TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company
of Tri Counties Bank, today announced net income of $22,726,000 for
the quarter ended March 31, 2019, compared to $23,211,000 during
the trailing quarter December 31, 2018 and $13,910,000 during the
quarter ended March 31, 2018. Diluted earnings per share were $0.74
for the first quarter of 2019, compared to $0.76 for the fourth
quarter of 2018 and $0.60 for the first quarter of 2018.
Financial Highlights
Performance highlights and other developments for the Company
during the three months ended March 31, 2019 included the
following:
- For the three months ended March 31,
2019, the Company’s return on average assets was 1.41% and the
return on average equity was 10.78%.
- As of March 31, 2019, the Company
reached record levels of total loans, total assets and total
deposits which were $4.03 billion, $6.47 billion and $5.43 billion,
respectively.
- The loan to deposit ratio remained
stable at 74.3% at March 31, 2019 as compared to 75.0% at December
31, 2018 and 75.2% at March 31, 2018.
- Net interest margin grew 32 basis
points to 4.46% on a tax equivalent basis as compared to 4.14% in
the quarter ended March 31, 2018 and decreased by 7 basis points
from the trailing quarter.
- Non-interest bearing deposits as a
percentage of total deposits were 32.4% at March 31, 2019, as
compared to 32.8% at December 31, 2018 and 33.3% at March 31,
2018.
- The average rate of interest paid on
deposits, including noninterest-bearing deposits, remained low at
0.20%, with no change from the trailing quarter and an increase of
9 basis points from the average rate paid during the same quarter
of the prior year.
- Non-performing assets to total assets
were 0.34% as of March 31, 2019 as compared to 0.47% and 0.54% at
December 31, 2018 and March 31, 2018, respectively.
- The balance of nonperforming loans
decreased by $7.9 million and recoveries on previously charged-off
loans significantly contributed to the $1.6 million reversal of the
allowance for loan losses during the period.
- The efficiency ratio increased slightly
to 60.1% as compared to the trailing quarter, which had an
efficiency ratio of 59.1%.
President and CEO, Rick Smith commented, “Our strategic focus on
process improvement and efficiency through the use of technology,
investments in the next generation of our leadership teams, and our
commitment to delivering service with solutions to our customers
remain as the keys to the continued success of the Company. With
the storm filled weeks of winter behind us, we remain optimistic
about the growth possibilities throughout the markets that we
serve.”
Smith continued, “Regardless of the local, national or global
economic and political volatility that transpires, we believe that
TriCo’s strengths including our low cost of funds, overall credit
quality and access to liquidity provide us with significant
competitive advantages.”
Summary Results
The following is a summary of the components of the Company’s
operating results and performance ratios for the periods
indicated:
Three months ended March 31,
December 31, (dollars and shares in thousands) 2019 2018
$ Change
% Change
Net interest income $ 63,870 $ 64,002 $ (132) (0.2%) Benefit from
reversal of (provision
for) loan losses
1,600 (806) 2,406 nm Noninterest income 11,864 12,634 (770) (6.1%)
Noninterest expense (45,513) (45,285) (228) 0.5% Provision for
income taxes (9,095) (7,334) (1,761) 24.0% Net
income $ 22,726 $ 23,211 $ (485) (2.1%) Diluted earnings per
share $ 0.74 $ 0.76 $ (0.02) (2.2%) Dividends per share $ 0.19 $
0.19 - 0.0% Average common shares 30,424 30,423 1 0.0% Average
diluted common shares 30,658 30,672 (14) (0.0%) Return on
average total assets 1.41% 1.47% Return on average equity 10.78%
11.43% Efficiency ratio 60.10% 59.09% Three
months ended March 31, (dollars and shares in
thousands) 2019 2018
$ Change
% Change Net interest income $ 63,870 $ 44,986 $ 18,884 42.0%
Benefit from reversal of provision
for loan losses
1,600 236 1,364 nm Noninterest income 11,864 12,290 (426) (3.5%)
Noninterest expense (45,513) (38,162) (7,351) 19.3% Provision for
income taxes (9,095) (5,440) (3,655) 67.2% Net
income $ 22,726 $ 13,910 $ 8,816 63.4% Diluted earnings per
share $ 0.74 $ 0.60 $ 0.14 23.3% Dividends per share $ 0.19 $ 0.17
$ 0.02 11.8% Average common shares 30,424 22,956 7,468 32.5%
Average diluted common shares 30,658 23,283 7,375 31.7%
Return on average total assets 1.41% 1.17% Return on average equity
10.78% 11.00% Efficiency ratio 60.10% 66.63%
Balance Sheet
Deposit growth of $63,796,000 or 4.8% on an annualized basis
during the first quarter of 2019 continued to provide benefit to
the overall organic growth in total assets of $88,469,000 (5.6%
annualized).
Trailing Quarter Balance Sheet Change
Annualized Ending balances As of March 31, As
of December 31, Impact of Organic Organic ($'s in thousands) 2019
2018
$ Change
ASU 2016-02 (1)
$ Change
% Change Total assets $ 6,471,852 $ 6,352,441 $ 119,411 $
30,942 $ 88,469 5.6% Total loans 4,034,331
4,022,014 12,317 - 12,317 1.2% Total investments 1,564,692
1,580,096 (15,404) - (15,404) (3.9%) Total deposits $ 5,430,262
$ 5,366,466 $ 63,796 - $ 63,796 4.8%
Total average assets increased by $78,473,000 (5.0% annualized)
to $6,426,227,000 and total average deposits increased by
$151,049,000 (11.5% annualized) to $5,393,188,000 as compared to
the trailing quarter.
Average Trailing Quarter Balance Sheet Change
Annualized Qtrly avg balances As of March 31, As of
December 31, Impact of Organic Organic ($'s in
thousands) 2019 2018
$ Change
ASU 2016-02 (1)
$ Change
% Change Total assets $ 6,426,227 $ 6,316,337 $ 109,890 $
31,417 $ 78,473 5.0 % Total loans 4,023,864 4,026,569 (2,705 ) -
(2,705 ) (0.3 %) Total investments 1,567,584 1,521,780 45,804 -
45,804 12.0 % Total deposits $ 5,393,188 $ 5,242,139 $ 151,049 - $
151,049 11.5 %
(1)
On January 1, 2019, the Company recorded
on its consolidated balance sheet a right-of-use asset for
operating leases and a corresponding liability for payment
obligations in conjunction with the adoption and implementation of
the Accounting Standard Update ("ASU") 2016-02: Leases, as issued
by the Financial Accounting Standards Board ("FASB").
In addition to the balance sheet changes which resulted from the
acquisition of FNB Bancorp, total assets grew by $228,695,000
(4.8%) between March 2018 and March 2019. This growth was led by
$129,915,000 (4.2%) of organic loan growth which was funded by
$353,923,000 (8.7%) in organic deposit growth.
Year Over Year Balance Sheet Change
Ending balances As of March 31, Acquired
Organic Organic ($'s in thousands) 2019 2018
$ Change
Balances
$ Change
% Change Total assets $ 6,471,852 $ 4,779,957 $ 1,691,895 $
1,463,200 $ 228,695 4.8% Total loans 4,034,331 3,069,733 964,598
834,683 129,915 4.2% Total investments 1,564,692 1,251,776 312,916
335,667 (22,751) (1.8%) Total deposits $ 5,430,262 $ 4,084,404 $
1,345,858 $ 991,935 $ 353,923 8.7%
Total equity increased to $853,278,000 at March 31, 2019 as
compared to $827,373,000 at the close of the trailing quarter and
inclusive of $8,927,000 and $17,879,000 in accumulated other
comprehensive loss at the same periods, respectively. As a result,
the Company’s book value per share increased to $28.04 at March 31,
2019 from $27.20 per share at December 31, 2018. The Company’s
tangible book value per share, calculated by subtracting goodwill
and other intangible assets from total shareholders’ equity and
dividing that sum by total shares outstanding, increased to $19.86
per share at March 31, 2019 from $18.97 per share at December 31,
2018. Excluding accumulated other comprehensive losses from total
equity for both quarters, tangible book value per share increased
to $20.16 at March 31, 2019 from $19.56 at December 31, 2018.
Net Interest Income and Net Interest
Margin
The following is a summary of the components of net interest
income for the periods indicated:
Three months ended March 31,
December 31, (dollars in thousands) 2019 2018
$ Change
% Change Interest income $ 67,457 $ 68,065 $ (608) (0.9%) Interest
expense (3,587) (4,063) 476 (11.7%) Fully tax-equivalent adjustment
(FTE) (1) 322 322 0 0.0% Net interest income
(FTE) $ 64,192 $ 64,324 $ (132) (0.2%) Net interest margin (FTE)
4.46% 4.53% Acquired loans discount accretion, net:
Amount (included in interest income) $ 1,655 $ 1,982 $ (327)
(16.5%) Effect on average loan yield 0.17% 0.20% Effect on net
interest margin (FTE) 0.12% 0.14% Three months
ended March 31, (dollars in thousands) 2019
2018
$ Change
% Change Interest income $ 67,457 $ 47,121 $ 20,336 43.2% Interest
expense (3,587) (2,135) (1,452) 68.0% Fully tax-equivalent
adjustment (FTE) (1) 322 312 10 3.2% Net
interest income (FTE) $ 64,192 $ 45,298 $ 18,894 41.7% Net interest
margin (FTE) 4.46% 4.14% Acquired loans discount
accretion, net: Amount (included in interest income) $ 1,655 $ 632
$ 1,023 161.9% Effect on average loan yield 0.17% 0.09% Effect on
net interest margin (FTE) 0.12% 0.06%
(1)
Information is presented on a fully tax-equivalent (FTE)
basis. The Company believes the use of this non-generally accepted
accounting principles (non-GAAP) measure provides additional
clarity in assessing its results, and the presentation of these
measures on a FTE basis is a common practice within the banking
industry.
Loans may be acquired at a premium or discount to par value, in
which case, the premium is amortized (subtracted from) or accreted
(added to) 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.
During the three months ended March 31, 2019, December 31, 2018 and
March 31, 2018, purchased loan discount accretion was $1,655,000,
$1,982,000, and $632,000, respectively. During the three months
ended March 31, 2019, loans purchased at net premiums several years
ago were repaid prior to expected maturity resulting in
approximately $259,000 of accelerated amortization.
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,
2019
December 31,
2018
March 31,
2018
Average Income/ Yield/ Average Income/
Yield/ Average Income/ Yield/ Balance Expense Rate
Balance (4) Expense Rate Balance Expense Rate Assets Loans $
4,023,864 $ 54,398 5.41% $ 4,026,569 $ 55,662 5.53% $ 3,028,178 $
38,049 5.03% Investments - taxable 1,425,352 10,915 3.06% 1,378,182
10,660 3.09% 1,125,394 7,658 2.72% Investments - nontaxable (1)
142,232 1,395 3.92% 143,598 1,395 3.89%
136,160 1,353 3.97% Total investments 1,567,584
12,310 3.14% 1,521,780 12,055 3.17% 1,261,554 9,011 2.86% Cash at
Federal Reserve and other banks 168,518 1,071 2.54%
131,496 670 2.04% 90,864 373 1.64% Total
earning assets 5,759,966 67,779 4.71% 5,679,845 68,387 4.82%
4,380,596 47,433 4.33% Other assets, net 666,261
636,492 360,631 Total assets $ 6,426,227 $ 6,316,337 $
4,741,227 Liabilities and shareholders' equity Interest-bearing
demand deposits $ 1,279,639 287 0.09% $ 1,183,805 272 0.09% $
994,206 $ 211 0.08% Savings deposits 1,926,339 1,133 0.24%
1,849,788 1,132 0.24% 1,371,377 411 0.12% Time deposits
441,778 1,299 1.18% 459,658 1,190 1.04%
306,514 474 0.62% Total interest-bearing deposits 3,647,756
2,719 0.30% 3,493,251 2,594 0.30% 2,672,097 1,096 0.16% Other
borrowings 15,509 13 0.34% 122,755 639 2.08% 107,781 342 1.27%
Junior subordinated debt 56,950 855 6.01%
57,019 830 5.82% 56,882 697 4.90% Total
interest-bearing liabilities 3,720,215 3,587 0.39% 3,673,025
4,063 0.44% 2,836,760 2,135 0.30% Noninterest-bearing
deposits 1,745,432 1,748,888 1,332,235 Other liabilities 117,490
81,899 66,219 Shareholders' equity 843,090 812,525
506,013 Total liabilities and shareholders' equity $
6,426,227 $ 6,316,337 $ 4,741,227 Net interest rate spread (1) (2)
4.32% 4.38% 4.03% Net interest income and net interest margin (1)
(3) $ 64,192 4.46% $ 64,324 4.53% 45,298 4.14%
(1)
Fully taxable equivalent (FTE)
(2)
Net interest spread is the average yield
earned on interest-earning assets minus the average rate paid on
interest-bearing liabilities.
(3)
Net interest margin is computed by
calculating the difference between interest income and interest
expense, divided by the average balance of interest-earning
assets.
(4)
The reported amounts of average balances
for the three months ended December 31, 2018 have been corrected
for immaterial differences that were identified subsequent to the
prior period's earnings release and for purposes of ensuring that
reclassifications of these amounts are presented on a comparable
basis. These changes in average balances had no impact on the
aggregate amounts of income or expense previously reported but did
have an immaterial impact on the calculated rates and yields.
Net interest income (FTE) during the three months ended March
31, 2019 decreased $132,000 or 0.2% to $64,192,000 compared to
$64,324,000 during the three months ended December 31, 2018. The
generally static level of net interest income (FTE) was due
primarily to negligible changes in the average balances and mix of
interest earnings assets and interest bearing liabilities during
the quarter but negatively impacted by the repayment of loans prior
to anticipated maturity that were acquired for net premiums.
The index utilized in a significant portion of the Company’s
variable rate loans, Wall Street Journal Prime, has increased by
1.50% to 5.50% at March 31, 2019 as compared to 4.00% at March 31,
2018. The most recent increase of the index was during December
2018, with an increase of 25 basis points. As such, there were
minimal changes to loan yields as compared to the trailing quarter.
However, as compared to the same quarter in the prior year, average
loan yields increased 38 basis points from 5.03% during the three
months ended March 31, 2018 to 5.41% during the three months ended
March 31, 2019. Of the 38 basis point increase in yields on loans,
30 basis points was attributable to increases in market rates while
8 basis points was from increased accretion of purchased loans.
The impact of changes in rates and volumes of interest bearing
liabilities resulted in a decrease in interest expense of $476,000
during the current quarter. Declines in interest expense on other
borrowings contributed to $626,000 of the decrease which was
partially offset by a $109,000 increase in interest expense on time
deposits and an additional $25,000 in expense on variable rate
junior subordinated debt. Comparing the quarter ended March 31,
2019 to the trailing quarter, the total cost of interest bearing
liabilities decreased by 5 basis points to 0.39% but increased 9
basis points from the same quarter in the prior year due in part to
differences in market rates associated with deposits acquired from
First National Bank of Northern California and to increases in the
variable rates paid on other borrowings and subordinated debt.
Asset Quality and Loan Loss
Provisioning
The Company recorded a benefit from the reversal of provision
for loan losses of $1,600,000 during the three months ended March
31, 2019 as compared to a benefit from the reversal of provision of
$236,000 in the same quarter of the prior year. The benefit from
the reversal of the provision was necessitated in part by
$1,082,000 in net recoveries on previously charged-off loans during
the first quarter of 2019 as compared to net charge-offs of
$114,000 in the first quarter of 2018. Additionally, while the
Company remains cautious about the risks associated with trends in
California real estate prices and the affordability of housing in
the markets served by the Company, changes in affordability and
energy related index rates improved during the quarter ended March
31, 2019. The qualitative factors associated with these two
measures reduced the level of calculated required reserves by
approximately $1,059,000.
Provision for Income
Taxes
The Company’s effective tax rate was 28.6% for the quarter ended
March 31, 2019 as compared to 28.1% for the same quarter in the
prior year. As previously reported, the Company’s effective tax
rate was 24.0% for the quarter ended December 31, 2018 which was
benefited by certain tax method elections. Absent the benefits made
possible through these elections, the Company’s effective tax rate
would have been 27.5% for the quarter ended December 31, 2018.
Non-interest Income
The following table presents the key components of noninterest
income for the periods indicated:
Three months ended March 31, (dollars in
thousands) 2019 2018
$ Change
% Change ATM and interchange fees $ 4,581 $ 4,235 $ 346 8.2%
Service charges on deposit accounts 3,880 3,779 101 2.7% Other
service fees 771 714 57 8.0% Mortgage banking service fees 483 517
(34) (6.6%) Change in value of mortgage servicing rights
(645) 111 (756) (681.1%) Total service charges
and fees 9,070 9,356 (286) (3.1%)
Increase in cash value of life insurance 775 608 167 27.5% Asset
management and commission income 642 876 (234) (26.7%) Gain on sale
of loans 412 626 (214) (34.2%) Lease brokerage income 220 128 92
71.9% Sale of customer checks 140 101 39 38.6% Gain on sale of
foreclosed assets 99 371 (272) (73.3%) Gain (loss) on marketable
equity securities 36 (47) 83 (176.6%) Loss on disposal of fixed
assets (38) (13) (25) 192.3% Other 508 284 224
78.9% Total other noninterest income 2,794
2,934 (140) (4.8%) Total noninterest income $ 11,864
$ 12,290 $ (426) (3.5%)
Noninterest income decreased $426,000 (3.5%) to $11,864,000
during the three months ended March 31, 2019 compared to the three
months ended March 31, 2018. The decrease in noninterest income was
due primarily to a $756,000 (681.1%) decrease in the fair value of
mortgage servicing rights, $234,000 (26.7%) decrease in asset
management and commission income, $214,000 (34.2%) decrease in gain
on sale of loans, and a $272,000 (73.3%) decrease on the gain on
sale of foreclosed assets. Offsetting the decreases in non-interest
income was an increase in ATM and interchange fees of $346,000
(8.2%), an increase in service charges on deposit accounts of
$101,000 (2.7%), and an increase in the cash value of life
insurance of $167,000 (27.5%). The fair value of the mortgage
servicing asset decreased as compared to the first quarter in the
prior year due to changes in the assumptions utilized in
determining the fair value. Specifically, increased prepayment
speeds and decreases in the 15 and 30 year mortgage rates were the
largest contributors to the decline in fair value of the mortgage
servicing asset.
Three months ended March 31, December
31, (dollars in thousands) 2019 2018
$ Change
% Change ATM and interchange fees $ 4,581 $ 4,914 $ (333)
(6.8%) Service charges on deposit accounts 3,880 4,059 (179) (4.4%)
Other service fees 771 832 (61) (7.3%) Mortgage banking service
fees 483 511 (28) (5.5%) Change in value of mortgage servicing
rights (645) (184) (461) 250.5% Total
service charges and fees 9,070 10,132 (1,062)
(10.5%) Increase in cash value of life insurance 775 722 53
7.3% Asset management and commission income 642 737 (95) (12.9%)
Gain on sale of loans 412 540 (128) (23.7%) Lease brokerage income
220 164 56 34.1% Sale of customer checks 140 122 18 14.8% Gain on
sale of foreclosed assets 99 18 81 450.0% Gain on marketable equity
securities 36 28 8 28.6% (Loss) gain on disposal of fixed assets
(38) 21 (59) (281.0%) Other 508 150 358 238.7%
Total other noninterest income 2,794 2,502
292 11.7% Total noninterest income $ 11,864 $ 12,634
$ (770) (6.1%)
Noninterest income decreased $770,000 (6.1%) to $11,864,000
during the three months ended March 31, 2019 compared to the three
months ended December 31, 2018. The decrease in noninterest income
was due primarily to a $1,062,000 (10.5%) decrease in total service
charges and fees, which comprised primarily of a $461,000 (250.5%)
decrease in the fair value of the mortgage servicing rights and
$333,000 (6.8%) decrease in ATM and interchange fees. Partially
offsetting the decreases in non-interest income was an increase in
other miscellaneous income of $358,000 (238.7%).
Non-interest Expense
The following table presents the key components of the Company’s
noninterest expense for the periods indicated:
Three months ended March 31, 2019 2018
$ Change
% Change Base salaries, net of deferred loan
origination costs
$ 16,757 $ 13,962 $ 2,795 20.0% Incentive compensation 2,567 2,452
115 4.7% Benefits and other compensation costs 5,804
5,238 566 10.8% Total salaries and benefits expense
25,128 21,652 3,476 16.1% Occupancy
3,774 2,681 1,093 40.8% Data processing and software 3,349 2,514
835 33.2% Equipment 1,867 1,551 316 20.4% Intangible amortization
1,431 339 1,092 322.1% Advertising 1,331 838 493 58.8% ATM and POS
network charges 1,323 1,226 97 7.9% Professional fees 839 773 66
8.6% Telecommunications 797 701 96 13.7% Regulatory assessments and
insurance 511 430 81 18.8% Merger and acquisition expense - 476
(476) (100.0%) Postage 310 358 (48) (13.4%) Operational losses 225
294 (69) (23.5%) Courier service 270 267 3 1.1% Other miscellaneous
expense 4,358 4,062 296 7.3% Total
other noninterest expense 20,385 16,510 3,875
23.5% Total noninterest expense $ 45,513 $ 38,162 $ 7,351
19.3% Average full time equivalent staff 1,138 1,002
Salary and benefit expenses increased $3,476,000 (16.1%) to
$25,128,000 during the three months ended March 31, 2019 compared
to $21,652,000 during the three months ended March 31, 2018. Base
salaries, net of deferred loan origination costs increased
$2,795,000 (20.0%) to $16,757,000. The increase in base salaries
was due primarily to a 13.6% increase in average full time
equivalent employees to 1,138 from 1,002 in the year-ago quarter.
Commissions and incentive compensation increased $115,000 (4.7%) to
$2,567,000 during the three months ended March 31, 2019 compared to
the year-ago quarter due primarily to organic loan and deposit
growth. Benefits & other compensation expense increased
$566,000 (10.8%) to $5,804,000 during the three months ended March
31, 2019 due primarily to increases in the average full time
equivalent employees, as mentioned above.
Other noninterest expense increased $3,875,000 (23.5%) to
$20,385,000 during the three months ended March 31, 2019 compared
to the three months ended March 31, 2018. The increase in other
noninterest expense was due primarily to increased overhead
operating costs related to the additional branches as a result of
the prior year acquisition of FNB Bancorp. Highlighting those
increases were intangible amortization, occupancy, data processing
and software, and advertising expenses, which increased by
$1,092,000, $1,093,000, $835,000 and $493,000, respectively, as
compared to the prior year quarter. The increases in noninterest
expenses were partially offset by decreased merger &
acquisition expenses of $476,000.
Three months ended March 31, December
31, 2019 2018
$ Change
% Change Base salaries, net of deferred loan
origination costs
$ 16,757 $ 16,980 $ (223) (1.3%) Incentive compensation 2,567 3,313
(746) (22.5%) Benefits and other compensation costs 5,804
4,721 1,083 22.9% Total salaries and benefits
expense 25,128 25,014 114 0.5%
Occupancy 3,774 3,565 209 5.9% Data processing and software 3,349
3,042 307 10.1% Equipment 1,867 1,713 154 9.0% Intangible
amortization 1,431 1,431 - 0.0% Advertising 1,331 1,364 (33) (2.4%)
ATM and POS network charges 1,323 1,413 (90) (6.4%) Professional
fees 839 1,071 (232) (21.7%) Telecommunications 797 822 (25) (3.0%)
Regulatory assessments and insurance 511 522 (11) (2.1%) Postage
310 220 90 40.9% Operational losses 225 497 (272) (54.7%) Courier
service 270 518 (248) (47.9%) Other miscellaneous expense
4,358 4,093 265 6.5% Total other noninterest
expense 20,385 20,271 114 0.6% Total
noninterest expense $ 45,513 $ 45,285 $ 228 0.5% Average
full time equivalent staff 1,138 1,134
Salary and benefit expenses increased $114,000 (0.5%) to
$25,128,000 during the three months ended March 31, 2019 compared
to $25,014,000 during the three months ended December 31, 2018.
Base salaries, net of deferred loan origination costs decreased
$223,000 (1.3%) to $16,757,000. Commissions and incentive
compensation decreased $746,000 (22.5%) to $2,567,000 during the
three months ended March 31, 2019 compared to the trailing quarter
due primarily to lack of organic loan and deposit growth. Benefits
& other compensation expense increased $1,083,000 (22.9%) to
$5,804,000 during the three months ended March 31, 2019 due
primarily to increases in group insurance and employer taxes.
Other noninterest expense increased $114,000 (0.6%) to
$20,385,000 during the three months ended March 31, 2019 compared
to the trailing quarter. Increases in occupancy, data processing
and software, and equipment were offset by decrease in professional
fees, operational losses, and courier service.
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.
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 our control. There can be no assurance that
future developments affecting us will be the same as those
anticipated by management. We caution 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 we conduct 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;
changes in the level of our 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 us; changes in consumer spending, borrowing
and savings habits; our 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 other
financial service providers; the possibility that any of the
anticipated benefits of our recent merger with FNBB will not be
realized or will not be realized within the expected time period,
or that integration of FNBB’s operations will be more costly or
difficult than expected; the challenges of integrating and
retaining key employees; unanticipated regulatory or judicial
proceedings; the costs and effects of litigation and of unexpected
or adverse outcomes in such litigation; and our 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, 2018, 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.
TRICO BANCSHARES - CONDENSED CONSOLIDATED FINANCIAL
DATA (Unaudited. Dollars in thousands, except share data)
Three months ended March 31, December 31,
September 30, June 30, March 31, 2019 2018 2018 2018
2018
Revenue and Expense Data Interest income $ 67,457 $
68,065 $ 64,554 $ 48,478 $ 47,121 Interest expense 3,587
4,063 4,065 2,609 2,135 Net interest
income 63,870 64,002 60,489 45,869 44,986 Provision for (benefit
from) loan losses (1,600) 806 2,651 (638) (236) Noninterest income:
Service charges and fees 9,070 10,132 9,743 9,228 9,356 Gain on
sale of investment securities - - 207 - - Other income 2,794
2,502 2,236 2,946 2,934 Total
noninterest income 11,864 12,634 12,186 12,174 12,290 Noninterest
expense: Salaries and benefits 25,128 25,014 25,823 21,453 21,652
Occupancy and equipment 5,641 5,278 5,056 4,357 4,232 Data
processing and network 4,672 4,455 3,981 4,116 3,740 Other
noninterest expense 10,072 10,538 12,518
7,944 8,538 Total noninterest expense 45,513
45,285 47,378 37,870 38,162 Total
income before taxes 31,821 30,545 22,646
20,811 19,350 Provision for income taxes 9,095
7,334 6,476 5,782 5,440 Net income $
22,726 $ 23,211 $ 16,170 $ 15,029 $ 13,910
Share Data Basic
earnings per share $ 0.75 $ 0.76 $ 0.54 $ 0.65 $ 0.61 Diluted
earnings per share $ 0.74 $ 0.76 $ 0.53 $ 0.65 $ 0.60 Dividends per
share $ 0.19 $ 0.19 $ 0.17 $ 0.17 $ 0.17 Book value per common
share $ 28.04 $ 27.20 $ 26.37 $ 22.27 $ 22.01 Tangible book value
per common share (1) $ 19.86 $ 18.97 $ 18.10 $ 19.28 $ 19.00 Shares
outstanding 30,432,419 30,417,223 30,417,818 23,004,153 22,956,323
Weighted average shares 30,424,184 30,422,687 30,011,307 22,983,439
22,956,239 Weighted average diluted shares 30,657,833 30,671,723
30,291,225 23,276,471 23,283,127
Credit Quality Loans past
due 30 days or more $ 16,761 $ 17,368 $ 13,218 $ 11,626 $ 20,416
Nonperforming originated loans 13,737 19,416 17,087 17,077 16,080
Total nonperforming loans 19,565 27,494 27,148 25,420 24,381 Total
nonperforming assets 21,880 29,774 28,980 26,794 25,945 Loans
charged-off 726 424 1,142 318 480 Loans recovered $ 1,808 $ 596 $
570 $ 507 $ 366
Selected Financial Ratios Return on average
total assets 1.41% 1.47% 1.05% 1.25% 1.17% Return on average equity
10.78% 11.43% 9.11% 11.78% 11.00% Average yield on loans 5.41%
5.53% 5.27% 5.06% 5.03% Average yield on interest-earning assets
4.71% 4.82% 4.61% 4.38% 4.33% Average rate on interest-bearing
deposits 0.30% 0.30% 0.25% 0.18% 0.16% Average cost of total
deposits 0.20% 0.20% 0.16% 0.12% 0.11%
Average rate on borrowings and
subordinated debt
4.79% 3.27% 2.63% 2.80% 2.52% Average rate on interest-bearing
liabilities 0.39% 0.44% 0.44% 0.36% 0.30% Net interest margin
(fully tax-equivalent) 4.46% 4.53% 4.32% 4.14% 4.14% Loans to
deposits 74.29% 74.95% 79.08% 77.17% 75.16% Efficiency ratio 60.10%
59.09% 65.19% 65.24% 66.63%
Supplemental Loan Interest Income
Data Discount accretion on acquired loans $ 1,655 $ 1,982 $
2,098 $ 559 $ 632 All other loan interest income 52,743 53,680
51,004 38,745 37,417 Total loan interest income $ 54,398 $ 55,662 $
53,102 $ 39,304 $ 38,049
(1)
Tangible book value per share is calculated by subtracting
goodwill and other intangible assets from total shareholders'
equity and dividing that result by the shares outstanding at the
end of the period. Management believes that tangible book value per
common share is meaningful because it is a measure that the Company
and investors commonly use to assess shareholder value.
TRICO BANCSHARES - CONDENSED CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands) Three months ended March
31, December 31, September 30, June 30,
March 31,
Balance Sheet Data 2019 2018 2018 2018 2018 Cash
and due from banks $ 318,708 $ 227,533 $ 226,543 $ 184,062 $
182,979 Securities, available for sale 1,116,426 1,117,910
1,058,806 757,075 738,785 Securities, held to maturity 431,016
444,936 459,897 477,745 496,035 Restricted equity securities 17,250
17,250 17,250 16,956 16,956 Loans held for sale 5,410 3,687 3,824
3,601 2,149 Loans: Commercial loans 269,163 276,548 289,645 237,619
216,015 Consumer loans 418,352 418,982 421,287 350,925 348,789 Real
estate mortgage loans 3,129,339 3,143,100 3,132,202 2,401,040
2,359,379 Real estate construction loans 217,477
183,384 184,302 156,729 145,550 Total loans,
gross 4,034,331 4,022,014 4,027,436 3,146,313 3,069,733 Allowance
for loan losses (32,064) (32,582) (31,603)
(29,524) (29,973) Total loans, net 4,002,267
3,989,432 3,995,833# 3,116,789 3,039,760 Premises and equipment
89,275 89,347 89,290 59,014 58,558 Cash value of life insurance
117,841 117,318 116,596 99,047 98,391 Accrued interest receivable
20,431 19,412 19,592 14,253 12,407 Goodwill 220,972 220,972 220,972
64,311 64,311 Other intangible assets 27,849 29,280 30,711 4,496
4,835 Operating leases, right-of-use 30,942 - - - - Other assets
73,465 75,364 79,551 65,804
64,791 Total assets $ 6,471,852 $ 6,352,441 $ 6,318,865 $ 4,863,153
$ 4,779,957 Deposits: Noninterest-bearing demand deposits $
1,761,559 $ 1,760,580 $ 1,710,505 $ 1,369,834 $ 1,359,996
Interest-bearing demand deposits 1,297,672 1,252,366 1,152,705
1,006,331 1,022,299 Savings deposits 1,925,168 1,921,324 1,801,087
1,385,268 1,395,481 Time certificates 445,863 432,196
428,820 315,789 306,628 Total deposits
5,430,262 5,366,466 5,093,117 4,077,222 4,084,404 Accrued interest
payable 2,195 1,997 1,729 1,175 958 Operating lease liability
30,204 - - - - Other liabilities 86,362 83,724 82,077 62,623 67,393
Other borrowings 12,466 15,839 282,831 152,839 65,041 Junior
subordinated debt 57,085 57,042 56,996
56,950 56,905 Total liabilities $ 5,618,574 $ 5,525,068 $
5,516,750 $ 4,350,809 $ 4,274,701 Common stock 542,340 541,762
541,519 256,590 256,226 Retained earnings 319,865 303,490 287,555
276,877 266,235 Accumulated other comprehensive loss (8,927)
(17,879) (26,959) (21,123) (17,205)
Total shareholders' equity $ 853,278 $ 827,373 $ 802,115 $ 512,344
$ 505,256
Average Balance Data Average loans $ 4,023,864 $
4,026,569 $ 4,028,462 $ 3,104,126 $ 3,028,178 Average
interest-earning assets $ 5,759,966 $ 5,679,845 $ 5,638,162 $
4,457,660 $ 4,380,596 Average total assets $ 6,426,227 $ 6,316,337
$ 6,168,344 $ 4,814,523 $ 4,741,227 Average deposits $ 5,393,188 $
5,242,139 $ 5,068,841 $ 4,042,110 $ 4,004,332 Average borrowings
and subordinated debt $ 72,459 $ 179,774 $ 303,610 $ 196,235 $
164,663 Average total equity $ 843,090 $ 812,525 $ 709,762 $
510,433 $ 506,013
Capital Ratio Data Total risk based
capital ratio 14.4% 14.4% 13.9% 13.9% 13.9% Tier 1 capital ratio
13.6% 13.7% 13.2% 13.1% 13.0% Tier 1 common equity ratio 12.5%
12.5% 12.0% 11.7% 11.6% Tier 1 leverage ratio 10.6% 10.7% 10.7%
10.9% 10.8% Tangible capital ratio (1) 9.7% 9.5% 9.1% 9.3% 9.3%
(1)
Tangible capital ratio is calculated by subtracting goodwill
and other intangible assets from total shareholders' equity and
total assets and then dividing the adjusted assets by the adjusted
equity. Management believes that the tangible capital ratio is
meaningful because it is a measure that the Company and investors
commonly use to assess capital adequacy.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190425006062/en/
Richard P. SmithPresident & CEO (530) 898-0300
TriCo Bancshares (NASDAQ:TCBK)
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