TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company
of Tri Counties Bank, today announced net income of $2,989,000 for
the quarter ended December 31, 2017, compared to $12,533,000 for
the fourth quarter of 2016. Diluted earnings per share were $0.13
for the fourth quarter of 2017, compared to $0.54 for the fourth
quarter of 2016. Net income for the fourth quarter of 2017 includes
a one-time income tax expense of $7,416,000 due to the
re-measurement of the Company’s net deferred tax asset (“DTA”)
resulting from the Tax Cuts and Jobs Act of 2017. Also included in
net income for the fourth quarter of 2017 is $530,000 of merger and
acquisition expenses related to the proposed merger with FNB
Bancorp (“FNBB”) previously announced on December 11, 2017.
Excluding the impact of the FNBB related merger expenses, and the
DTA re-measurement, net income totaled $10,896,000 for the fourth
quarter of 2017, or $0.47 per diluted share.
Net income was $40,554,000 for the year ended December 31, 2017,
compared to $44,811,000 for the year ended December 31, 2016.
Diluted earnings per share were $1.74 for the year ended December
31, 2017, compared to $1.94 for the year ended December 31, 2016.
Excluding the impact of the FNBB related merger expenses, and the
DTA re-measurement, net income totaled $48,462,000 for the year
ended December 31, 2017, or $2.08 per diluted share. Net income for
twelve months ended December 31, 2016 include the effects of
$784,000 of expenses related to the acquisition of three bank
branches, including $161,231,000 of deposits, during the three
months ended March 31, 2016. Excluding the impact of the branch
acquisition expenses, net income totaled $45,266,000 for the year
ended December 31, 2016, or $1.96 per diluted share.
On December 22, 2017, President Donald Trump signed into law
"H.R.1", commonly known as the "Tax Cuts and Jobs Act", which among
other items reduces the Federal corporate tax rate from 35% to 21%
effective January 1, 2018. While this decrease in the Federal
corporate tax rate is expected to have a positive impact on the
Company’s net income beginning January 1, 2018, the Company
concluded that this caused the Company’s DTA to be reduced, and
Federal income tax expense to be increased by $7,416,000 during the
fourth quarter of 2017.
In addition to the nonrecurring income statement items noted
above, there were other expense and revenue items during the three
months ended December 31, 2017 and 2016 of less significance that
may be considered nonrecurring and these items are described below
in various sections of this announcement.
Performance highlights and other developments for the Company
during the three months ended December 31, 2017 included the
following:
- On December 11, 2017, TriCo and
FNBB announced that they entered into an Agreement and Plan of
Merger and Reorganization (the “Merger Agreement”) pursuant to
which FNBB will be merged with and into the Company, with the
Company as the surviving corporation (the “Merger”). The Merger
Agreement provides that immediately after the Merger, FNBB’s bank
subsidiary, First National Bank of Northern California, will merge
with and into the Company’s bank subsidiary, Tri Counties Bank,
with Tri Counties Bank as the surviving bank.
- Loan balances increased $83,552,000
representing a 2.9% increase in total loans, and an annualized
growth rate of 11.4%, during the three months ended December 31,
2017.
- The average rate of interest paid on
deposits, including the effect of noninterest-bearing deposits,
remained low at 0.11%.
The following is a summary of the components of the Company’s
consolidated net income, average common shares, and average diluted
common shares outstanding for the periods indicated:
Three months ended December 31, (dollars and
shares in thousands) 2017 2016
$ Change
% Change Net Interest Income $ 45,093 $ 43,155 $ 1,938 4.5 %
(Provision for) reversal of loan losses (1,677 ) 1,433 (3,110 )
Noninterest income 12,478 12,462 16 0.1 % Noninterest expense
(38,076 ) (36,563 ) (1,513 ) 4.1 % Provision for income taxes
(14,829 ) (7,954 ) (6,875 ) 86.4 % Net income
$ 2,989 $ 12,533 ($9,544 ) (76.2 %)
Average common shares 22,945 22,846 99 0.4 % Average diluted common
shares 23,290 23,116 174 0.8 %
The following is a summary of certain of the Company’s
consolidated assets and deposits as of the dates indicated:
Ending balances As of December 31, ($'s in
thousands) 2017 2016
$ Change
% Change Total assets $ 4,761,315 $ 4,517,968 $
243,347 5.4 % Total loans 3,015,165 2,759,593 255,572 9.3 % Total
investments 1,262,683 1,169,725 92,958 7.9 % Total deposits
4,009,131 3,895,560 $ 113,571 2.9 % Qtrly avg
balances As of December 31, ($'s in thousands) 2017 2016
$ Change
% Change Total assets $ 4,658,677 $ 4,483,251 $ 175,426 3.9
% Total loans $ 2,948,277 $ 2,730,391 217,886 8.0 % Total
investments 1,254,868 1,166,410 88,458 7.6 % Total deposits $
3,961,422 $ 3,853,432 $ 107,990 2.8 %
The Company’s primary source of revenue is net interest income,
or the difference between interest income on interest-earning
assets and interest expense on interest-bearing liabilities.
Included in the Company’s net interest income is interest income
from municipal bonds that is almost entirely exempt from Federal
income tax. These municipal bonds are classified as investments –
nontaxable, and the Company may present the interest income from
these bonds on a fully tax equivalent (FTE) basis.
Loans acquired through purchase, or acquisition of other banks,
are classified by the Company 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. A
loan may also be purchased at a premium to face value, in which
case, the premium is amortized into (subtracted from) interest
income over the remaining life of the loan. Generally, as time goes
on, the effects of loan discount accretion and loan premium
amortization decrease as the purchased loans mature or pay off
early. Upon the early pay off of a loan, any remaining (unaccreted)
discount or (unamortized) premium is immediately taken into
interest income; and as loan payoffs may vary significantly from
quarter to quarter, so may the impact of discount accretion and
premium amortization on interest income. 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.
Following is a summary of the components of net interest income
for the periods indicated (dollars in thousands):
Three months ended December 31, (dollars and
shares in thousands) 2017 2016
$ Change
% Change Interest income $ 46,961 $ 44,615 $ 2,346 5.3 % Interest
expense (1,868 ) (1,460 ) (408 ) 27.9 % FTE adjustment 625
619 6 1.0 % Net interest income
(FTE)
$
45,718
$ 43,774 $ 1,944 4.4 % Net interest margin
(FTE) 4.26 % 4.24 % Purchased loan discount
accretion: Amount (included in interest income) $ 1,489 $ 1,778
Effect on average loan yield 0.20 % 0.26 % Effect on net interest
margin (FTE) 0.14 % 0.17 % Interest income recovered via loan
sales: Amount (included in interest income) - $ 586 Effect on
average loan yield 0.00 % 0.09 % Effect on net interest margin
(FTE) 0.00 % 0.06 %
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,
2017
September 30,
2017
December 31,
2016
Average Income/ Yield/ Average Income/
Yield/ Average Income/ Yield/ Balance Expense Rate
Balance Expense Rate Balance Expense Rate Assets Earning assets
Loans $ 2,948,277 $ 38,194 5.18 % $ 2,878,944 $ 37,268 5.18 % $
2,730,391 $ 36,241 5.31 % Investments - taxable 1,118,547 7,459
2.67 % 1,114,112 7,312 2.63 % 1,031,401 7,026 2.72 % Investments -
nontaxable 136,321 1,666 4.89 % 136,095 1,665 4.89 % 135,009 1,650
4.89 % Cash at Federal Reserve and other banks 86,511
267 1.23 % 85,337 292
1.37 % 233,169 317 0.54 % Total earning
assets 4,289,656 47,586 4.44 % 4,214,488
46,537 4.42 % 4,129,970 45,234 4.38 % Other
assets, net 369,021 357,936 353,281 Total
assets $ 4,658,677 $ 4,572,424 $ 4,483,251 Liabilities and
shareholders' equity Interest-bearing Demand deposits $ 964,827 210
0.09 % $ 949,348 206 0.09 % $ 892,518 94 0.04 % Savings deposits
1,380,384 430 0.12 % 1,365,249 419 0.12 % 1,389,676 439 0.13 % Time
deposits 307,446 422 0.55 % 310,325 403 0.52 % 338,326 339 0.40 %
Other borrowings 61,769 141 0.91 % 65,234 149 0.91 % 19,122 2 0.04
% Trust preferred securities 56,837 665
4.68 % 56,784 652 4.59 % 56,641
586 4.14 % Total interest-bearing liabilities
2,771,263 1,868 0.27 % 2,746,941 1,829
0.27 % 2,696,283 1,460 0.22 % Noninterest-bearing
deposits 1,308,765 1,253,261 1,232,912 Other liabilities 65,642
64,834 72,352 Shareholders' equity 513,007 507,389
481,704 Total liabilities and shareholders' equity $
4,658,677 $ 4,572,424 $ 4,483,251 Net interest rate spread 4.17 %
4.15 % 4.16 % Net interest income/net interest margin (FTE)
45,718 4.26 % 44,708 4.24 % 43,774
4.24 % FTE adjustment (625 ) (624 )
(619 ) Net interest income (not FTE) $ 45,093 $ 44,084
$ 43,155 Purchase loan discount
accretion effect: Amount (included in interest income) $ 1,489 $
1,364 $ 1,778 Effect on avg loan yield 0.20 % 0.19 % 0.26 % Effect
on net interest margin 0.14 % 0.13 % 0.17 % Loan sale effect:
Amount (included in interest income) - - $ 586 Effect on avg loan
yield 0.00 % 0.00 % 0.09 % Effect on net interest margin 0.00 %
0.00 % 0.06 %
Net interest income (FTE) during the three months ended December
31, 2017 increased $1,944,000 (4.4%) to $45,718,000 compared to
$43,774,000 during the three months ended December 31, 2016. The
increase in net interest income (FTE) was due primarily to
increases in the average balance of loans and investments that were
partially offset by an increase in other borrowings, a decrease in
yield on loans, and an increase in the average rate paid on
interest-bearing liabilities compared to the three months ended
December 31, 2016.
The table below that sets forth a summary of the changes in
interest income and interest expense from changes in average asset
and liability balances (volume) and changes in average interest
yields and rates for each category of interest earning asset and
interest paying liability for the periods indicated:
Three months ended December 31,
2017compared with three months ended December 31, 2016
Volume Yield/Rate Total Increase (decrease) in
interest income: Loans $ 2,892 $ (939 ) $ 1,953
Investments - taxable 593 (160 ) 433 Investments - nontaxable 16 -
16 Federal funds sold (198 ) 148
(50 ) Total 3,303 (951 )
2,352 Increase (decrease) in interest expense: Demand
deposits (interest-bearing) 7 109 116 Savings deposits (3 ) (6 ) (9
) Time deposits (31 ) 114 83 Other borrowings 4 135 139 Junior
subordinated debt 2 77
79 Total (21 ) 429
408 Increase (decrease) in net interest income $
3,324 $ (1,380 ) $ 1,944
The Company recorded a provision for loan losses of $1,677,000
during the three months ended December 31, 2017 compared to a
reversal of provision for loan losses of $1,433,000 during the
three months ended December 31, 2016. The $1,677,000 provision for
loan losses during the three months ended December 31, 2017 was due
primarily to an increase in nonperforming loans, and an increase in
loans classified as “special mention” that were partially offset by
continued low historical loan loss experience. Nonperforming loans
were $24,394,000, or 0.81% of loans outstanding as of December 31,
2017, compared to $21,955,000, or 0.75% of loans outstanding as of
September 30, 2017, and $20,128,000, or 0.73% of loans outstanding
as of December 31, 2016. Net loan charge-offs during the three
months ended December 31, 2017 were $101,000.
The following table presents the key components of noninterest
income for the periods indicated:
Three months ended December 31, (dollars in
thousands) 2017 2016
$ Change
% Change Service charges on deposit accounts
$
3,954
$
3,816
$
138 3.6 % ATM fees and interchange 4,255 4,723 (468 ) (9.9 %) Other
service fees 761 752 9 1.2 % Mortgage banking service fees 515 495
20 4.0 % Change in value of mortgage servicing rights 77
14 63 450.0 % Total service charges and
fees 9,562 9,800 (238 ) (2.4 %)
Gain on sale of loans 816 1,392 (576 ) (41.4 %) Commission on
nondeposit investment products 745 439 306 69.7 % Increase in cash
value of life insurance 642 631 11 1.7 % Change in indemnification
asset - (219 ) 219 (100.0 %) Gain on sale of foreclosed assets 403
44 359 815.9 % Other noninterest income 310 375
(65 ) (17.3 %) Total other noninterest income
2,916 2,662 254 9.5 % Total noninterest
income
$
12,478 $ 12,462 $ 16 0.1 %
Noninterest income increased $16,000 (0.1%) to $12,478,000
during the three months ended December 31, 2017 compared to the
three months ended December 31, 2016. The increase in noninterest
income was due primarily to a $359,000 (816%) increase in gain on
sale of foreclosed assets, a $306,000 (69.7%) increase in
commission on nondeposit investment products, and a $219,000
increase in change in indemnification asset that were partially
offset by a $576,000 decrease in gain on sale of loans. The
$359,000 increase in gain on sale of foreclosed asset was due
primarily to $378,000 of previously deferred gain on sale of
foreclosed assets being recorded into noninterest income as the
conditions requiring its deferral were alleviated during the three
months ended December 31, 2017. The $306,000 increase in
commissions on nondeposit investment products was due to continued
focus in this area. The $219,000 increase in change in
indemnification asset was due to a $219,000 decrease in the
indemnification asset during the fourth quarter of 2016, and no
such change during the fourth quarter of 2017 as the Company and
the FDIC terminated their loss sharing agreements during the second
quarter of 2017. The $576,000 decrease in gain on sale of loans was
due primarily to decreased residential mortgage refinance activity
compared to the year-ago quarter.
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) 2017 2016
$ Change
% Change Base salaries, overtime and temporary help, net of
deferred loan origination costs $ 13,942 $ 14,074
$
(132
)
(0.9 %) Commissions and incentives 2,247 1,864 383 20.5 % Employee
benefits 4,421 4,616 (195 ) (4.2 %)
Total salaries and benefits expense 20,610 20,554
56 0.3 % Occupancy 2,698 2,635 63 2.4 %
Equipment 1,797 1,760 37 2.1 % Provision for losses unfunded 175
(189 ) 364 (192.6 %) Data processing and software 3,116 2,580 536
20.8 % Telecommunications 686 664 22 3.3 % ATM & POS network
charges 1,399 1,076 323 30.0 % Professional fees 1,388 2,226 (838 )
(37.6 %) Advertising and marketing 928 808 120 14.9 % Postage 238
417 (179 ) (42.9 %) Courier service 283 182 101 55.5 % Intangible
amortization 339 360 (21 ) (5.8 %) Operational losses 228 558 (330
) (59.1 %) Provision for OREO losses - 100 (100 ) (100.0 %) OREO
expense 114 69 45 65.2 % Assessments 424 241 183 75.9 % Merger
& acquisition expense 530 - 530 Other 3,123 2,522
601 23.8 % Total other noninterest expense
17,466 16,009 1,457 9.1 % Total
noninterest expense $ 38,076 $ 36,563 $ 1,513 4.1 %
Average full time equivalent employees 981 1,008 (27 ) (2.7
%) Merger & acquisition expense: Professional fees $ 513
- Miscellaneous other expense 17 - Total
merger & acquisition expense $ 530 $ 0
Salary and benefit expenses increased $56,000 (0.3%) to
$20,610,000 during the three months ended December 31, 2017
compared to $20,554,000 during the three months ended December 31,
2016. Base salaries, net of deferred loan origination costs
decreased $132,000 (0.9%) to 13,942,000. The decrease in base
salaries was due primarily to annual merit increases that were more
than offset by a 2.7% decrease in average full time equivalent
employees to 981 from 1,008 in the year-ago quarter, and a decrease
in temporary help expense. Commissions and incentive compensation
increased $383,000 (20.5%) to $2,247,000 during the three months
ended December 31, 2017 compared to the year-ago quarter due
primarily to increases in almost every category of incentive
compensation. Benefits & other compensation expense decreased
$195,000 (4.2%) to $4,421,000 during the three months ended
December 31, 2017 due primarily to decreases in group medical
expense.
Other noninterest expense increased $1,457,000 (9.1%) to
$17,466,000 during the three months ended December 31, 2017
compared to the three months ended December 31, 2016. The increase
in other noninterest expense was due primarily to $530,000 of
expenses incurred in the fourth quarter of 2017 related to the
proposed merger with FNBB, a $536,000 (20.8%) increase in data
processing and software expense, a $323,000 increase in ATM &
POS network charges, and a $364,000 increase in provision for
losses for unfunded loan commitments that were partially offset by
decreases of $838,000 in professional fees, and $330,000 in
operational losses. The increase in data processing and software
expense and ATM & POS network charges were due primarily to
system enhancements and capacity expansion. The increase in change
in reserve for unfunded commitments was due primarily to a larger
increase in unfunded loan commitments during the three months ended
December 31, 2017, compared to the three months ended December 31,
2016. The decrease in professional fees was due primarily to
consulting fees incurred in the fourth quarter of 2016 related to
system enhancements and capacity expansion.
The effective combined Federal and State income tax rate on
income was 83.2% and 38.8% for the three months ended December 31,
2017 and 2016, respectively. The effective combined Federal and
State income tax rate was greater than the Federal statutory tax
rate of 35.0% due to a Federal tax expense of $7,416,000 related to
the DTA re-measurement in the fourth quarter of 2017, and State
income tax expense of $1,973,000 and $2,195,000, for the three
months ended December 31, 2017 and 2016, respectively, that were
partially offset by the effects of tax-exempt income of $1,041,000
and $1,031,000, respectively, from investment securities, $641,000
and $631,000, respectively, from increase in cash value of life
insurance, low-income housing tax credits of ($123,000) and
$62,000, respectively, and $59,000 and $0, respectively, of equity
compensation excess tax benefits. The low income housing tax
credits and the equity compensation excess tax benefits represent
direct reductions in tax expense.
The provisions for income taxes applicable to income before
taxes differ from amounts computed by applying the statutory
Federal income tax rates to income before taxes. The effective tax
rate and the statutory federal income tax rate are reconciled for
the periods indicated as follows:
Three months ended
December 31,
2017 2016 Federal statutory income tax rate 35.0 %
35.0 % State income taxes, net of federal tax benefit 7.2 7.0
Tax-exempt interest on municipal obligations (2.0 ) (1.8 ) Increase
in cash value of insurance policies (1.3 ) (1.1 ) Low income
housing tax credits 0.7 (0.3 ) Equity compensation (0.3 ) -
Nondeductible merger expenses 0.9 - DTA re-measurement 41.6 - Other
1.4 - Effective Tax Rate 83.2 % 38.8 %
The Company’s financial statements are prepared in conformity
with generally accepted accounting principles in the United States
of America (GAAP). The Company uses certain non-GAAP measures to
provide supplemental information regarding performance. Net income
and the effective tax rate for the three and twelve months ended
December 31, 2017 include the effects of $530,000 of expenses
related to the proposed merger with FNBB, of which $438,000 is
non-deductible for taxes, and a one-time charge of $7,416,000 due
to the re-measurement of the Company’s DTA resulting from the Tax
Cuts and Jobs Act of 2017. Net income for the twelve months ended
December 31, 2016 include the effects of $784,000 of expenses, all
of which were deductible for taxes, related to the acquisition of
three bank branches, including $161,231,000 of deposits, during the
three months ended March 31, 2016. The Company believes that
presenting the effective tax rate, net income, return on average
assets (ROAA), return on average equity (ROAE), and earnings per
common share, excluding the impact of merger & acquisition
expenses and the re-measurement of the Company’s DTA, provides
additional clarity to the users of the financial statements
regarding core financial performance. The following table presents
a comparison of the effective tax rate, net income, ROAA, ROAE, and
earnings per common share as reported, and as adjusted for the
impact of merger & acquisition expenses and the re-measurement
of the Company’s DTA, for the periods indicated.
Three months ended Year ended December 31, December
31, ($'s in thousands except per share amounts) 2017
2016 2017 2016
Income tax expense $ 14,829 $ 7,954 $ 36,958 $
27,712 Effect of non-deductible merger expense
(184 )
-
(184 )
- Effect of income tax rate change DTA re-measurement (7,416
) - (7,416 ) -
Adjusted income tax expense
$ 7,229 $ 7,954 $ 29,358 $
27,712 Effective tax rate 83.2 % 38.8 % 47.7 % 38.2 %
Adjusted effective tax rate 40.6 % 38.8 % 37.9 % 38.2 % Net
income $ 2,989 $ 12,533 $ 40,554 $ 44,811
Effect of merger expense
491
-
491
454 Effect of income tax rate change DTA re-measurement
7,416 - 7,416
- Adjusted net income $ 10,896 $ 12,533
$ 48,462 $ 45,266 ROAA 0.26 %
1.12 % 0.89 % 1.02 % Adjusted ROAA 0.94 % 1.12 % 1.06 % 1.04 %
ROAE 2.33 % 10.41 % 8.10 % 9.46 % Adjusted ROAE 8.50 % 10.41
% 9.68 % 9.55 % Earnings per common share: Basic $ 0.13 $
0.55 $ 1.77 $ 1.96 Diluted $ 0.13 $ 0.54 $ 1.74 $ 1.94
Adjusted earnings per common share: Basic $ 0.47 $ 0.55 $ 2.12 $
1.98 Diluted $ 0.47 $ 0.54 $ 2.08 $ 1.96 M&A expense $
530 $ - $ 530 $ 784 Non-deductible M&A expense $ 438 $ - $ 438
$ - Average assets $ 4,658,677 $ 4,483,251 $ 4,554,505 $ 4,373,022
Average equity $ 513,007 $ 481,704 $ 500,653 $ 473,829 Weighted
average shares 22,944,523 22,845,623 22,911,611 22,814,002 Weighted
average diluted shares 23,289,545 23,115,708 23,249,887 23,086,460
Richard P. Smith, President and CEO of the Company commented,
“The fourth quarter of 2017 was a very busy and successful quarter
for the company. Lending activity across our footprint remains
strong, with total loans eclipsing $3.0 billion for the first time.
Total loans grew by 2.9% during the quarter, or at 11.4%
annualized. Similarly, total deposits exceeded $4.0 billion during
the quarter, growing $102 million or 2.6%. Just as importantly, the
bank continues to be positioned well for rising rates, with demand
deposits representing 34% of total deposits and the overall average
cost of deposits at just 0.11%
Smith added, “Key events for the quarter were the passing of the
Tax Cuts and Jobs Act and our announced acquisition of First
National Bank of Northern California. While the reduction in the
corporate tax rate resulted in the recognition of immediate
revaluation expense against our deferred tax assets, we expect a
lower corporate tax rate to have a continuing positive impact on
the Company’s net income beginning in January 2018. We remain
enthusiastic about our organic growth and momentum as we enter
2018, along with the completion of our previously announced
strategic acquisition of First National Bank of Northern
California. We continue to believe this transaction is an important
element in our overall growth strategy and squarely align with our
goal of being Northern California’s #1 community bank.
The statements contained herein that are not historical facts
are forward-looking statements based on management's current
expectations and beliefs concerning future developments and their
potential effects on the Company. Such statements involve inherent
risks and uncertainties, many of which are difficult to predict and
are generally beyond the control of the Company. There can be no
assurance that future developments affecting the Company will be
the same as those anticipated by management. The Company cautions
readers that a number of important factors could cause actual
results to differ materially from those expressed in, or implied or
projected by, such forward-looking statements. These risks and
uncertainties include, but are not limited to, the following: the
strength of the United States economy in general and the strength
of the local economies in which the Company conducts operations;
the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of
Governors of the Federal Reserve System; inflation, interest rate,
market and monetary fluctuations; the impact of changes in
financial services policies, laws and regulations; technological
changes; mergers and acquisitions, including costs or difficulties
related to the integration of acquired companies; changes in the
level of the Company’s nonperforming assets and charge-offs; any
deterioration in values of California real estate, both residential
and commercial; the effect of changes in accounting standards and
practices; possible other-than-temporary impairment of securities
held by the Company; changes in consumer spending, borrowing and
savings habits; ability to attract deposits and other sources of
liquidity; changes in the financial performance and/or condition of
our borrowers; the impact of competition from financial and bank
holding companies and other financial service providers;
unanticipated regulatory or judicial proceedings; the costs and
effects of litigation and of unexpected or adverse outcomes in such
litigation; and the Company’s ability to manage the risks involved
in the foregoing. Additional factors that could cause results to
differ materially from those described above can be found in our
Annual Report on Form 10-K for the year ended December 31, 2016,
which is on file with the Securities and Exchange Commission (the
“SEC”) and available in the “Investor Relations” section of our
website, https://www.tcbk.com/investor-relations and in other
documents we file with the SEC. Annualized, pro forma, projections
and estimates are not forecasts and may not reflect actual
results.
Statements concerning the potential merger of the Company and
FNB Bancorp may also be forward-looking statements. Please refer to
each of the Company’s and FNB’s Annual Report on Form 10-K for the
year ended December 31, 2016, as well as their other filings with
the SEC, for a more detailed discussion of risks, uncertainties and
factors that could cause actual results to differ from those
discussed in the forward-looking statements.
Established in 1975, Tri Counties Bank is a wholly-owned
subsidiary of TriCo Bancshares (NASDAQ: TCBK) headquartered in
Chico, California, providing a unique brand of customer Service
with Solutions available in traditional stand-alone and
in-store bank branches in communities throughout Northern and
Central California. Tri Counties Bank provides an extensive and
competitive breadth of consumer, small business and commercial
banking financial services, along with convenient around-the-clock
ATM, online and mobile banking access. Brokerage services are
provided by the Bank’s investment services through affiliation with
Raymond James Financial Services, Inc. Visit
www.TriCountiesBank.com to learn more.
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, 2017
2017 2017 2017
2016
Statement of Income Data
Interest income $ 46,961 $ 45,913 $ 45,044 $ 43,484 $ 44,615
Interest expense 1,868 1,829 1,610 1,491 1,460 Net interest income
45,093 44,084 43,434 41,993 43,155 Provision (benefit from reversal
of provision) for loan losses 1,677 765 (796 ) (1,557 ) (1,433 )
Noninterest income: Service charges and fees 9,562 9,475 9,479
8,907 9,800 Other income 2,916 3,455 3,431 2,796 2,662 Total
noninterest income 12,478 12,930 12,910 11,703 12,462 Noninterest
expense:
Base salaries net of deferred loan
origination costs
13,942 13,600 13,657 13,390 14,074 Incentive compensation expense
2,247 2,609 2,173 2,198 1,864
Employee benefits and other compensation
expense
4,421 4,724 4,664 5,305 4,616 Total salaries and benefits expense
20,610 20,933 20,494 20,893 20,554 Other noninterest expense 17,466
16,289 15,410 14,929 16,009 Total noninterest expense 38,076 37,222
35,904 35,822 36,563 Income before taxes 17,818 19,027 21,236
19,431 20,487 Net income $ 2,989 $ 11,897 $ 13,589 $ 12,079 $
12,533
Share Data Basic earnings per share $ 0.13 $ 0.52 $
0.59 $ 0.53 $ 0.55 Diluted earnings per share $ 0.13 $ 0.51 $ 0.58
$ 0.52 $ 0.54 Book value per common share $ 22.03 $ 22.09 $ 21.76 $
21.28 $ 20.87 Tangible book value per common share $ 19.01 $ 19.04
$ 18.70 $ 18.20 $ 17.77 Shares outstanding 22,955,963 22,941,464
22,925,069 22,873,305 22,867,802 Weighted average shares 22,944,523
22,931,855 22,899,600 22,870,467 22,845,623 Weighted average
diluted shares 23,289,545 23,244,235 23,240,112 23,231,778
23,115,708
Credit Quality Nonperforming originated loans $
15,463 $ 11,689 $ 10,581 $ 13,234 $ 12,894 Total nonperforming
loans 24,394 21,955 17,429 19,511 20,128 Foreclosed assets, net of
allowance 3,226 3,071 3,489 3,529 3,986 Loans charged-off 627 862
2,512 409 635 Loans recovered 526 701 434 480 1,087
Selected
Financial Ratios Return on average total assets 0.26 % 1.04 %
1.21 % 1.08 % 1.12 % Return on average equity 2.33 % 9.38 % 10.93 %
9.97 % 10.41 % Average yield on loans 5.18 % 5.18 % 5.23 % 5.06 %
5.31 % Average yield on interest-earning assets 4.44 % 4.42 % 4.42
% 4.27 % 4.38 % Average rate on interest-bearing liabilities 0.27 %
0.27 % 0.24 % 0.22 % 0.22 % Net interest margin (fully
tax-equivalent) 4.26 % 4.24 % 4.26 % 4.13 % 4.24 %
Supplemental
Loan Interest Income Data: Discount accretion PCI - cash basis
loans $ 516 $ 398 $ 386 $ 112 $ 483 Discount accretion PCI - other
loans 445 407 797 631 658 Discount accretion PNCI loans 528 559 987
798 637 All other loan interest income 36,705 35,904 34,248 33,373
34,463 Total loan interest income $ 38,194 $ 37,268 $ 36,418 $
34,914 $ 36,241
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
2017 2017 2017
2017 2016 Cash and
due from banks $ 205,428 $ 188,034 $ 167,649 $ 323,706 $ 305,612
Securities, available for sale
730,883
678,236 672,569 571,719 550,233 Securities, held to maturity
514,844
536,567 559,518 580,137 602,536 Restricted equity securities 16,956
16,956 16,956 16,956 16,956 Loans held for sale 4,616 2,733 2,537
1,176 2,998 Loans: Commercial loans 220,500 227,479 225,743 212,685
217,047 Consumer loans 365,113 361,320 360,782 357,593 366,111 Real
estate mortgage loans 2,291,995 2,194,874 2,106,567 2,066,372
2,054,016 Real estate construction loans 137,557 147,940 133,301
124,542 122,419 Total loans, gross 3,015,165 2,931,613 2,826,393
2,761,192 2,759,593 Allowance for loan losses (30,323 ) (28,747 )
(28,143 ) (31,017 ) (32,503 ) Foreclosed assets 3,226 3,071 3,489
3,529 3,986 Premises and equipment 57,742 54,995 51,558 49,508
48,406 Cash value of life insurance 97,783 97,142 96,410 95,783
95,912 Goodwill 64,311 64,311 64,311 64,311 64,311 Other intangible
assets 5,174 5,513 5,852 6,204 6,563 Mortgage servicing rights
6,687 6,419 6,596 6,860 6,595 Accrued interest receivable 13,772
12,656 11,605 11,236 12,027 Other assets 55,051 86,936 62,635
66,654 74,743 Total assets $ 4,761,315 $ 4,656,435 $ 4,519,935 $
4,527,954 $ 4,517,968 Deposits: Noninterest-bearing demand deposits
$ 1,368,218 $ 1,283,949 $ 1,261,355 $ 1,254,431 $ 1,275,745
Interest-bearing demand deposits 971,459 965,480 956,690 947,006
887,625 Savings deposits 1,364,518 1,367,597 1,346,016 1,370,015
1,397,036 Time certificates 304,936 310,430 314,361 327,432 335,154
Total deposits 4,009,131 3,927,456 3,878,422 3,898,884 3,895,560
Accrued interest payable 930 867 781 770 818 Reserve for unfunded
commitments 3,164 2,989 2,599 2,734 2,719 Other liabilities 63,258
62,850 59,868 66,938 67,364 Other borrowings 122,166 98,730 22,560
15,197 17,493 Junior subordinated debt 56,858 56,810 56,761 56,713
56,667 Total liabilities $ 4,255,507 $ 4,149,702 $ 4,020,991 $
4,041,236 $ 4,040,621 Total shareholders' equity $ 505,808 $
506,733 $ 498,944 $ 486,718 $ 477,347
Accumulated other comprehensive gain
(loss)
(5,228 ) (4,612 ) (4,501 ) (7,402 ) (7,913 ) Average loans $
2,948,277 $ 2,878,944 $ 2,783,686 $ 2,758,544 $ 2,730,391 Average
interest-earning assets 4,289,656 4,214,488 4,135,021 4,130,469
4,129,970 Average total assets 4,658,677 4,572,424 4,492,389
4,493,657 4,483,251 Average deposits 3,961,422 3,878,183 3,851,519
3,862,793 3,853,432 Average total equity 513,007 507,389 497,225
484,811 481,704 Total risk based capital ratio 14.1 % 14.4 % 14.8 %
15.0 % 14.8 % Tier 1 capital ratio 13.2 % 13.6 % 13.9 % 14.0 % 13.7
% Tier 1 common equity ratio 11.7 % 12.1 % 12.3 % 12.4 % 12.2 %
Tier 1 leverage ratio 10.8 % 11.0 % 11.0 % 10.8 % 10.6 % Tangible
capital ratio 9.3 % 9.5 % 9.6 % 9.3 % 9.1 %
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version on businesswire.com: http://www.businesswire.com/news/home/20180130006363/en/
TriCo BancsharesRichard P. Smith, 530-898-0300President &
CEO
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