TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company
of Tri Counties Bank, today announced net income of $13,910,000 for
the quarter ended March 31, 2018, compared to $12,079,000 for the
quarter ended March 31, 2017. Diluted earnings per share were $0.60
for the quarter ended March 31, 2018, compared to $0.52 for the
quarter ended March 31, 2017. Net income before taxes was
$19,350,000 and $19,431,000 for the quarters ended March 31, 2018
and 2017, respectively. Net income for the quarter ended March 31,
2018 includes the effect of a change in the Company’s Federal tax
rate from 35% to 21% that resulted from the Tax Cuts and Jobs Act
of 2017 that was effective on January 1, 2018. During the quarter
ended March 31, 2018, income tax expense was $2,020,000 lower than
it would have been, and net income was $2,020,000 higher than it
would have been, had the tax rate not changed. Also, affecting net
income during the quarter ended March 31, 2018 was $476,000 of
merger and acquisition expenses related to the proposed merger with
FNB Bancorp (“FNBB”) previously announced on December 11, 2017
compared to no merger and acquisition expense recorded in the
quarter ended March 31, 2017.
Performance highlights and other developments for the Company
during the quarter ended March 31, 2018 included the following:
- Total loan balances averaged
$3,028,178,000 during the three months ended March 31, 2018
representing a $269,634,000 (9.8%) increase compared to the quarter
ended March 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 March 31, (dollars and
shares in thousands) 2018 2017
$ Change
% Change Net Interest Income $44,986 $41,993 $2,993
7.1 % Reversal of provision for loan losses 236 1,557 (1,321 )
Noninterest income 12,290 11,703 587 5.0 % Noninterest expense
(38,162 ) (35,822 ) (2,340 ) 6.5 % Provision for income taxes
(5,440 ) (7,352 ) 1,912 (26.0 %) Net income $13,910
$12,079 $1,831 15.2 % Average common shares
22,956 22,870 86 0.4 % Average diluted common shares 23,283 23,232
51 0.2 %
The following is a summary of certain of the Company’s
consolidated assets and deposits as of the dates indicated:
Ending balances As of March 31, ($'s in
thousands) 2018 2017
$ Change
% Change Total assets $4,779,957 $4,527,954 $252,003 5.6%
Total loans 3,069,733 2,761,192 308,541 11.2% Total investments
1,251,776 1,168,812 82,964 7.1% Total deposits $4,084,404
$3,898,884 $185,520 4.8% Qtrly avg balances As of
March 31, ($'s in thousands) 2018 2017
$ Change
% Change Total assets $4,741,227 $4,493,657 $247,570 5.5%
Total loans 3,028,178 2,758,544 269,634 9.8% Total investments
1,261,554 1,174,519 87,035 7.4% Total deposits $4,004,332
$3,862,793 $141,539 3.7%
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 March 31,
(dollars and shares in thousands) 2018 2017
$ Change
% Change Interest income $47,121 $43,484 $3,637 8.4 %
Interest expense (2,135 ) (1,491 ) (644 ) 43.2 % FTE adjustment 312
625 (313 ) (50.1 %) Net interest income (FTE) $45,298
$42,618 $2,680 6.3 % Net interest margin (FTE)
4.14 % 4.13 % Purchased loan discount accretion: Amount (included
in interest income) $632 $1,541 Effect on average loan yield 0.08 %
0.22 % Effect on net interest margin (FTE) 0.06 % 0.15 % Interest
income recovered via loan sales: Amount (included in interest
income) - - Effect on average loan yield 0.00 % 0.00 % Effect on
net interest margin (FTE) 0.00 % 0.00 %
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
March 31,
2018
December 31,
2017
March 31,
2017
Average Income/ Yield/ Average Income/
Yield/ Average Income/ Yield/ Balance Expense Rate
Balance Expense Rate Balance Expense Rate Assets Earning assets
Loans $3,028,178 $38,049 5.03 % $2,948,277 $38,194 5.18 %
$2,758,544 $34,914 5.06 % Investments - taxable 1,125,394 7,658
2.72 % 1,118,547 7,459 2.67 % 1,038,229 7,094 2.73 % Investments -
nontaxable 136,160 1,353 3.97 % 136,321 1,666 4.89 % 136,290 1,666
4.89 % Cash at Federal Reserve and other banks 90,864 373
1.64 % 86,511 267 1.23 % 197,406 435
0.88 % Total earning assets 4,380,596 47,433 4.33 %
4,289,656 47,586 4.44 % 4,130,469 44,109 4.27 % Other
assets, net 360,631 369,021 363,188 Total assets $4,741,227
$4,658,677 $4,493,657 Liabilities and shareholders' equity
Interest-bearing Demand deposits $994,206 211 0.08 % $964,827 210
0.09 % $907,104 127 0.06 % Savings deposits 1,371,377 411 0.12 %
1,380,384 430 0.12 % 1,376,048 424 0.12 % Time deposits 306,514 474
0.62 % 307,446 422 0.55 % 331,789 343 0.41 % Other borrowings
107,781 342 1.27 % 61,769 141 0.91 % 17,483 2 0.05 % Junior
subordinated debt 56,882 697 4.90 % 56,837 665
4.68 % 56,690 595 4.20 % Total
interest-bearing liabilities 2,836,760 2,135 0.30 %
2,771,263 1,868 0.27 % 2,689,114 1,491 0.22 %
Noninterest-bearing deposits 1,332,235 1,308,765 1,247,852 Other
liabilities 66,219 65,642 71,880 Shareholders' equity 506,013
513,007 484,811 Total liabilities and shareholders' equity
$4,741,227 $4,658,677 $4,493,657 Net interest rate spread 4.03 %
4.17 % 4.05 % Net interest income/net interest margin (FTE) 45,298
4.14 % 45,718 4.26 % 42,618 4.13 % FTE
adjustment (312 ) (625 ) (625 ) Net interest income (not FTE)
$44,986 $45,093 $41,993 Purchase
loan discount accretion effect: Amount (included in interest
income) $632 $1,489 $1,541 Effect on avg loan yield 0.08 % 0.20 %
0.22 % Effect on net interest margin 0.06 % 0.14 % 0.15 % Loan sale
effect: Amount (included in interest income) - - - Effect on avg
loan yield 0.00 % 0.00 % 0.00 % Effect on net interest margin 0.00
% 0.00 % 0.00 %
Net interest income (FTE) during the three months ended March
31, 2018 increased $2,680,000 (6.3%) to $45,298,000 compared to
$42,618,000 during the three months ended March 31, 2017. 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 3 basis
point decrease in yield on loans, and an 8 basis point increase in
the average rate paid on interest-bearing liabilities compared to
the three months ended March 31, 2017. The 3 basis point decrease
in loan yields from 5.06% during the three months ended March 31,
2017 to 5.03% during the three months ended March 31, 2018 was due
to a decrease in purchased loan discount accretion from $1,541,000
during the three months ended March 31, 2017 to $632,000 during the
three months ended March 31, 2018. This decrease in purchased loan
discount accretion reduced loan yields by 14 basis points, and net
interest margin by 9 basis points, but was substantially offset by
increases in new and renewed loan yields due to increases in market
yields. The 8 basis point increase in the average rate paid on
interest-bearing liabilities was primarily due to increases in
market rates that increased the rates the Company pays on its
overnight borrowings and junior subordinated debt.
Also affecting net interest margin during the three months ended
March 31, 2018, was the decrease in the Federal tax rate from 35%
to 21%. This decrease in the Federal tax rate caused the fully
tax-equivalent (FTE) yield on the Company’s nontaxable investments
to decrease from 4.89% during the three months ended March 31, 2017
to 3.97% during the three months ended March 31, 2018, and resulted
in net interest income (FTE) being $312,000, or 2 basis points,
less than it otherwise would have been.
The negative impact on net interest margin from these decreases
in average loan and nontaxable investments yields was offset by the
positive impact of an increase in average loan balances and a
decrease in the average balance of lower yielding interest earning
cash compared to the year-ago quarter.
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 March 31, 2018compared
with three months ended March 31, 2017
Volume Yield/Rate Total Increase (decrease) in
interest income: Loans $3,411 $(276 ) $3,135
Investments - taxable 595 (31 ) 564 Investments - nontaxable (2 )
(311 ) (313 ) Federal funds sold (234 ) 172
(62 ) Total 3,770 (446 ) 3,324 Increase
(decrease) in interest expense: Demand deposits (interest-bearing)
13 71 84 Savings deposits (1 ) (12 ) (13 ) Time deposits (26 ) 157
131 Other borrowings 11 329 340 Junior subordinated debt 2
100 102 Total (1 ) 645
644 Increase (decrease) in net interest income $3,771
$(1,091 ) $2,680
The Company recorded a reversal of provision for loan losses of
$236,000 during the three months ended March 31, 2018 compared to a
reversal of provision for loan losses of $1,557,000 during the
three months ended March 31, 2017. The $236,000 reversal of
provision for loan losses during the three months ended March 31,
2018 was due primarily to a decrease in the balance of
performing/unimpaired but substandard loans during the three months
ended March 31, 2018. Nonperforming loans were $24,381,000, or
0.79% of loans outstanding as of March 31, 2018, compared to
$24,394,000, or 0.81% of loans outstanding as of December 31, 2017,
and $19,511,000, or 0.71% of loans outstanding as of March 31,
2017. Net loan charge-offs during the three months ended March 31,
2018 were $114,000.
The following table presents the key components of noninterest
income for the periods indicated:
Three months ended March 31, (dollars
in thousands) 2018 2017
$ Change
% Change Service charges on deposit accounts $3,779
$3,619 $160 4.4 % ATM fees and interchange 4,235 4,015 220 5.5 %
Other service fees 714 765 (51 ) (6.7 %) Mortgage banking service
fees 517 521 (4 ) (0.8 %) Change in value of mortgage servicing
rights 111 (13 ) 124 (953.8 %) Total service charges and
fees 9,356 8,907 449 5.0 % Gain on sale of
loans 626 910 (284 ) (31.2 %) Commission on nondeposit investment
products 876 607 269 44.3 % Increase in cash value of life
insurance 608 685 (77 ) (11.2 %) Change in indemnification asset -
(221 ) 221 (100.0 %) Gain on sale of foreclosed assets 371 118 253
214.4 % Other noninterest income 453 697 (244 ) (35.0 %)
Total other noninterest income 2,934 2,796 138 4.9 %
Total noninterest income $12,290 $11,703 $587 5.0 %
Noninterest income increased $587,000 (5.0%) to $12,290,000
during the three months ended March 31, 2018 compared to the three
months ended March 31, 2017. The increase in noninterest income was
due to the changes noted in the table above. The $269,000 increase
in commissions on nondeposit investment products was due to
continued focus in this area. The $253,000 increase in gain on sale
of foreclosed assets was due to the sale of six foreclosed
properties each of which had increases in property values since
they were foreclosed. The $221,000 increase in change in
indemnification asset was due to a $221,000 decrease in the
indemnification asset during the first quarter of 2017, and no
change during the first quarter of 2018 as the Company and the FDIC
terminated their loss sharing agreements during the second quarter
of 2017. The $220,000 increase in ATM fees and interchange revenue
was due primarily to increased interchange revenue. The $160,000
increase in service charges on deposit accounts was due primarily
to increased monthly service charges that were partially offset by
a decrease in nonsufficient funds fees. The $284,000 decrease in
gain on sale of loans was due primarily to decreased residential
mortgage refinance activity compared to the year-ago quarter. The
$244,000 decrease in other noninterest income was due primarily to
a decrease in lease brokerage revenue.
The following table presents the key components of the Company’s
noninterest expense for the periods indicated:
Three months ended March 31, (dollars
in thousands) 2018 2017
$ Change
% Change Base salaries, overtime and temporary help,
net of deferred loan origination costs $13,962 $13,390 $572 4.3 %
Commissions and incentives 2,452 2,198 254 11.6 % Employee benefits
5,238 5,305 (67 ) (1.3 %) Total salaries and benefits
expense 21,652 20,893 759 3.6 % Occupancy
2,681 2,692 (11 ) (0.4 %) Equipment 1,551 1,723 (172 ) (10.0 %)
Data processing and software 2,514 2,396 118 4.9 % ATM and POS
network charges 1,226 853 373 43.7 % Telecommunications 701 643 58
9.0 % Postage 358 404 (46 ) (11.4 %) Courier service 267 254 13 5.1
% Advertising 838 967 (129 ) (13.3 %) Assessments 430 405 25 6.2 %
Operational losses 294 435 (141 ) (32.4 %) Professional fees 773
766 7 0.8 % Foreclosed assets expense 24 38 (14 ) (36.8 %)
Provision for (reversal of) foreclosed
asset losses
90 (66 ) 156 (236.4 %) Change in reserve for unfunded commitments
700 15 685 4566.7 % Intangible amortization 339 359 (20 ) (5.6 %)
Merger and acquisition expense 476 - 476 Other miscellaneous
expense 3,248 3,045 203 6.7 % Total other noninterest
expense 16,510 14,929 1,581 10.6 % Total noninterest
expense $38,162 $35,822 $2,340 6.5 % Average
full time equivalent employees 1,002 1,015 (13 ) (1.3 %)
Merger & acquisition expense: Professional fees $355 -
Miscellaneous other expense 121 - Total merger &
acquisition expense $476 -
Salary and benefit expenses increased $759,000 (3.6%) to
$21,652,000 during the three months ended March 31, 2018 compared
to $20,893,000 during the three months ended March 31, 2017. Base
salaries, net of deferred loan origination costs increased $572,000
(4.3%) to 13,962,000. The increase in base salaries was due to
annual merit increases, and the addition of employees with base
salaries above the average base salary that were partially offset
by a 1.3% decrease in average full time equivalent employees to
1,002 from 1,015 in the year-ago quarter. Commissions and incentive
compensation increased $254,000 (11.6%) to $2,452,000 during the
three months ended March 31, 2018 compared to the year-ago quarter
due primarily to increases in management, back-office and
nondeposit investment product sales incentives that were partially
offset by decreased commissions on loans and other sales
incentives. Benefits & other compensation expense decreased
$67,000 (1.3%) to $5,238,000 during the three months ended March
31, 2018 due primarily to decreases in group medical, workers
compensation insurance, retirement (ESOP) expenses, that were
partially offset by an increase in employer payroll tax
expense.
Other noninterest expense increased $1,581,000 (10.6%) to
$16,510,000 during the three months ended March 31, 20018 compared
to the three months ended March 31, 2017. The increase in other
noninterest expense was due to the changes noted in the table
above. The $685,000 increase in change in reserve for unfunded
commitments was due to an increase in unfunded construction loan
commitments. The $118,000 and $373,000 increases in data processing
and software expense and ATM & POS network charges,
respectively, were due primarily to system enhancements and
capacity expansion. The $172,000 decrease in equipment expense was
due to decreased equipment rental, repair and maintenance. During
the three months ended March 31, 2018, the Company incurred
$476,000 of merger related expense associated with the proposed
merger with FNBB of which $343,000 is nondeductible for tax
purposes.
The effective combined Federal and State income tax rate on
income was 28.1% and 37.8% for the three months ended March 31,
2018 and 2017, respectively. This decrease in effective combined
Federal and State income tax rate was due primarily to a decrease
in the Federal tax rate from 35% to 21% effective January 1, 2018.
The effective combined Federal and State income tax rate was
greater than the Federal statutory tax rate due to State income tax
expense of $2,207,000 and $2,134,000, for the three months ended
March 31, 2018 and 2017, respectively, that were partially offset
by the effects of tax-exempt income of $1,041,000 and $1,041,000,
respectively, from investment securities, $608,000 and $792,000,
respectively, from increase in cash value of life insurance,
low-income housing tax credits of $190,000 and $121,000,
respectively, $1,000 and $90,000, respectively, of equity
compensation excess tax benefits, and $343,000 of nondeductible
merger expense during the three months ended March 31, 2018. 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 net 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 March 31, 2018 2017 Federal
statutory income tax rate 21.0% 35.0% State income taxes,
net of federal tax benefit 9.0 6.9 Tax-exempt interest on municipal
obligations (1.1) (1.9) Increase in cash value of insurance
policies (0.7) (1.4) Low income housing tax credits (1.0) (0.6)
Equity compensation - (0.5) Nondeductible merger expenses 0.4 -
Other 0.5 0.3 Effective Tax Rate 28.1% 37.8%
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 months ended March 31,
2018 include the effects of $476,000 of expenses related to the
proposed merger with FNBB, of which $343,000 is non-deductible for
taxes. Net income for the three months ended March 31, 2017
includes no merger related expenses. The Company believes that
presenting the effective tax rate, net income, return on average
assets (ROAA), return on average equity (ROAE), and earnings per
common share, excluding the impact of merger & acquisition
expenses, provides additional clarity to the users of the financial
statements regarding core financial performance. The following
table presents a comparison of the effective tax rate, net income,
ROAA, ROAE, and earnings per common share as reported, and as
adjusted for the impact of merger & acquisition expenses, for
the periods indicated.
Three months ended March 31, ($'s in thousands except per
share amounts) 2018 2017 Net income before tax $19,350
$19,431 Effect of merger expense 476 - Adjusted net
income before tax $19,826 $19,431 Income tax expense
$5,440 $7,352 Effect of merger expense 39 - Adjusted income
tax expense $5,479 $7,352 Net income $13,910 $12,079
Effect of merger expense 437 - Adjusted net income $14,347
$12,079 Effective tax rate 28.1% 37.8% Adjusted
effective tax rate 27.6% 37.8% ROAA 1.17% 1.08% Adjusted
ROAA 1.21% 1.08% ROAE 11.00% 9.97% Adjusted ROAE 11.34%
9.97% Earnings per common share: Basic $0.61 $0.53 Diluted
$0.60 $0.52 Adjusted earnings per common share: Basic $0.62
$0.53 Diluted $0.62 $0.52 M&A expense $476 -
Non-deductible M&A expense $343 - Average assets $4,741,227
$4,493,657 Average equity $506,013 $484,811 Weighted average shares
22,956,239 22,870,467 Weighted average diluted shares 23,283,127
23,231,778
Richard P. Smith, President and CEO of the Company commented,
“Our Company enjoyed another strong quarter of performance as
consistent loan demand continued to provide the catalyst for
revenue growth. Total loans grew by 1.8% during the quarter, or
7.2% annualized, and increased 11.2% over the prior year.
Additionally, deposit growth also increased during the quarter
during a period that normally sees deposit outflows. This
performance is reflective of improved economic activity in our
Northern California markets and generally to a more robust US and
California economy.”
Smith added, “Other key activities affecting performance in the
quarter include the benefits of lower corporate taxes, increased
revenues from service charges and fees on deposit accounts and
ATM/interchange revenues. Most important we continue to proceed
with the approval and integration of our previously announced
acquisition of FNB Bank of Northern California.”
About TriCo Bancshares
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.
Important Additional Information about the Merger
The Company has filed a registration statement on Form S-4 with
the SEC (filed on March 21, 2018 and amended on April 18, 2018),
which includes a joint proxy statement of the Company and FNBB and
a prospectus of the Company, and each party will file other
documents regarding the proposed transaction with the SEC. A
definitive joint proxy statement/prospectus will also be sent to
the Company and FNBB shareholders seeking required shareholder
approvals.
Before making any voting or investment decision, investors
and security holders of the Company and FNBB are urged to carefully
read the entire registration statement and joint proxy
statement/prospectus, when they become available, as well as any
amendments or supplements to these documents, because they will
contain important information about the proposed
transaction.
The documents filed by the Company and FNBB with the SEC may be
obtained free of charge at the SEC’s website at www.sec.gov. In
addition, the documents filed by the Company may be obtained free
of charge at the Company’s website at
https://www.tcbk.com/investor-relations and the documents filed by
FNBB may be obtained free of charge at FNBB’s website at
https://www.fnbnorcal.com/investor-relations-overview.
Alternatively, these documents, when available, can be obtained
free of charge from the Company upon written request to TriCo
Bancshares, Attention: Craig Compton, Secretary, 63 Constitution
Drive, Chico, CA 95973 or by calling (800) 922-8742 or from FNBB
upon written request to FNB Bancorp, 975 El Camino Real, South San
Francisco, CA, 94080, Attention: Corporate Secretary, or by calling
(650) 588-6800.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities nor shall there be any
sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction. This
communication is also not a solicitation of any vote in any
jurisdiction pursuant to the proposed transactions or otherwise. No
offer of securities or solicitation will be made except by means of
a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended. The communication is not a
substitute for the joint proxy statement/prospectus that the
Company and FNBB will file with the SEC.
Forward-Looking Statement
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, 2017,
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.
In addition to factors previously disclosed in reports filed by
the Company and FNBB with the SEC, risks and uncertainties for the
Company, FNBB and the combined company include, but are not limited
to: the possibility that any of the anticipated benefits of the
proposed merger will not be realized or will not be realized within
the expected time period; the risk that integration of FNBB's
operations with those of the Company will be materially delayed or
will be more costly or difficult than expected; the inability to
close the merger in a timely manner; the inability to complete the
merger due to the failure of the Company's or FNBB's shareholders
to adopt the merger agreement; diversion of management's attention
from ongoing business operations and opportunities; the failure to
satisfy other conditions to completion of the merger, including
receipt of required regulatory and other approvals; the failure of
the proposed merger to close for any other reason; the challenges
of integrating and retaining key employees; the effect of the
announcement of the merger on the Company's, FNBB's or the combined
company's respective customer relationships and operating results;
the possibility that the merger may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; and general competitive, economic, political and market
conditions and fluctuations. All forward-looking statements
included in this filing are made as of the date hereof and are
based on information available at the time of the filing. Except as
required by law, neither the Company nor FNBB assumes any
obligation to update any forward-looking statement.
Proxy Solicitation
The Company, FNBB, their directors, executive officers and
certain other persons may be deemed to be participants in the
solicitation of proxies from the Company's and FNBB's shareholders
in favor of the approval of the merger. Information about the
directors and executive officers of the Company and their ownership
of the Company's common stock is set forth in the proxy statement
for the Company's 2018 annual meeting of shareholders, as
previously filed with the SEC on April 18, 2018. Information about
the directors and executive officers of FNBB and their ownership of
FNBB common stock is set forth in FNBB’s Amendment No. 1 on Form
10-K/A, as previously filed with the SEC on April 20, 2018.
Shareholders may obtain additional information regarding the
interests of such participants by reading the registration
statement and the proxy statement/prospectus when they become
available.
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands, except share data)
Three months ended March 31, December 31,
September 30, June 30, March 31, 2018
2017 2017 2017 2017
Statement of Income Data Interest income $47,121
$46,961 $45,913 $45,044 $43,484 Interest expense 2,135 1,868 1,829
1,610 1,491 Net interest income 44,986 45,093 44,084 43,434 41,993
Provision (benefit from reversal of provision) for loan losses (236
) 1,677 765 (796 ) (1,557 ) Noninterest income: Service charges and
fees 9,356 9,562 9,475 9,479 8,907 Other income 2,934 2,916 3,455
3,431 2,796 Total noninterest income 12,290 12,478 12,930 12,910
11,703 Noninterest expense:
Base salaries net of deferred loan
origination costs
13,962 13,942 13,600 13,657 13,390 Incentive compensation expense
2,452 2,247 2,609 2,173 2,198
Employee benefits and other compensation
expense
5,238 4,421 4,724 4,664 5,305 Total salaries and benefits expense
21,652 20,610 20,933 20,494 20,893 Other noninterest expense 16,510
17,466 16,289 15,410 14,929 Total noninterest expense 38,162 38,076
37,222 35,904 35,822 Income before taxes 19,350 17,818 19,027
21,236 19,431 Net income $13,910 $2,989 $11,897 $13,589 $12,079
Share Data Basic earnings per share $0.61 $0.13 $0.52 $0.59
$0.53 Diluted earnings per share $0.60 $0.13 $0.51 $0.58 $0.52 Book
value per common share $22.01 $22.03 $22.09 $21.76 $21.28 Tangible
book value per common share $19.00 $19.01 $19.04 $18.70 $18.20
Shares outstanding 22,956,323 22,955,963 22,941,464 22,925,069
22,873,305 Weighted average shares 22,956,239 22,944,523 22,931,855
22,899,600 22,870,467 Weighted average diluted shares 23,283,127
23,289,545 23,244,235 23,240,112 23,231,778
Credit Quality
Nonperforming originated loans $16,080 $15,463 $11,689 $10,581
$13,234 Total nonperforming loans 24,381 24,394 21,955 17,429
19,511 Foreclosed assets, net of allowance 1,564 3,226 3,071 3,489
3,529 Loans charged-off 480 627 862 2,512 409 Loans recovered $366
$526 $701 $434 $480
Selected Financial Ratios Return on
average total assets 1.17 % 0.26 % 1.04 % 1.21 % 1.08 % Return on
average equity 11.00 % 2.33 % 9.38 % 10.93 % 9.97 % Average yield
on loans 5.03 % 5.18 % 5.18 % 5.23 % 5.06 % Average yield on
interest-earning assets 4.33 % 4.44 % 4.42 % 4.42 % 4.27 % Average
rate on interest-bearing liabilities 0.30 % 0.27 % 0.27 % 0.24 %
0.22 % Net interest margin (fully tax-equivalent) 4.14 % 4.26 %
4.24 % 4.26 % 4.13 %
Supplemental Loan Interest Income Data:
Discount accretion PCI - cash basis loans $246 $516 $398 $386 $112
Discount accretion PCI - other loans 60 445 407 797 631 Discount
accretion PNCI loans 326 528 559 987 798 All other loan interest
income 37,417 36,705 35,904 34,248 33,373 Total loan interest
income $38,049 $38,194 $37,268 $36,418 $34,914
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA (Unaudited.
Dollars in thousands) Three months ended March 31,
December 31, September 30, June 30,
March 31,
Balance Sheet Data 2018 2017
2017 2017 2017 Cash and
due from banks $182,979 $205,428 $188,034 $167,649 $323,706
Securities, marketable equity 2,890 2,938 2,957 2,955 3,033
Securities, available for sale 735,895 727,945 675,279 669,614
568,686 Securities, held to maturity 496,035 514,844 536,567
559,518 580,137 Restricted equity securities 16,956 16,956 16,956
16,956 16,956 Loans held for sale 2,149 4,616 2,733 2,537 1,176
Loans: Commercial loans 216,015 220,500 227,479 225,743 212,685
Consumer loans 348,789 365,113 361,320 360,782 357,593 Real estate
mortgage loans 2,359,379 2,291,995 2,194,874 2,106,567 2,066,372
Real estate construction loans 145,550 137,557 147,940 133,301
124,542 Total loans, gross 3,069,733 3,015,165 2,931,613 2,826,393
2,761,192 Allowance for loan losses (29,973 ) (30,323 ) (28,747 )
(28,143 ) (31,017 ) Foreclosed assets 1,564 3,226 3,071 3,489 3,529
Premises and equipment 58,558 57,742 54,995 51,558 49,508 Cash
value of life insurance 98,391 97,783 97,142 96,410 95,783 Goodwill
64,311 64,311 64,311 64,311 64,311 Other intangible assets 4,835
5,174 5,513 5,852 6,204 Mortgage servicing rights 6,953 6,687 6,419
6,596 6,860 Accrued interest receivable 12,407 13,772 12,656 11,605
11,236 Other assets 56,274 55,051 86,936 62,635 66,654 Total assets
$4,779,957 $4,761,315 $4,656,435 $4,519,935 $4,527,954 Deposits:
Noninterest-bearing demand deposits $1,359,996 $1,368,218
$1,283,949 $1,261,355 $1,254,431 Interest-bearing demand deposits
1,022,299 971,459 965,480 956,690 947,006 Savings deposits
1,395,481 1,364,518 1,367,597 1,346,016 1,370,015 Time certificates
306,628 304,936 310,430 314,361 327,432 Total deposits 4,084,404
4,009,131 3,927,456 3,878,422 3,898,884 Accrued interest payable
958 930 867 781 770 Reserve for unfunded commitments 3,864 3,164
2,989 2,599 2,734 Other liabilities 63,529 63,258 62,850 59,868
66,938 Other borrowings 65,041 122,166 98,730 22,560 15,197 Junior
subordinated debt 56,905 56,858 56,810 56,761 56,713 Total
liabilities $4,274,701 $4,255,507 $4,149,702 $4,020,991 $4,041,236
Total shareholders' equity $505,256 $505,808 $506,733 $498,944
$486,718
Accumulated other comprehensive gain
(loss)
$(17,205 ) $(5,228 ) $(4,612 ) $(4,501 ) $(7,402 ) Average loans
$3,028,178 $2,948,277 $2,878,944 $2,783,686 $2,758,544 Average
interest-earning assets $4,380,596 $4,289,656 $4,214,488 $4,135,021
$4,130,469 Average total assets $4,741,227 $4,658,677 $4,572,424
$4,492,389 $4,493,657 Average deposits $4,004,332 $3,961,422
$3,878,183 $3,851,519 $3,862,793 Average total equity $506,013
$513,007 $507,389 $497,225 $484,811 Total risk based capital ratio
13.9 % 14.1 % 14.4 % 14.8 % 15.0 % Tier 1 capital ratio 13.0 % 13.2
% 13.6 % 13.9 % 14.0 % Tier 1 common equity ratio 11.6 % 11.7 %
12.1 % 12.3 % 12.4 % Tier 1 leverage ratio 10.8 % 10.8 % 11.0 %
11.0 % 10.8 % Tangible capital ratio 9.3 % 9.3 % 9.5 % 9.6 % 9.3 %
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version on businesswire.com: https://www.businesswire.com/news/home/20180426006516/en/
TriCo BancsharesRichard P. Smith, 530-898-0300President &
CEO
TriCo Bancshares (NASDAQ:TCBK)
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