TriCo Bancshares (NASDAQ:TCBK) (the "Company"), parent company of Tri
Counties Bank (the "Bank"), today announced earnings of $6,549,000 for
the quarter ended December 31, 2011. This compares with earnings of
$3,126,000 the Company reported for the quarter ended December 31, 2010.
Diluted earnings per share for the quarter ended December 31, 2011 were
$0.41 compared to diluted earnings per share of $0.20 for the quarter
ended December 31, 2010. Diluted earnings per share for the year ended
December 31, 2011 and 2010 were $1.16 and $0.37, respectively, on
earnings of $18,590,000 and $6,005,000, respectively.
Total assets of the Company increased $365,808,000 (16.7%) to
$2,555,597,000 at December 31, 2011 from $2,189,789,000 at December 31,
2010. Total loans of the Company increased $131,461,000 (9.3%) to
$1,551,032,000 at December 31, 2011 from $1,419,571,000 at December 31,
2010. Total deposits of the Company increased $338,363,000 (18.3%) to
$2,190,536,000 at December 31, 2011 from $1,852,173,000 at December 31,
2010.
The following is a summary of the components of Company's consolidated
net income for the periods indicated:
Three months ended
December 31,
(in thousands)
2011
2010
$ Change
% Change
Net Interest Income
$
27,280
$
22,591
$
4,689
20.8
%
Provision for loan losses
(5,429
)
(8,144
)
2,715
(33.3
%)
Noninterest income
10,489
9,881
608
6.2
%
Noninterest expense
(22,076
)
(19,470
)
(2,606
)
13.4
%
Provision for income taxes
(3,715
)
(1,732
)
(1,983
)
114.5
%
Net income
$
6,549
$
3,126
$
3,423
109.5
%
Included in the Company's results for the three and twelve month periods
ended December 31, 2011 is the acquisition by Tri Counties Bank of the
banking operations of Citizens Bank of Northern California ("Citizens"),
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).
As a result of the Citizens acquisition on September 23, 2011, the
Company recorded a before-tax bargain purchase gain of $7,575,000
($4,390,000 after-tax) representing the excess of the estimated fair
value of the assets acquired over the estimated fair value of the
liabilities assumed. The before-tax bargain purchase gain is recorded in
noninterest income and the related tax effect ($3,185,000) is recorded
in tax expense for the three month period ended September 30, 2011 and
the year ended December 31, 2011.
A summary of the net assets received in the Citizens acquisition, at
their estimated fair values on September 23, 2011, is presented below:
(in thousands)
Citizens
Asset acquired:
September 23, 2011
Cash and cash equivalents
$
80,707
Securities available-for-sale
9,353
Loans
167,484
Core deposit intangible
898
Foreclosed assets
8,412
Other assets
3,450
Total assets acquired
$
270,304
Liabilities assumed:
Deposits
$
239,899
Other borrowings
22,038
Other liabilities
792
Total liabilities assumed
262,729
Net assets acquired/bargain purchase gain
$
7,575
A summary of the estimated fair value adjustments resulting in the
bargain purchase gain in the Citizens acquisition are presented below:
Citizens
(in thousands)
September 23, 2011
Cost basis net assets acquired
$
26,682
Cash payment received from FDIC
44,140
Fair value adjustments:
Cash and cash equivalents
539
Loans
(57,745
)
Foreclosed assets
(5,609
)
Core deposit intangible
898
Deposits
(382
)
Borrowings
(28
)
Other
(920
)
Bargain purchase gain
$
7,575
The operations of Citizens from September 23, 2011 to December 31, 2011
added approximately $6,171,000 and $54,000 to interest income and
interest expense, respectively, $1,462,000 to provision for loan losses,
$8,029,000 to noninterest income, and $1,865,000 to noninterest expense.
Included in the $6,171,000 of Citizens related interest income recorded
from September 23, 2011 to December 31, 2011, is $3,146,000 of interest
income from fair value discount accretion. The recognition of interest
income from the acquired Citizens loans, and in particular the fair
value discount accretion portion, may fluctuate greatly depending on
changes in actual and expected future cash flows of such loans. 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, in thousands)
Three Months Ended
December 31, 2011
December 31, 2010
Average
Income/
Yield/
Average
Income/
Yield/
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Earning assets
Loans
$
1,570,648
$
27,247
6.94
%
$
1,443,603
$
23,070
6.39
%
Investments - taxable
245,683
1,887
3.07
%
246,043
2,159
3.51
%
Investments - nontaxable
10,128
181
7.15
%
12,644
232
7.34
%
Federal funds sold
493,746
361
0.29
%
365,925
252
0.28
%
Total earning assets
2,320,205
29,676
5.12
%
2,068,215
25,713
4.97
%
Other assets, net
193,429
167,256
Total assets
$
2,513,634
$
2,235,471
Liabilities and shareholders' equity
Interest-bearing
Demand deposits
$
424,109
235
0.22
%
$
393,356
459
0.47
%
Savings deposits
800,035
351
0.18
%
580,451
449
0.31
%
Time deposits
433,844
801
0.74
%
515,809
1,200
0.93
%
Other borrowings
75,179
617
3.28
%
63,040
608
3.86
%
Trust preferred securities
41,238
325
3.15
%
41,238
320
3.10
%
Total interest-bearing liabilities
1,774,405
2,329
0.53
%
1,593,894
3,036
0.76
%
Noninterest-bearing deposits
491,434
405,390
Other liabilities
32,816
32,475
Shareholders' equity
214,979
203,712
Total liabilities and shareholders' equity
$
2,513,634
$
2,235,471
Net interest rate spread
4.59
%
4.21
%
Net interest income/net interest margin (FTE)
27,347
4.71
%
22,677
4.39
%
FTE adjustment
(67
)
(86
)
Net interest income (not FTE)
$
27,280
$
22,591
The increase in net interest income and the increase in net interest
margin (FTE) from 4.39% during the three months ended December 31, 2010
to 4.71% in the current quarter is primarily due to the operations of
Citizens since their acquisition on September 23, 2011. Absent the
contributions from the Citizens acquisition, loan demand continues to be
weak and investments continue to be unattractive given their low market
yields and interest rate risk profile.
The Company recorded a provision for loan loss of $5,429,000 during the
three months ended December 31, 2011 compared to $8,144,000 during the
three months ended December 31, 2010. Nonperforming originated loans
were $75,775,000 and $75,987,000 at December 31, 2011 and 2010,
respectively. Loan charge-offs, net of recoveries, were $4,815,000
during the three months ended December 31, 2011 compared to $4,342,000
during the year-ago period.
Noninterest income increased $608,000 to $10,489,000 during the three
months ended December 31, 2011 when compared to the three months ended
December 31, 2010. The following table presents the key components of
noninterest income for the periods indicated:
Three months ended
December 31,
(in thousands)
2011
2010
$ Change
% Change
Service charges on deposit accounts
$
3,877
$
3,510
$
367
10.5
%
ATM fees and interchange
1,857
1,601
256
16.0
%
Other service fees
419
379
40
10.6
%
Mortgage banking service fees
389
358
31
8.7
%
Change in value of mortgage servicing rights
(85
)
198
(283
)
(142.9
%)
Total service charges and fees
6,457
6,046
411
6.8
%
Gain on sale of loans
1,219
1,395
(176
)
(12.6
%)
Commission on NDIP
555
341
214
62.8
%
Increase in cash value of life insurance
535
569
(34
)
(6.0
%)
Change in indemnification asset
512
1,294
(782
)
(60.4
%)
Gain on sale of foreclosed assets
191
157
34
21.7
%
Gain on life insurance death benefit
789
-
Other noninterest income
231
79
152
192.4
%
Total other noninterest income
$
4,032
$
3,835
197
5.1
%
Total noninterest income
$
10,489
$
9,881
$
608
6.2
%
Noninterest expense increased $2,606,000 to $22,076,000 during the three
months ended December 31, 2011 when compared to the three months ended
December 31, 2010. The operations of Citizens from September 23, 2011 to
December 31, 2011 added $751,000 to salaries expense and $1,114,000 to
other noninterest expense. Included in the $1,114,000 of Citizens
related other noninterest expense were $296,000 of provision for
foreclosed assets expense and $271,000 of information systems expense
including system conversion expense as the Company has begun work to
convert the Citizens systems to the Company's systems. The following
table presents the key components of the Company's noninterest expense
for the periods indicated:
Three months ended
December 31,
(in thousands)
2011
2010
$ Change
% Change
Salaries
$
8,071
$
7,160
$
911
12.7
%
Commissions and incentives
188
478
(290
)
(60.7
%)
Employee benefits
2,506
2,434
72
3.0
%
Total salaries and benefits expense
10,765
10,072
693
6.9
%
Occupancy
1,815
1,457
358
24.6
%
Equipment
1,020
951
69
7.3
%
Change in reserve for unfunded commitments
100
(200
)
300
Data processing and software
1,232
885
347
39.2
%
Telecommunications
567
456
111
24.3
%
ATM network charges
525
475
50
10.5
%
Professional fees
682
396
286
72.2
%
Advertising and marketing
871
702
169
24.1
%
Postage
337
217
120
55.3
%
Courier service
302
221
81
36.7
%
Intangible amortization
52
85
(33
)
(38.8
%)
Operational losses
207
102
105
102.9
%
Provision for foreclosed asset losses
570
337
233
69.1
%
Foreclosed asset expense
258
265
(7
)
(2.6
%)
Assessments
589
833
(244
)
(29.3
%)
Other
2,184
2,216
(32
)
(1.4
%)
Total other noninterest expense
11,311
9,398
1,913
20.4
%
Total noninterest expense
$
22,076
$
19,470
$
2,606
13.4
%
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, 2010. 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 36-year history in the banking
industry. It operates 41 traditional branch locations and 27 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
76 ATMs and a 24-hour, seven days-a-week telephone customer service
center. Brokerage services are provided by the Bank's investment
services affiliate, Raymond James Financial Services, Inc. For further
information please visit the Tri Counties Bank web site at http://www.tricountiesbank.com.
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands, except share data)
Three months ended
December 31,
September 30,
June 30,
March 31,
December 31,
2011
2011
2011
2011
2010
Statement of Income Data
Interest income
$
29,609
$
24,472
$
24,467
$
24,434
$
25,627
Interest expense
2,329
2,465
2,714
2,730
3,036
Net interest income
27,280
22,007
21,753
21,704
22,591
Provision for loan losses
5,429
5,069
5,561
7,001
8,144
Noninterest income:
Service charges and fees
6,457
5,584
6,121
5,782
6,045
Other income
4,032
9,139
2,130
3,568
3,836
Total noninterest income
10,489
14,723
8,251
9,350
9,881
Noninterest expense:
Base salaries net of deferred loan origination costs
