Market Overview

TriCo Bancshares Announces Quarterly Results

Share:
CHICO, Calif.--(BUSINESS WIRE)--

TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company of Tri Counties Bank (the “Bank”), today announced earnings of $5,020,000, or $0.31 per diluted share, for the three months ended September 30, 2012. Included in the results for the three months ended September 30, 2012 is a legal settlement expense of $2,090,000 that was previous disclosed on September 27, 2012. Excluding this legal settlement expense, earnings for the three months ended September 30, 2012 would have been approximately $6,231,000, or approximately $0.39 per diluted share. These results compare to earnings of $6,470,000, or $0.40 per diluted share reported by the Company for the three months ended September 30, 2011. Included in the results for the three months ended September 30, 2011 was a $7,575,000 bargain purchase gain related to the Company's acquisition of the banking operations of Citizens Bank of Northern California on September 23, 2011. Excluding this bargain purchase gain, earnings for the three months ended September 30, 2011 would have been approximately $2,080,000, or $0.13 per diluted share. Diluted earnings per share for the nine months ended September 30, 2012 and 2011 were $0.89 and $0.75, respectively, on earnings of $14,272,000 and $12,041,000, respectively.

Total assets of the Company increased $27,014,000 (1.1%) to $2,515,481,000 at September 30, 2012 from $2,488,467,000 at September 30, 2011. Total loans of the Company increased $20,000 (0.0%) to $1,575,647,000 at September 30, 2012 from $1,575,627,000 at September 30, 2011. Loans increased $23,165,000 and $41,397,000 during the three months ended September 30, 2012 and June 30, 2012, respectively. Total deposits of the Company increased $81,416,000 (3.8%) to $2,201,639,000 at September 30, 2012 from $2,120,223,000 at September 30, 2011.

The following is a summary of the components of the Company's consolidated net income for the periods indicated:

  Three months ended    
September 30,
(dollars in thousands) 2012   2011

$ Change

% Change
Net Interest Income $ 25,631 $ 22,007 $ 3,624 16.5 %
Provision for loan losses (532 ) (5,069 ) 4,537 (89.5 %)
Noninterest income 9,127 14,723 (5,596 ) (38.0 %)
Noninterest expense (25,590 ) (20,873 ) (4,717 ) 22.6 %
Provision for income taxes   (3,616 )   (4,318 )   702   (16.3 %)
Net income $ 5,020   $ 6,470     ($1,450 ) (22.4 %)

Included in the Company's results for the three month period ended September 30, 2012 is the acquisition by Tri Counties Bank of the banking operations of Citizens Bank of Northern California, Nevada City, California from the FDIC under a whole bank purchase and assumption agreement without loss sharing on September 23, 2011. The assets acquired and liabilities assumed in the Citizens acquisition have been accounted for under the acquisition method of accounting (formerly the purchase method). Loans acquired through the Citizens acquisition are classified as Purchased Not Credit Impaired (PNCI), Purchased Credit Impaired – cash basis (PCI – cash basis), or Purchased Credit Impaired – other (PCI – other). Loans not acquired in an acquisition or otherwise “purchased” are classified as “originated”. Further details regarding interest income from loans, including fair value discount accretion, may be found under the heading “Supplemental Loan Interest Income Data” in the Consolidated Financial Data table at the end of this announcement.

The 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

September 30, 2012

 

September 30, 2011

Average   Income/   Yield/ Average   Income/   Yield/
Balance Expense Rate Balance Expense Rate
Assets
Earning assets
Loans $ 1,573,816 $ 25,530 6.49 % $ 1,410,151 $ 21,987 6.24 %
Investments - taxable 195,951 1,455 2.97 % 256,149 2,138 3.34 %
Investments - nontaxable 9,561 173 7.24 % 11,586 213 7.36 %
Federal funds sold   571,837     372   0.26 %   359,462     213   0.24 %
Total earning assets 2,351,164   27,530   4.68 % 2,037,348   24,551   4.82 %
Other assets, net   168,095   170,452
Total assets $ 2,519,259 $ 2,207,800
Liabilities and shareholders' equity
Interest-bearing
Demand deposits $ 479,565 196 0.16 % $ 408,954 275 0.27 %
Savings deposits 757,491 314 0.17 % 639,476 331 0.21 %
Time deposits 359,507 596 0.66 % 389,161 937 0.96 %
Other borrowings 41,852 395 3.78 % 60,849 610 4.01 %
Trust preferred securities   41,238     333   3.23 %   41,238     312   3.03 %
Total interest-bearing liabilities 1,679,652   1,834   0.44 % 1,539,678   2,465   0.64 %
Noninterest-bearing deposits 577,523 427,808
Other liabilities 35,227 31,754
Shareholders' equity   226,857   208,560

Total liabilities and shareholders' equity

$ 2,519,259 $ 2,207,800
Net interest rate spread 4.24 % 4.18 %
Net interest income/net interest margin (FTE)   25,696   4.37 %   22,086   4.34 %
FTE adjustment   (65 )   (79 )
Net interest income (not FTE) $ 25,631   $ 22,007  
 

Net interest income (FTE) during the three months ended September 30, 2012 increased $3,610,000 (16.3%) from the same period in 2011 to $25,696,000. The increase in net interest income (FTE) was primarily due to a $163,665,000 (11.6%) increase in average balance of loans and a 25 basis point increase in average yield on loans to 6.49%, both of which are primarily due to the Citizens acquisition in September 2011. The operations of Citizens from July 1, 2012 to September 30, 2012 added approximately $4,130,000 and $79,000 to interest income and interest expense, respectively. Included in the $4,130,000 of Citizens related interest income recorded during the three months ended September 30, 2012, is $1,658,000 of interest income from fair value discount accretion.

The Company provided $532,000 for loan losses in the third quarter of 2012 versus $3,371,000 in the second quarter of 2012 and $5,069,000 in the third quarter of 2011. Included in the provision for loan losses during the quarter ended September 30, 2012, was $529,000 related to Citizens loans. The decrease in provision for loan losses during the third quarter of 2012 compared to the second quarter of 2012 was primarily the result of improvement in collateral values and estimated cash flows related to nonperforming and purchased credit impaired loans, and a reduction in nonperforming loans.

The following table presents the key components of noninterest income for the periods indicated:

  Three months ended    
September 30,
(dollars in thousands) 2012   2011

$ Change

% Change
Service charges on deposit accounts 3,617 3,769   ($152 ) (4.0 %)
ATM fees and interchange 1,877 1,780 97 5.4 %
Other service fees 567 460 107 23.3 %
Mortgage banking service fees 403 375 28 7.5 %
Change in value of mortgage servicing rights   (681 )   (800 )   119   (14.9 %)
Total service charges and fees   5,783     5,584     199   3.6 %
 
Gain on sale of loans 1,430 598 832 139.1 %
Commission on NDIP 803 542 261 48.2 %
Increase in cash value of life insurance 450 450 - 0.0 %
Change in indemnification asset (94 ) (289 ) 195 (67.5 %)
Gain on sale of foreclosed assets 418 82 336 409.8 %
Other noninterest income   337     7,756     (7,419 ) (95.7 %)
Total other noninterest income   3,344     9,139     (5,795 ) (63.4 %)
Total noninterest income $ 9,127   $ 14,723     ($5,596 ) (38.0 %)
 

Noninterest income decreased $5,596,000 (38.0%) to $9,127,000 for the three months ended September 30, 2012 when compared to the three months ended September 30, 2011. Excluding the $7,575,000 bargain purchase gain related to the Citizens acquisition and recorded in the three month period ended September 30, 2011, noninterest income would have increased $1,979,000 (27.7%) for the three months ended September 30, 2012 compared to the three months ended September 30, 2011. Excluding the effect of the bargain purchase gain, the change in noninterest income was primarily due to an $832,000 increase in gain on sale of loans, a $336,000 increase in gain on sale of foreclosed assets, and a $261,000 increase in commissions on sale of nondeposit investment products (NDIP). The increase in gain on sale of loans is due to increased residential real estate loan refinance activity and our focus to service that activity. The increase in commissions on sale of NDIP is due to our application of additional resources in that area. The operations of Citizens accounted for $574,000 of noninterest income during the three months ended September 30, 2012.

Salary and benefit expenses increased $432,000 (3.6%) to $12,362,000 during the three months ended September 30, 2012 compared to the three months ended September 30, 2011. Base salaries increased $857,000 (11.5%) to $8,337,000 during the three months ended September 30, 2012. The increase in base salaries was mainly due to a 10.6% increase in average full time equivalent staff to 740 and annual merit increases when compared to the three months ended September 30, 2011. The increase in full time equivalent staff is mainly due to the Citizens acquisition on September 23, 2011. Incentive and commission related salary expenses decreased $594,000 (32.1%) to $1,254,000 during three months ended September 30, 2012 due primarily to large net income related bonus accruals made during the three months ended September 30, 2011. Benefits expense, including retirement, medical and workers' compensation insurance, and taxes, increased $169,000 (6.5%) to $2,771,000 during the three months ended September 30, 2012 primarily due to the increase in average full time equivalent staff noted above. The operations of Citizens from July 1, 2012 to September 30, 2012 added $524,000 to salaries and benefits expense.

Other noninterest expenses increased $4,285,000 (47.9%) to $13,228,000 during the three months ended September 30, 2012 when compared to the three months ended September 30, 2011. Included in noninterest income for the three months ended September 30, 2012 is $2,090,000 related to a legal settlement that was previously disclosed by the Company on September 27, 2012. Excluding this legal settlement, other noninterest expenses would have increased $2,195,000 (24.5%). Changes in the various categories of other noninterest expense are reflected in the table below. The changes are indicative of the Citizens acquisition, and the economic environment which has led to increases, or fluctuations, in professional loan collection expenses, provision for foreclosed asset losses, and foreclosed asset expenses. The operations of Citizens from July 1, 2012 to September 30, 2012 added $646,000 to other noninterest expenses.

The following table presents the key components of the Company's noninterest expense for the periods indicated:

  Three months ended    
September 30,
(dollars in thousands) 2012   2011

$ Change

% Change
Salaries $ 8,337 $ 7,480 $ 857 11.5 %

Commissions and incentives

1,254 1,848 (594 ) (32.1 %)
Employee benefits   2,771     2,602   169   6.5 %
Total salaries and benefits expense   12,362     11,930   432   3.6 %
 
Occupancy 1,851 1,521 330 21.7 %
Equipment 1,138 949 189 19.9 %

Change in reserve for unfunded commitments

(35 ) - (35 )
Data processing and software 1,017 940 77 8.2 %
Telecommunications 553 382 171 44.8 %
ATM network charges 529 425 104 24.5 %
Professional fees 832 462 370 80.1 %
Advertising and marketing 710 607 103 17.0 %
Postage 230 163 67 41.1 %
Courier service 270 222 48 21.6 %
Intangible amortization 52 20 32 160.0 %
Operational losses 171 166 5 3.0 %
Provision for foreclosed asset losses 433 306 127 41.5 %
Foreclosed asset expense 284 215 69 32.1 %
Assessments 590 517 73 14.1 %
Other   4,603     2,048   2,555   124.8 %
Total other noninterest expense   13,228     8,943   4,285   47.9 %
Total noninterest expense $ 25,590   $ 20,873 $ 4,717   22.6 %

In addition to the historical information contained herein, this press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The reader of this press release should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, interest rate fluctuations, economic conditions in the Company's primary market area, demand for loans, regulatory and accounting changes, loan losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, competition effects, fee and other noninterest income earned as well as other factors detailed in the Company's reports filed with the Securities and Exchange Commission which are incorporated herein by reference, including the Form 10-K for the year ended December 31, 2011. These reports and this entire press release should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company's business. Any forward-looking statement may turn out to be wrong and cannot be guaranteed. The Company does not intend to update any of the forward-looking statements after the date of this release.

TriCo Bancshares and Tri Counties Bank are headquartered in Chico, California. Tri Counties Bank has a 37-year history in the banking industry. It operates 41 traditional branch locations and 25 in-store branch locations in 23 California counties. Tri Counties Bank offers financial services and provides a diversified line of products and services to consumers and businesses, which include demand, savings and time deposits, consumer finance, online banking, mortgage lending, and commercial banking throughout its market area. It operates a network of 72 ATMs and a 24-hour, seven days-a-week telephone customer service center. Brokerage services are provided by the Bank's investment services affiliate, Raymond James Financial Services, Inc. For further information please visit the Tri Counties Bank web site at http://www.tricountiesbank.com.

TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands, except share data)
 
Three months ended
September 30,   June 30,   March 31,   December 31,   September 30,
2012 2012 2012 2011 2011
Statement of Income Data
Interest income $ 27,465 $ 27,944 $ 27,164 $ 29,609 $ 24,472
Interest expense 1,834 2,010 2,128 2,329 2,465
Net interest income 25,631 25,934 25,036 27,280 22,007
Provision for loan losses 532 3,371 3,996 5,429 5,069
Noninterest income:
Service charges and fees 5,783 6,155 5,952 6,457 5,584
Other income 3,344 4,422 2,313 4,032 9,139
Total noninterest income 9,127 10,577 8,265 10,489 14,723
Noninterest expense:

Base salaries net of deferred loan origination costs

8,337 8,273 8,159 8,071 7,478
Incentive compensation expense 1,254 1,347 1,375 188 1,850

Employee benefits and other compensation expense

2,771 2,870 3,228 2,506 2,602
Total salaries and benefits expense 12,362 12,490 12,762 10,765 11,930
Other noninterest expense 13,228 11,877 10,153 11,311 8,943
Total noninterest expense 25,590 24,367 22,915 22,076 20,873
Income before taxes 8,636 8,773 6,390 10,264 10,788
Net income $ 5,020 $ 5,321 $ 3,931 $ 6,549 $ 6,470
Share Data
Basic earnings per share $ 0.31 $ 0.33 $ 0.25 $ 0.41 $ 0.40
Diluted earnings per share $ 0.31 $ 0.33 $ 0.25 $ 0.41 $ 0.40
Book value per common share $ 14.21 $ 13.96 $ 13.71 $ 13.55 $ 13.19
Tangible book value per common share $ 13.16 $ 12.91 $ 12.66 $ 12.49 $ 12.14
Shares outstanding 15,992,893 15,992,893 15,978,958 15,978,958 15,978,958
Weighted average shares 15,992,893 15,985,922 15,978,958 15,978,958 15,978,958
Weighted average diluted shares 16,051,876 16,047,344 16,042,765 16,015,312 16,006,358
Credit Quality
Nonperforming originated loans $ 66,654 $ 69,749 $ 70,764 $ 75,775 $ 74,324
Total nonperforming loans 81,611 82,877 82,575 85,731 85,067
Guaranteed portion of nonperforming loans 218 218 218 3,061 3,287
Foreclosed assets, net of allowance 10,185 12,743 14,789 16,332 17,870
Loans charged-off 3,368 4,188 4,922 5,340 4,428
Loans recovered 1,133 1,214 464 525 697
Selected Financial Ratios
Return on average total assets 0.80 % 0.85 % 0.63 % 1.04 % 1.17 %
Return on average equity 8.85 % 9.54 % 7.14 % 12.19 % 12.41 %
Average yield on loans 6.49 % 6.73 % 6.53 % 6.94 % 6.24 %
Average yield on interest-earning assets 4.68 % 4.81 % 4.66 % 5.12 % 4.82 %
Average rate on interest-bearing liabilities 0.44 % 0.48 % 0.49 % 0.53 % 0.64 %
Net interest margin (fully tax-equivalent) 4.37 % 4.46 % 4.30 % 4.71 % 4.34 %
Supplemental Loan Interest Income Data:
Discount accretion PCI - cash basis loans 24 108 18 418 28
Discount accretion PCI - other loans 1,192 886 776 949 223
Discount accretion PNCI loans 591 1,391 1,286 1,738 -
Regular interest Purchased loans 3,251 3,439 3,420 3,651 978
All other loan interest income 20,472 19,968 19,429 20,491 20,758
Total loan interest income 25,530 25,792 24,929 27,247 21,987
 
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands)
 
Three months ended
September 30,   June 30,   March 31,   December 31,   September 30,
Balance Sheet Data 2012 2012 2012 2011 2011
Cash and due from banks $ 622,494 $ 644,102 $ 681,760 $ 637,275 $ 522,636
Securities, available-for-sale 183,432 202,849 212,157 229,223 257,300
Federal Home Loan Bank Stock 9,647 9,990 10,508 10,610 11,124
Loans held for sale 14,937 5,321 5,869 10,219 10,872
Loans:
Commercial loans 145,469 139,733 129,906 139,131 154,257
Consumer loans 388,844 393,248 419,539 406,330 400,627
Real estate mortgage loans 1,007,432 984,147 924,336 965,922 978,492
Real estate construction loans 33,902 35,354 37,304 39,649 42,251
Total loans, gross 1,575,647 1,552,482 1,511,085 1,551,032 1,575,627
Allowance for loan losses (44,146 ) (45,849 ) (45,452 ) (45,914 ) (45,300 )
Foreclosed assets 10,185 12,743 14,789 16,332 17,870
Premises and equipment 24,083 22,595 19,814 19,893 19,717
Cash value of life insurance 50,742 50,292 50,853 50,403 51,891
Goodwill 15,519 15,519 15,519 15,519 15,519
Intangible assets 1,144 1,196 1,248 1,301 1,353
Mortgage servicing rights 4,485 4,757 4,784 4,603 4,238
FDIC indemnification asset 2,485 4,046 3,405 4,405 4,473
Accrued interest receivable 7,638 7,545 7,095 7,312 7,397
Other assets 37,189 38,030 39,474 43,384 33,750
Total assets 2,515,481 2,525,618 2,532,908 2,555,597 2,488,467
Deposits:
Noninterest-bearing demand deposits 592,529 578,010 564,143 541,276 469,630
Interest-bearing demand deposits 483,557 480,337 488,573 431,565 425,281
Savings deposits 767,244 737,433 724,449 797,182 788,276
Time certificates 358,309 369,997 392,581 420,513 437,036
Total deposits 2,201,639 2,165,777 2,169,746 2,190,536 2,120,223
Accrued interest payable 1,139 1,415 1,587 1,674 1,815
Reserve for unfunded commitments 2,555 2,590 2,550 2,740 2,640
Other liabilities 32,449 30,538 29,675 30,427 28,808
Other borrowings 9,264 60,831 69,074 72,541 82,919
Junior subordinated debt 41,238 41,238 41,238 41,238 41,238
Total liabilities 2,288,284 2,302,389 2,313,870 2,339,156 2,277,643
Total shareholders' equity 227,197 223,229 219,038 216,441 210,824

Accumulated other comprehensive gain

3,635 3,537 3,658 3,811 3,468
Average loans 1,573,816 1,534,006 1,527,536 1,570,648 1,410,151
Average interest-earning assets 2,351,164 2,331,148 2,334,842 2,320,205 2,037,348
Average total assets 2,519,259 2,509,099 2,514,541 2,513,634 2,207,800
Average deposits 2,174,085 2,148,964 2,149,212 2,149,422 1,865,399
Average total equity $ 226,857 $ 223,028 $ 220,366 $ 214,979 $ 208,560
Total risk based capital ratio 14.4 % 14.3 % 14.3 % 13.9 % 13.5 %
Tier 1 capital ratio 13.1 % 13.0 % 13.0 % 12.7 % 12.2 %
Tier 1 leverage ratio 9.9 % 9.7 % 9.5 % 9.5 % 10.5 %
Tangible capital ratio 8.4 % 8.2 % 8.0 % 7.9 % 7.8 %

TriCo Bancshares
Richard P. Smith, 530-898-0300
President & CEO

View Comments and Join the Discussion!