,288,284
2,302,389 2,313,870 2,339,156 Total shareholders' equity 229,359
227,197 223,229 219,038 216,441
Accumulated other comprehensive gain
2,159 3,635 3,537 3,658 3,811 Average loans 1,574,329 1,573,816
1,534,006 1,527,536 1,570,648 Average interest-earning assets
2,383,226 2,351,164 2,331,148 2,334,842 2,320,205 Average total
assets 2,565,307 2,519,259 2,509,099 2,514,541 2,513,634 Average
deposits 2,247,776 2,174,085 2,148,964 2,149,212 2,149,422 Average
total equity $ 230,296 $ 226,857 $ 223,028 $ 220,366 $ 214,979
Total risk based capital ratio 14.5 % 14.4 % 14.3 % 14.3 % 13.9 %
Tier 1 capital ratio 13.3 % 13.1 % 13.0 % 13.0 % 12.7 % Tier 1
leverage ratio 9.8 % 9.9 % 9.7 % 9.5 % 9.5 % Tangible capital ratio
8.2 % 8.4 % 8.2 % 8.0 % 7.9 %
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