-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P5Uno2XIdZ/2WkJVYZ6oys5xZNJMhJMy7LktIEjKYZS//ar7emeDyEH9tYKQRwKJ mMAK8S/zrWU2qMeMVDgNsg== 0000356171-00-000004.txt : 20000516 0000356171-00-000004.hdr.sgml : 20000516 ACCESSION NUMBER: 0000356171-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRICO BANCSHARES / CENTRAL INDEX KEY: 0000356171 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 942792841 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10661 FILM NUMBER: 632051 BUSINESS ADDRESS: STREET 1: TRI COUNTIES BANK ADMINISTRATION STREET 2: 40 PHILADELPHIA DRIVE CITY: CHICO STATE: CA ZIP: 95973 BUSINESS PHONE: 9168980300 MAIL ADDRESS: STREET 1: TRI COUNTIES BANK ADMINISTRATION STREET 2: 40 PHILADELPHIA DRIVE CITY: CHICO STATE: CA ZIP: 95973 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 2000 Commission file number 0-10661 - -------------------------------- ------------------------------ TRICO BANCSHARES (Exact name of registrant as specified in its charter) California 94-2792841 - ------------------------------ ------------------- (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 63 Constitution Drive, Chico, California 95973 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 530/898-0300 - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Class: Common stock, no par value Outstanding shares as of May 5, 2000: 7,181,350
TRICO BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) March 31, December 31, 2000 1999 ------------------ ------------------ Assets: Cash and due from banks $ 40,079 $ 52,036 Federal funds sold and repurchase agreements 14,900 8,400 ------------------ ------------------ Cash and cash equivalents 54,979 60,436 Securities available-for-sale 225,454 231,708 Loans, net of allowance for loan losses of $11,914 and $11,037, respectively 585,810 576,942 Premises and equipment, net 15,966 16,043 Other real estate owned 1,152 760 Accrued interest receivable 6,112 6,076 Other assets 33,472 32,831 ------------------ ------------------ Total assets $ 922,945 $ 924,796 ================== ================== Liabilities: Deposits: Noninterest-bearing demand $ 144,072 $ 155,937 Interest-bearing demand 150,708 143,923 Savings 222,451 222,615 Time certificates 266,109 271,635 ------------------ ------------------ Total deposits 783,340 794,110 Federal funds purchased 4,700 0 Accrued interest payable and other liabilities 14,092 12,058 Long term borrowings 45,500 45,505 ------------------ ------------------ Total liabilities 847,632 851,673 Shareholders' equity: Common stock 50,229 50,043 Retained earnings 31,149 28,613 Accumulated other comprehensive loss (6,065) (5,533) ------------------ ------------------ Total shareholders' equity 75,313 73,123 ------------------ ------------------ Total liabilities and shareholders' equity $ 922,945 $ 924,796 ================== ==================
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands except earnings per common share) For the three months ended March 31, 2000 1999 Interest income: Interest and fees on loans $ 14,063 $ 12,384 Interest on investment securities-taxable 3,080 3,405 Interest on investment securities-tax exempt 558 548 Interest on federal funds sold 193 8 -------------- -------------- Total interest income 17,894 16,345 -------------- -------------- Interest expense: Interest on deposits 5,769 5,109 Interest on federal funds purchased 9 201 Interest on repurchase agreements 1 7 Interest on other borrowings 629 521 -------------- -------------- Total interest expense 6,408 5,838 -------------- -------------- Net interest income 11,486 10,507 Provision for loan losses 800 840 -------------- -------------- Net interest income after provision for loan losses 10,686 9,667 Noninterest income: Service charges and fees 1,807 1,707 Other income 2,819 1,255 -------------- -------------- Total noninterest income 4,626 2,962 -------------- -------------- Noninterest expenses: Salaries and related expenses 4,834 4,433 Other, net 4,190 4,053 -------------- -------------- Total noninterest expenses 9,024 8,486 -------------- -------------- Net income before income taxes 6,288 4,143 Income taxes 2,360 1,509 -------------- -------------- Net income $ 3,928 $ 2,634 ============== ============== Basic earnings per common share $ 0.55 $ 0.37 ============== ============== Diluted earnings per common share $ 0.54 $ 0.36 ============== ==============
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) (in thousands, except number of shares) Common stock Accumulated ------------------------ Other Number Retained Comprehensive Comprehensive of shares Amount earnings Loss Total Income ------------------------------------------------------------------------------------- Balance, December 31, 1999 7,152,329 $50,043 $28,613 ($5,533) $73,123 Exercise of Common Stock options, net of tax 32,750 171 171 Repurchase of Common Stock (3,729) (26) (29) (55) Common stock cash dividends (1,363) (1,363) Stock option amortization 41 41 Comprehensive income: Net income 3,928 3,928 $3,928 Other comprehensive loss: Change in unrealized loss on securities, net of tax (532) (532) (532) ---------------- Comprehensive income $3,396 ------------------------------------------------------------------------------------- Balance, March 31, 2000 7,181,350 $50,229 $31,149 ($6,065) $75,313 -------------------------------------------------------------------
TRICO BANCSHARES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the three months ended March 31, 2000 1999 -------------- -------------- Operating activities: Net income $3,928 $2,634 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 800 840 Depreciation and amortization 638 647 Amortization of intangible assets 241 284 Accretion and amortization of investment securities discounts and premiums, net 73 181 Deferred income taxes 1,901 (80) Investment security gains, net - (9) Gain on sale of OREO (29) (14) Gain on sale of loans (358) (358) (Gain) loss on sale of fixed assets 23 (7) Amortization of stock options 41 41 Decrease (increase) in interest receivable (36) 481 Increase (decrease) in interest payable 193 (67) Decrease in other assets and liabilities (2,053) 3,025 -------------- -------------- Net cash provided by operating activities 5,362 7,598 -------------- -------------- Investing activities: Proceeds from maturities of securities available-for-sale 14,673 34,883 Proceeds from sales of securities available-for-sale - 9,187 Purchases of securities available-for-sale (7,990) (28,018) Proceeds from sale of fixed asset 21 27 Net increase in loans (9,799) (16,000) Purchases of premises and equipment (528) (406) Proceeds from sale of OREO 126 185 -------------- -------------- Net cash used by investing activities (3,497) (142) -------------- -------------- Financing activities: Net decrease in deposits (10,770) (14,877) Net increase (decrease) in Fed funds purchased 4,700 (4,600) Borrowings under long-term debt agreements - 1,000 Payments of principal on long-term debt agreements (5) (3,404) Repurchase of common stock (55) (49) Cash dividends (1,363) (1,139) Exercise of common stock options 171 365 -------------- -------------- Net cash used by financing activities (7,322) (22,704) -------------- -------------- (Decrease) in cash and cash equivalents (5,457) (15,248) Cash and cash equivalents at beginning of period 60,436 50,483 -------------- -------------- Cash and cash equivalents at end of period $54,979 $35,235 -------------- -------------- Supplemental information Cash paid for taxes $275 $50 Cash paid for interest expense $6,215 $5,905
Item 1. Notes to Condensed Consolidated Financial Statements Note A - Basis of Presentation The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and in Management's opinion, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of results for such interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to SEC rules or regulations; however, the Company believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three months ended March 31, 2000 and 1999 are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Company's Annual Report for the year ended December 31, 1999. Note B - Comprehensive Income For the Company, comprehensive income includes net income reported on the statement of income and changes in the fair value of its available-for-sale investments reported as other comprehensive income. The following table presents net income adjusted by the change in unrealized gains or losses on the available-for-sale investments as a component of comprehensive income (in thousands). Three months ended March 31, 2000 1999 Net income $ 3,928 $ 2,634 Net change in unrealized gains (losses) on securities available-for-sale, net of tax (532) (777) Comprehensive income $ 3,396 $ 1,857 Note C - Earnings per Share The Company's basic and diluted earnings per share are as follows (in thousands except per share data): Three Months Ended March 31, 2000 Weighted Average Per-Share Income Shares Amount Basic Earnings per Share Net income available to common shareholders $3,928 7,171,612 $0.55 Common stock options outstanding -- 157,466 Diluted Earnings per Share Net income available to common shareholders $3,928 7,329,078 $0.54 ====== ========= Three Months Ended March 31, 1999 Weighted Average Per-Share Income Shares Amount Basic Earnings per Share Net income available to common shareholders $2,634 7,105,437 $0.37 Common stock options outstanding -- 191,889 Diluted Earnings per Share Net income available to common shareholders $2,634 7,297,326 $0.36 ====== ========= Note D - Business Segments The Company is principally engaged in traditional community banking activities provided through its twenty-nine branches and eight in-store branches located throughout Northern California. Community banking activities include the Bank's commercial and retail lending, deposit gathering and investment and liquidity management activities. In addition to its community banking services, the Bank offers investment brokerage and leasing services. The Company held investments in real estate through its wholly-owned subsidiary, TCB Real Estate. During 1998, TCB Real Estate divested all investment properties, and in April 1999, TCB Real Estate was dissolved. These activities were monitored and reported by Bank management as separate operating segments. As permitted under the Statement, the results of the separate branches have been aggregated into a single reportable segment, Community Banking. The Company's leasing, investment brokerage and real estate segments do not meet the prescribed aggregation or materiality criteria and therefore are reported as "Other" in the following table. Summarized financial information concerning the Bank's reportable segments is as follows (in thousands): Community Banking Other Total Three Months Ended March 31, 2000 Net interest income $ 11,306 $ 180 $ 11,486 Noninterest income 3,926 700 4,626 Noninterest expense 8,599 425 9,024 Net income 3,678 250 3,928 Assets $912,003 $10,942 $922,945 Three Months Ended March 31, 1999 Net interest income $ 10,490 $ 17 $ 10,507 Noninterest income 2,353 609 2,962 Noninterest expense 8,184 302 8,486 Net income 2,430 204 2,634 Assets $873,408 $11,564 $884,972 Note E - Other Income Included in the results for the three months ended March 31, 2000 was a one-time pre-tax income item of $1,510,000. This one-time item represents the initial value of 88,796 common shares of John Hancock Financial Services, Inc. (JHF) which the Bank received as a consequence of its ownership of certain insurance policies through John Hancock Mutual Life Insurance Company and John Hancock's conversion from a mutual company to a stock company. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As TriCo Bancshares (the "Company") has not commenced any business operations independent of Tri Counties Bank (the "Bank"), the following discussion pertains primarily to the Bank. Average balances, including such balances used in calculating certain financial ratios, are generally comprised of average daily balances for the Company. Except within the "overview" section, interest income and net interest income are presented on a tax equivalent basis. In addition to the historical information contained herein, this Quarterly Report contains certain forward-looking statements. The reader of this Quarterly Report 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, 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. This entire Quarterly Report 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. Overview The Company had quarterly earnings of $3,928,000 for the three months ended March 31, 2000. The quarterly earnings represented a 49.1% increase over the $2,634,000 reported for the three months ended March 31, 1999. Diluted earnings per share were $0.54 versus $0.36. Included in the results for the three months ended March 31, 2000 was a one-time pre-tax income item of $1,510,000. This one-time item represents the initial value of 88,796 common shares of John Hancock Financial Services, Inc. (JHF) which the Bank received as a consequence of its ownership of certain insurance policies through John Hancock Mutual Life Insurance Company and John Hancock's conversion from a mutual company to a stock company. Excluding the receipt of the JHF shares, net income for the three months ended March 31, 2000 would have been $3,039,000 and diluted earnings per share would have been $0.42, and would have represented 15.4% and 16.7% increases over the same period in the prior year, respectively. Factors contributing to the improved operating results included growth in loan balances that was funded mainly by runoff of lower yielding investment securities, and a five percent increase in noninterest income excluding the one-time income event noted above. Improvements in these areas were offset in part by a six percent increase in noninterest expenses. First quarter 2000 pretax earnings increased $2,145,000 to $6,288,000. Net interest income reflected growth of 9.3% to $11,486,000. The interest income component was up $1,589,000 (9.5%) due to higher quarter over quarter volume of loans and a 57 basis point increase in the average yield on earning assets. The average balance of loans was up $52,498,000 (9.8%) to $586,659,000 while the average balance of securities was down $47,753,000 (17.5%) to $225,875,000 in 2000. The average yield on loans was up 32 basis points to 9.59% and the average yield on securities was up 75 basis points to 6.95% in 2000. The average balance of interest earning assets increased $17,674,000 (2.2%) to $826,197,000 and the average yield on interest earning assets increased to 8.80% in the first quarter of 2000 versus 8.23% in the first quarter of 1999. Interest expense increased $570,000 (9.8%) which was due to a 25 basis point increase in the average rate paid on interest bearing liabilities to 3.74% and a 2.5% increase in the average volume of interest bearing liabilities to $686,088,000 in 2000. Net interest margin was 5.70% for the first quarter of 2000 versus 5.34% in the same quarter of the prior year. Provision for loan losses for the first quarter of 2000 was $800,000 versus $840,000 in the same quarter in 1999. The Company had net loan recoveries of $77,000 in the first quarter of 2000 compared to $60,000 of net loan charge-offs in the same period of 1999. Noninterest income in the first quarter of 2000 was $4,626,000 versus $2,962,000 in the same period of 1999. As described above, the 2000 results include a one-time pre-tax income item of $1,510,000 from the receipt of common stock. Excluding this one-time event, noninterest income would have increased $154,000 (5.2%) to $3,116,000. Service charges and fees were up $100,000 (5.9%) to $1,807,000 over the year ago period. Commission income from the sale of insurance and investment products was $680,000 in the first quarter of 2000 versus $535,000 in 1999. For the three months ended March 31, 2000, gain on sale of loans was $75,000 compared to $358,000 in the first three months of 1999. Noninterest expense increased $538,000 (6.3%) to $9,024,000 in the first quarter 2000 versus 1999. Salary and benefit expense increased $401,000 (9.1%) on a quarter over quarter basis to $4,834,000. The salary expense was higher due to a 2.7% increase in average full-time equivalent employees to 383, and annual salary increases. Other noninterest expenses increased $137,000 (3.4%) to $4,190,000 in the first quarter of 2000. Assets of the Company totaled $922,945,000 at March 31, 2000 which was a decrease of $1,851,000 from December 31, 1999 balances and an increase of $37,973,000 from March 31, 1999 ending balances. For the first quarter of 2000 the Company had an annualized return on assets of 1.73% and a return on equity of 21.26% versus 1.19% and 14.37% in 1999. Excluding the one-time income event that occurred in the first quarter of 2000, the Company would have had an annualized return on assets of 1.34% and a return on equity of 16.45%. TriCo Bancshares ended the quarter with a Tier 1 capital ratio of 10.8% and a total risk-based capital ratio of 12.1%. The following table provides a summary of the major elements of income and expense for the first quarter of 2000 compared with the first quarter of 1999.
TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share) Three months Percentage ended March 31, Change 2000 1999 Interest income $ 18,181 $ 16,630 9.3% Interest expense 6,408 5,838 9.8% -------------- -------------- Net interest income 11,773 10,792 9.1% Provision for loan losses 800 840 (4.8%) -------------- -------------- Net interest income after 10,973 9,952 10.3% provision for loan losses Noninterest income 4,626 2,962 56.2% Noninterest expenses 9,024 8,486 6.3% -------------- -------------- Net income before income taxes 6,575 4,428 48.5% Income taxes 2,360 1,509 56.4% Tax equivalent adjustment1 287 285 0.7% -------------- -------------- Net income $ 3,928 $ 2,634 49.1% ============== ============== Diluted earnings per common share $ 0.54 $ 0.36 50.0% 1 Interest on tax-free securities is reported on a tax equivalent basis of 1.52 for March 31, 2000 and 1999.
Net Interest Income / Net Interest Margin Net interest income represents the excess of interest and fees earned on interest-earning assets (loans, securities and Federal Funds sold) over the interest paid on deposits and borrowed funds. Net interest margin is net interest income expressed as a percentage of average earning assets. Net interest income comprises the major portion of the Bank's income. For the three months ended March 31, 2000, interest income increased $1,551,000 or 9.3% over the same period in 1999. The average balance of total earning assets was higher by $17,674,000 (2.2%). The average balance of loans and Federal Funds sold outstanding increased $52,498,000 (9.8%) and 12,929,000 (176%), respectively, while investment security average balances decreased $47,753,000 (17.5%). The loan and federal funds volume increases accounted for additional interest income of $1,217,000 and $141,000, respectively, during the first quarter of 2000 versus the year earlier period. The decrease in the average balance of investment securities resulted in a reduction in interest income of $740,000. The average yields on loans, investment securities and Federal Funds sold were higher by 32, 75 and 129 basis points, respectively, and increased interest income for the quarter by $933,000 over the first quarter of 1999. The overall yield on earning assets increased 57 basis points to 8.80%. For the first quarter of 2000, interest expense increased by $570,000 or 9.8% over the year earlier period. Average balances of demand deposits, time deposits, and long-term debt increased $1,932,000 (1.3%), $24,074,000 (9.8%), and $7,741,00 (20.5%), respectively. The average balances of savings deposits and short-term borrowings were lower by $596,000 (0.2%) and $16,172,000 (96.1%), respectively, during the first quarter of 2000 versus the year earlier period. For the first quarter of 2000, the average balance of total interest bearing liabilities increased $16,979,000 (2.5%) over the year earlier period increasing interest expense by $192,000. The overall average rate on earning liabilities increased by 25 basis points to 3.74%, and increased interest expense by $378,000. The net effect of the increases in interest income and expense for the first quarter of 2000 versus 1999 resulted in an increase of $981,000 or 9.1% in net interest income. Net interest margin was up 36 basis points from 5.34% to 5.70%. The average balance of noninterest bearing deposits was $3,757,000 (2.8%) higher in the first quarter of 2000 versus the first quarter of 1999. The following two tables provide summaries of the components of the interest income, interest expense and net interest margins on earning assets for the quarter ended March 31, 2000 versus the same period in 1999.
TRICO BANCSHARES ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS (in thousands) Three Months Ended March 31, 2000 March 31, 1999 -------------- -------------- Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loan 2,3 $ 586,659 $ 14,063 9.59% $ 534,161 $ 12,384 9.27% Securities 225,875 3,925 6.95% 273,628 4,238 6.20% Federal funds sold 13,663 193 5.65% 734 8 4.36% ------------- ------------ ----------- ------------- ------------- ----------- Total earning assets 826,197 18,181 8.80% 808,523 16,630 8.23% ------------ ------------- Cash and due from bank 37,362 35,592 Premises and equipment 16,025 16,107 Other assets,net 40,927 35,301 Less: allowance for loan losses (11,404) (8,471) ------------- ------------- Total $ 909,107 $ 887,052 ============= ============= Liabilities and shareholders' equity Interest-bearing Demand deposits $ 147,239 578 1.57% $ 145,307 564 1.55% Savings deposits 223,905 1,695 3.03% 224,501 1,679 2.99% Time deposits 268,779 3,496 5.20% 244,705 2,866 4.68% Fed funds purchased 584 9 6.16% 16,280 201 4.94% Repurchase agreements 79 1 5.06% 555 7 5.05% Long-term debt 45,502 629 5.53% 37,761 521 5.52% ------------- ------------ ----------- ------------- ------------- ----------- Total interest-bearing liabilities 686,088 6,408 3.74% 669,109 5,838 3.49% ------------ ------------- Noninterest-bearing deposits 136,115 132,358 Other liabilities 12,994 12,242 Shareholders' equity 73,910 73,343 ------------- ------------- Total liabilities and shareholders' equity $ 909,107 $ 887,052 ============= ============= Net interest rate spread5 5.06% 4.74% Net interest income/net $ 11,773 $ 10,792 ============ ============= interest margin6 5.70% 5.34% ============ ============= 1Average balances are computed principally on the basis of daily balances. 2Nonaccrual loans are included. 3Interest income on loans includes fees on loans of $606,000 in 2000 and $737,000 in 1999. 4Interest income is stated on a tax equivalent basis of 1.52 at March 31, 2000 and 1999. 5Net interest rate spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. 6Net interest margin is computed by dividing net interest income by total average earning assets.
TRICO BANCSHARES ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE (in thousand) For the three months ended March 31, 2000 over 1999 Yield/ Volume Rate4 Total -------- ------- --------- Increase (decrease) in interest income: Loans 1,2 $1,217 $462 $1,679 Investment securities3 (740) 427 (313) Federal funds sold 141 44 185 -------- ------- --------- Total 618 933 1,551 -------- ------- --------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 7 7 14 Savings deposits (4) 20 16 Time deposits 282 348 630 Federal funds purchased (194) 2 (192) Repurchase agreements (6) - (6) Long-term debt 107 1 108 -------- ------ --------- Total 192 378 570 -------- ------ --------- Increase in net interest income $426 $555 $981 ======== ====== ========= 1Nonaccrual loans are included. 2Interest income on loans includes fee income on loans of $606,000 in 2000 and $737,000 in 1999. 3Interest income is stated on a tax equivalent basis of 1.52 for March 31, 2000 and 1999. 4The rate/volume variance has been included in the rate variance. Provision for Loan Losses The Bank provided $800,000 for loan losses in the first quarter of 2000 versus $840,000 in the same period of 1999. The company had net loan recoveries of $77,000 in the first quarter of 2000 compared to $60,000 of net loan charge-offs in the same period of 1999. Noninterest Income Noninterest income in the first quarter of 2000 was $4,626,000 versus $2,962,000 in the same period of 1999. As described above, the 2000 results include a one-time pre-tax income item of $1,510,000 from the receipt of common stock. Excluding this one-time event, noninterest income would have increased $154,000 (5.2%) to $3,116,000. Service charges and fees were up $100,000 (5.9%) to $1,807,000 over the year ago period. Commission income from the sale of insurance and investment products was $680,000 in the first quarter of 2000 versus $535,000 in 1999. For the three months ended March 31, 2000, gain on sale of loans were $75,000 compared to $358,000 in the first quarter of 1999. Noninterest Expense Noninterest expense increased $538,000 (6.3%) to $9,024,000 in the first quarter 2000 versus the first quarter of 1999. Salary and benefit expense increased $401,000 (9.1%) on a quarter over quarter basis to $4,834,000. The salary expense was higher due to a 2.7% increase in average full-time equivalent employees to 383, and annual salary increases. Other noninterest expenses increased $137,000 (3.4%) to $4,190,000 in the first quarter of 2000. Provision for Income Taxes The effective tax rate for the three months ended March 31, 2000 was 37.5% and reflects an increase from 36.4% in the year earlier period. The increase in tax rate is mainly the result of a lower percentage of nontaxable earnings to total earnings. Loans In the first quarter of 2000, loan balances increased $9,745,000 or 1.7% from the year end balances. Both commercial and consumer loans increased while there was a slight decrease in real estate loans. At March 31, 2000 loans totaled $597,724,000 which was a $49,173,000 (9.0%) increase from the year earlier totals. Securities At March 31, 2000, securities available-for-sale had a fair value of $225,454,000 and an amortized cost of $235,178,000. This portfolio contained mortgage-backed securities with an amortized cost of $133,240,000 of which $18,026,000 was CMO's. At March 31, 2000, the Bank had no securities classified as held-to-maturity. Nonperforming Loans As shown in the following table, total nonperforming assets have increased 49.9% to $5,159,000 in the first three months of 2000. Non performing assets represent 0.56% of total assets. Both nonaccrual loans and OREO increased during this period. All nonaccrual loans are considered to be impaired when determining the valuation allowance under SFAS 114. The Bank continues to make a concerted effort to work problem and potential problem loans to reduce risk of loss. March 31, December 31, 2000 1999 Nonaccrual loans $ 2,759 $ 1,758 Accruing loans past due 90 days or more 1,248 923 Restructured loans (in compliance with modified terms) 0 0 --------- --------- Total nonperforming loans 4,007 2,681 Other real estate owned 1,152 760 --------- --------- Total nonperforming assets $ 5,159 $ 3,441 ========= ========= Nonperforming loans to total loans 0.67% 0.46% Allowance for loan losses to nonperforming loans 297% 412% Nonperforming assets to total assets 0.56% 0.37% Allowance for loan losses to nonperforming assets 231% 321% Allowance for Loan Loss The Bank maintains its allowance for loan losses at a level Management believes will be adequate to absorb probable losses inherent in existing loans, leases and commitments to extend credit, based on evaluations of the collectibility, impairment and prior loss experience of loans, leases and commitments to extend credit. The following table presents information concerning the allowance and provision for loan losses. March 31, March 31, 1999 2000 (in thousands) Balance, beginning of period $ 11,037 $ 8,206 Provision charged to operations 800 840 Loans charged off (74) (100) Recoveries of loans previously charged off 151 40 =========== ========== Balance, end of period $ 11,914 $ 8,986 =========== ========== Ending loan portfolio $ 597,724 $ 548,551 =========== ========== Allowance to loans as a percentage of ending loan portfolio 1.99% 1.64% =========== ==========
Equity The following table indicates the amounts of regulatory capital of the Company. To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio As of March 31, 2000: Total Capital to Risk Weighted Assets Consolidated $83,892 12.05% =>$55,695 =>8.0% =>$69,619 =>10.0% Tri Counties Bank $82,618 11.89% =>$55,602 =>8.0% =>$69,502 =>10.0% Tier I Capital to Risk Weighted Assets Consolidated $75,190 10.80% =>$27,847 =>4.0% =>$41,771 =>6.0% Tri Counties Bank $73,890 10.63% =>$27,801 =>4.0% =>$41,701 =>6.0% Tier I Capital to Average Assets Consolidated $75,190 8.33% =>$36,117 =>4.0% =>$45,146 =>5.0% Tri Counties Bank $73,890 8.19% =>$36,071 =>4.0% =>$45,090 =>5.0%
Year 2000 The Company previously recognized the material nature of the business issues surrounding computer processing of dates into and beyond the Year 2000 and began taking corrective action as required pursuant to the interagency statements issued by the Federal Financial Institutions Examination Council. Management believes the Company has completed all the activities within its control to ensure that the Company's systems are Year 2000 compliant. The Company has not experienced and interruptions to normal operations due to the start of the Year 2000. The Company's Year 2000 readiness costs were approximately $103,000. The Company does not currently expect to apply any further funds to address the Year 2000 issues. As of April 20, 2000, the Company has not experienced any material disruptions of its internal computer systems or software applications and has not experienced any problems with the computer systems or software applications of its third party vendors, suppliers or service providers. The Company will continue to monitor these third parties to determine the impact, if any, on its business and the actions it must take, if any, in the event of non-compliance by any of these third parties. Based upon the Company's assessment of compliance by third parties, there appears to be no material business risk posed by any such non-compliance. Although the Company's Year 2000 rollover did not present any material business disruption, there are some remaining Year 2000 related risks. Management believes that appropriate actions have been taken to address these remaining Year 2000 issues and contingency plans are in place to minimize the financial impact to the Company. Management, however, cannot be certain that Year 2000 issues affecting its customers, suppliers or service providers will not have a material adverse impact on the Company. Item 3. MARKET RISK MANAGEMENT There have not been any significant changes in the risk management profile of the Bank since December 31, 1999. PART II Other Information (a) Item 6. Exhibits Filed Herewith Exhibit No. Exhibits 3.1 Articles of Incorporation, as amended to date, filed as Exhibit 3.1 to Registrant's Report on Form 10-K, filed for the year ended December 31, 1989, are incorporated herein by reference. 3.2 Bylaws, as amended to 1992, filed as Exhibit 3.2 to Registrant's Report on Form 10-K, filed for the year ended December 31, 1992, are incorporated herein by reference. 4.2 Certificate of Determination of Preferences of Series B Preferred Stock, filed as Appendix A to Registrant's Registration Statement on Form S-1 (No. 33-22738), is incorporated herein by reference. 10.1 Lease for Park Plaza Branch premises entered into as of September 29, 1978, by and between Park Plaza Limited Partnership as lessor and Tri Counties Bank as lessee, filed as Exhibit 10.9 to the TriCo Bancshares Registration Statement on Form S-14 (Registration No. 2-74796) is incorporated herein by reference. 10.2 Lease for Administration Headquarters premises entered into as of April 25, 1986, by and between Fortress-Independence Partnership (A California Limited Partnership) as lessor and Tri Counties Bank as lessee, filed as Exhibit 10.6 to Registrant's Report on Form 10-K filed for the year ended December 31, 1986, is incorporated herein by reference. 10.3 Lease for Data Processing premises entered into as of April 25, 1986, by and between Fortress-Independence Partnership (A California Limited Partnership) as lessor and Tri Counties Bank as lessee, filed as Exhibit 10.7 to Registrant's Report on Form 10-K filed for the year ended December 31, 1986, is incorporated herein by reference. 10.4 Lease for Chico Mall premises entered into as of March 11, 1988, by and between Chico Mall Associates as lessor and Tri Counties Bank as lessee, filed as Exhibit 10.4 to Registrant's Report on Form 10-K filed for the year ended December 31, 1988, is incorporated by reference. 10.5 First amendment to lease entered into as of May 31, 1988 by and between Chico Mall Associates and Tri Counties Bank, filed as Exhibit 10.5 to Registrant's Report on Form 10-K filed for the year ended December 31, 1988, is incorporated by reference. 10.9 Employment Agreement of Robert H. Steveson, dated December 12, 1989 between Tri Counties Bank and Robert H. Steveson, filed as Exhibit 10.9 to Registrant's Report on Form 10-K filed for the year ended December 31, 1989, is incorporated by reference. 10.11 Lease for Purchasing and Printing Department premises entered into as of February 1, 1990, by and between Dennis M. Casagrande as lessor and Tri Counties Bank as lessee, filed as Exhibit 10.11 to Registrant's Report on Form 10-K filed for the year ended December 31, 1991, is incorporated herein by reference. 10.12 Addendum to Employment Agreement of Robert H. Steveson, dated April 9, 1991, filed as Exhibit 10.12 to Registrant's Report on Form 10-K filed for the year ended December 31, 1991, is incorporated herein by reference. 22.1 Tri Counties Bank, a California banking corporation, is the only subsidiary of Registrant. (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRICO BANCSHARES Date May 5, 2000 /s/ Richard P. Smith ---------------- ------------------------------------- Richard P. Smith President and Chief Executive Officer Date May 5, 2000 /s/ Thomas J. Reddish ---------------- ------------------------------------- Thomas J. Reddish Vice President and CFO EX-27 2 EX-27
9 0000356171 TRICO BANCSHARES 1,000 3-MOS DEC-31-2000 MAR-31-2000 40,079 0 14,900 0 0 225,454 225,454 597,724 11,914 922,945 783,340 4,700 14,092 45,500 0 0 50,229 25,084 922,945 14,063 3,638 193 17,894 5,769 6,408 11,486 800 0 9,024 6,288 6,288 0 0 3,928 0.55 0.54 8.80 2,759 1,248 0 0 11,307 74 151 11,914 11,914 0 0
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