-----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, EM5BpMWElLmeppplcoTMxYjeshi5EUFwBcN4TKvFGVcWNhexGcCOaBcQzXbpMybe xeBxrvEqYhg4r9uyFq12Ug== 0000356171-96-000005.txt : 19960816 0000356171-96-000005.hdr.sgml : 19960816 ACCESSION NUMBER: 0000356171-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-10661 FILM NUMBER: 96611640 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 June 30, 1996 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.) 15 Independence Circle, Chico, California 95973 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 916/898-0300 (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 August 12, 1996: 4,493,871 TRICO BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
June 30, December 31, --------- --------- 1996 1995 Assets: Cash and due from banks ............................................ $ 30,572 $ 39,673 Federal funds sold ................................................. -- 25,600 Securities held-to-maturity (approximate fair value $104,643 and $116,576) .................... 108,279 116,865 Securities available-for-sale, net of unrealized (loss) of $(1,849) and $(236) .......................... 75,529 76,246 Loans, net of allowance for loan losses of $(5,234) and $(5,580) ... 367,684 313,186 Premises and equipment, net ........................................ 14,293 13,189 Investment in real estate properties ............................... 1,173 1,173 Other real estate owned ............................................ 747 631 Accrued interest receivable ........................................ 4,686 4,609 Other assets ....................................................... 13,973 12,382 --------- --------- Total assets .................................................. $ 616,936 $ 603,554 ========= ========= Liabilities: Deposits Noninterest-bearing demand ........................................ $ 81,744 $ 90,308 Interest-bearing demand ........................................... 84,361 84,314 Savings ........................................................... 155,198 161,479 Time certificates ................................................. 169,706 180,092 --------- --------- Total deposits ................................................ 491,009 516,193 Fed funds purchased ................................................ 30,000 -- Repurchase agreements .............................................. 9,828 -- Accrued interest payable and other liabilities ..................... 6,742 7,856 Long term borrowings ............................................... 24,458 26,292 --------- --------- Total liabilities ............................................. 562,037 550,341 Shareholders' equity: Common stock ....................................................... 44,627 44,315 Retained earnings .................................................. 11,757 9,548 Unrealized loss on securities available for sale ................... (1,485) (650) --------- --------- Total shareholders' equity .................................... 54,899 53,213 --------- --------- Total liabilities and shareholders' equity .................... $ 616,936 $ 603,554 ========= =========
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands except earnings per common share)
For the three months For the six months ended June 30, ended June 30, 1996 1995 1996 1995 Interest income: Interest and fees on loans ..................... $ 9,030 $ 8,244 $ 17,593 $ 16,281 Interest on investment securities-taxable ............................ 2,641 2,975 5,339 6,105 Interest on investment securities-tax exempt ......................... 30 43 63 87 Interest on federal funds sold ................. 21 40 332 130 ------- ------- ------- ------- Total interest income ....................... 11,722 11,302 23,327 22,603 ------- ------- ------- ------- Interest expense: Interest on deposits ........................... 3,946 4,111 8,099 7,861 Interest on federal funds purchased ............ 144 47 144 57 Interest on other borrowings ................... 408 283 790 896 ------- ------- ------- ------- Total interest expense ...................... 4,498 4,441 9,033 8,814 ------- ------- ------- ------- Net interest income ......................... 7,224 6,861 14,294 13,789 Provision for loan losses ........................ 50 35 90 75 ------- ------- ------- ------- Net interest income after provision for loan losses ................... 7,174 6,826 14,204 13,714 Noninterest income: Service charges and fees ....................... 1,176 1,015 2,295 2,036 Other income ................................... 404 602 751 1,044 Securities gains (losses), net ................. -- 21 -- (10) ------- ------- ------- ------- Total noninterest income .................... 1,580 1,638 3,046 3,070 ------- ------- ------- ------- Noninterest expenses: Salaries and related expenses .................. 3,005 2,724 5,964 5,534 Other, net ..................................... 2,819 2,747 5,365 5,493 ------- ------- ------- ------- Total noninterest expenses .................. 5,824 5,471 11,329 11,027 ------- ------- ------- ------- Net income before income taxes ................... 2,930 2,993 5,921 5,757 Income taxes ................................... 1,226 1,229 2,473 2,363 ------- ------- ------- ------- Net income .................................. 1,704 1,764 3,448 3,394 Preferred stock dividends ........................ -- 105 -- 210 ------- ------- ------- ------- Net income available to common shareholders ............................. $ 1,704 $ 1,659 $ 3,448 $ 3,184 Primary earnings per common sh$re ................ $ 0.37 $ 0.36 $ 0.74 $ 0.69 ======= ======= ======= ======= Fully diluted earnings per com$on share .......... $ 0.37 $ 0.36 $ 0.74 $ 0.69 ======= ======= ======= =======
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) (in thousands, except number of shares)
Common stock Unrealized -------------------------- ---------- securities ---------- Number Retained holding ---------- ----------- ---------- of shares Amount earnings gain (loss) Total ---------- ---------- ----------- ---------- ---------- Balance, December 31, 1995 4,464,828 $ 44,315 $ 9,548 $ (650) $ 53,213 Exercise of common stock options 26,169 290 $ 290 Repurchase of common stock (8,285) (82) (64) $ (146) Common stock cash dividends (1,175) $ (1,175) Change in unrealized loss on securities (835) $ (835) Stock option amortization 104 $ 104 Net income, June 30, 1996 3,448 $ 3,448 ---------- ---------- ----------- ---------- ---------- Balance, June 30, 1996 4,482,712 $ 44,627 $ 11,757 $ (1,485) $ 54,899 ========== ========== =========== ========== ==========
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the six months ended June 30, 1996 1995 Operating activities: Net income .................................................... $ 3,448 $ 3,394 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ................................. 90 75 Provision for losses on other real estate owned ........... -- 35 Depreciation and amortization ............................. 856 780 Amortization of investment security discounts ............. 30 59 Deferred income taxes ..................................... 106 -- Investment security (gains) losses (net) .................. -- 10 (Gain) loss on sale of OREO (net) ......................... (31) (66) (Gain) loss on sale of loans (net) ........................ 6 (23) Origination of loans held for sale ........................ (13,896) (4,923) Proceeds from loan sales .................................. 5,256 3,822 Amortization of stock options ............................. 104 104 (Increase) decrease in interest receivable ................ (77) 193 Increase (decrease) in interest payable ................... (818) 919 (Increase) decrease in other assets and liabilities (1,532) (517) -------- -------- Net cash provided (used) by operating activities ........ (6,458) 3,862 Investing activities: Proceeds from maturities of securities held-to-maturity 14,256 6,789 Purchases of securities held-to-maturity .................. (5,516) -- Proceeds from maturities of securities available-for-sale 12,677 6,101 Proceeds from sales of securities available-for-sale ...... -- 6,993 Purchases of securities available-for-sale ................ (13,587) (3,080) Net (increase) decrease in loans .......................... (46,485) (605) Purchases of premises and equipment ....................... (1,813) (720) Proceeds from the sale of OREO ............................ 446 900 -------- -------- Net cash provided (used) by investing activities ........ (40,022) 16,378 Financing activities: Net increase (decrease) in deposits ....................... (25,184) (3,363) Fed funds purchased ....................................... 30,000 -- Repayment of repurchase agreements ........................ -- (30,457) Borrowings under long-term debt agreements ................ 10,000 -- Payments of principal on long-term debt agreements ........ (2,006) (2,020) Cash dividends - Preferred ................................ -- (210) Cash dividends - Common ................................... (1,175) (704) Repurchase of common stock ................................ (146) -- Sale of Common Stock ...................................... 290 196 -------- -------- Net cash provided (used) by financing activities ........ 11,779 (36,558) -------- -------- Increase (decrease) in cash and cash equivalents (34,701) (16,318) Cash and cash equivalents at beginning of period ........ 65,273 39,709 -------- -------- Cash and cash equivalents at end of period ............ $ 30,572 $ 23,391 ======== ======== Supplemental information: Cash paid for taxes ....................................... $ 3,182 $ 2,264 Cash paid for interest expense ............................ $ 9,329 $ 7,895
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 six months ended June 30, 1996 and 1995, 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, 1995. Note B - Mortgage Servicing As of January 1, 1996, the Company adopted FASB Statement of Financial Accounting Standards No 122, Accounting for Mortgage Servicing Rights, (SFAS 122). SFAS 122 requires a mortgage banking enterprise to recognize the rights to service mortgage loans for others as a separate asset. SFAS 122 also requires that a mortgage banking enterprise assess its capitalized mortgage servicing rights for impairment based on the fair value of those rights and recognize impairment through a valuation allowance. The adoption of SFAS 122 did not have a material impact on the Company's financial position or results of operations for the six months ended June 30, 1996. 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. Unless otherwise stated, interest income and net interest income are presented on a tax equivalent basis. Overview The Company earned $1,704,000 for the second quarter ended June 30, 1996 versus $1,764,000 for the same period in 1995. Fully diluted earnings per share for the second quarter periods were $0.37 and $0.36, respectively. Earnings for the six months ended June 30, 1996 were $3,448,000 versus year ago results of $3,394,000. The fully diluted earnings per share were $.74 and $.69 for the respective six month periods. The earnings per share results have been adjusted for a five for four (5/4) stock split effected as a stock dividend in September 1995. A combination of factors in the second quarter 1996 resulted in the $63,000 or 2.1% decline in pretax earnings over the same period in 1995. Interest income was up $410,000 or 3.6% as average loans outstanding were $47.7 million (15.9%) higher than in the second quarter of 1995. The effect on interest income from the higher loan balances was offset in part by a 59 basis point decline in the average yield on loans to 10.4% and a reduction of $21.9 million (10.3%) in the average balances of securities and Federal funds sold. Interest expense was modestly higher with a 1.2% increase of $57,000 resulting from higher balances of interest-bearing liabilities offset in part by an 11 basis point decline in the average rate paid on these liabilities. Noninterest income is comprised of "service charges and fees" and "other income". Service charge and fee income increased 15.9% to $1,176,000 in the second quarter versus year ago results. The increase is due mainly to an increase in account volumes as basic fee rates have generally not changed. Other income was down from $602,000 in 1995 to $404,000 in 1996. In the second quarter of 1995 the Company had non-recurring miscellaneous income in excess of $250,000. Overall, noninterest income decreased $58,000 or 3.5% for the quarter. Noninterest expenses increased $353,000 to $5,824,000 in the second quarter 1996 versus 1995. Due to the virtual elimination of FDIC insurance premiums for the year 1996, this expense decreased $282,000 from the 1995 second quarter level. This cost savings was offset in part by a $281,000 or 10.3% increase in salary and benefit expenses, which reflects costs for additional employees at two new in-store branches, two loan production offices, fringe benefits and normal salary increases. Advertising costs were up $200,000 as the Company ran two television advertising campaigns during the second quarter of 1996, Net increases in various other expenses made up the remaining differences. Assets of the Company totaled $616,936,000 at June 30, 1996 which was up $13,382,000 from the 1995 ending balances. Changes in assets from year end balances included: an increase in loans of $54,152,000 to $372,918,000; a decrease in securities of $9,303,000 to $183,808,000; and a decrease in cash and near cash items of $34,701,000 to $30,572,000. Loan balances were up $64,219,000 or 20.8% at June 30, 1996 versus the same date in 1995. The loan to deposit ratio at June 30, 1996 was 76.5% versus 63.2% a year ago. For the second quarter of 1996 the Company had an annualized return on assets of 1.16% and a return on equity of 12.7% versus 1.18% and 13.5% in 1995. TriCo Bancshares ended the quarter with a leverage ratio of 9.0% (based on ending assets), a Tier 1 capital ratio of 12.9% and a total risk-based capital ratio of 14.1%. On June 15, 1996 TriCo Bancshares signed an Acquisition Agreement and Plan of Merger with Sutter Buttes Savings Bank. At March 31 1996, Sutter Buttes had assets totaling $67,000,000 of which $58,000,000 were loans. On July 25, 1996 the Securities and Exchange Commission approved the Company's Form S-4 Registration Statement relating to this acquisition and on August 5, 1996 the Registration Statement became effective. The acquisition agreement is still pending approval of the Sutter Buttes shareholders, the California State Department of Banking and the Federal Deposit Insurance Corporation. Management estimates the closing date will be late third quarter or early fourth quarter this year. As soon as possible after the acquisition closing date, the operations of Sutter Buttes will be absorbed into the Yuba City branches of Tri Counties Bank and the Sutter Buttes branches will be closed. The acquisition will be recorded using the purchase method of accounting. The following tables provide a summary of the major elements of income and expense for the second quarter of 1996 compared with the second quarter of 1995 and for the first six months of 1996 compared with the first six months of 1995. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share)
Three months ended June 30, Percentage 1996 1995 Change (in thousands, except increase earnings per share) (decrease) Interest income $ 11,744 $ 11,334 3.6% Interest expense 4,498 4,441 1.3% ------------- ------------ Net interest income 7,246 6,893 5.1% Provision for loan losses 50 35 42.9% ------------- ------------ Net interest income after 7,196 6,858 4.9% provision for loan losses Noninterest income 1,580 1,638 -3.5% Noninterest expenses 5,824 5,471 6.5% ------------- ------------ Net income before income taxes 2,952 3,025 -2.4% Income taxes 1,226 1,229 -0.2% Tax equivalent adjustment1 22 32 -32.5% ------------- ------------ Net income 1,704 1,764 -3.4% ============= ============ Preferred stock dividends (105) -100.0% Net income available to 1,704 1,659 2.7% common shareholders' Primary earnings per common share 0.37 0.36 2.8%
1 Interest on tax-free securities is reported on a tax equivalent basis of 1.72 and 1.75 for June 30, 1996 and 1995. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share)
Six months ended June 30, Percentage 1996 1995 Change (in thousands, except increase earnings per share) (decrease) Interest income $ 23,372 $ 22,668 3.1% Interest expense 9,033 8,814 2.5% ------------ ------------ Net interest income 14,339 13,854 3.5% Provision for loan losses 90 75 20.0% ------------ ------------ Net interest income after 14,249 13,779 3.4% provision for loan losses Noninterest income 3,046 3,070 -0.8% Noninterest expenses 11,329 11,027 2.7% ------------ ------------ Net income before income taxes 5,966 5,822 2.5% Income taxes 2,473 2,363 4.7% Tax equivalent adjustment1 45 65 -30.2% ------------ ------------ Net income 3,448 3,394 1.6% ============ ============ Preferred stock dividends (210) -100.0% Net income available to 3,448 3,184 8.3% common shareholders' Primary earnings per common share 0.74 0.69 7.6%
1 Interest on tax-free securities is reported on a tax equivalent basis of 1.72 and 1.75 for June 30, 1996 and 1995. 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. In the quarter ended June 30, 1996, interest income increased $410,000 or 3.6 percent over the same period in 1995. Average loans outstanding were 15.9% or $47,747,000 higher in the second quarter of 1996 compared to the second quarter of 1995. Interest income due to this increase totaled $1,308,000. The loan growth was funded by growth in liabilities and capital and reductions in investment securities and Federal funds sold. The lower balances in the investment securities and Federal funds sold resulted in a $319,000 reduction in interest income from these sources for the second quarter of 1996 as compared to the same period in 1995. Additionally, average rates received on all earning assets were lower with loan rates decreasing 59 basis points or 5.4%. The lower rates on all earning assets reduced interest income by $579,000 in the second quarter of 1996 as compared to the same period in 1995. Since the second quarter of 1995, the Bank's base lending rate has decreased 75 basis points in parallel with rate reductions by the Federal Reserve. For the second quarter of 1996, interest expense increased by $57,000 or 1.3% over the year earlier period. Average balances of interest bearing liabilities were $17,816,000 (4.1%) higher in the second quarter of 1996. These higher balances resulted in a $256,000 increase in interest expense in the second quarter of 1996 as compared to the same period in 1995. Second quarter 1996 average balances of Federal funds purchased and short-term debt were $11,490,000 and $19,656,000 respectively, as compared to $2,983,000 and $3,103,000 in the second quarter of 1995. Interest recorded on the increased volume of these two items amounted to $369,000. For the same periods, the average balance of long-term debt decreased $8,240,000 or 50% which resulted in a $119,000 decrease in interest expense. Average rates paid on all interest bearing liabilities decreased from 4.08% in the second quarter of 1995 to 3.97% in the second quarter of 1996. This accounted for a decrease in interest expense of $199,000. The lower average rate paid on interest-bearing liabilities was reflective of the general reduction in market rates of interest from the second quarter of 1995 to the second quarter of 1996. The combined effect of the increase in both interest income and interest expense for the second quarter of 1996 versus the same period in 1995 resulted in an increase of $353,000 (5.1%) in net interest income. Net interest margin of 5.38% was flat between the two periods. For the six month period ending June 30, 1996, interest income increased $704,000 or 3.1% over the same period in 1995. All of the increase resulted from higher average balances on loans and Federal funds sold. Interest income from the volume increase for these two items totaled $2,034,000. It was offset by an $810,000 decrease in interest income on investment securities for volume changes and $520,000 in decreases due to lower average rates on loans and Federal funds sold. However, because of the increased volume of loans (which have higher rates than investment securities), the average rate received on all earning assets for the six month period ended June 30, 1996 increased 6 basis points to 8.7% from that for the same period in 1995. Interest expense for the six month period increased $219,000 from that for the same period in 1995. This 2.5% increase was mostly due to volume and rate increases in time deposits as interest recorded on those instruments increased $453,000 or 10.8%. Reductions in average balances of savings accounts and short-term debt coupled with slightly lower rates helped offset $299,000 of the increase. The higher rates paid on time deposits caused customers to move funds from savings accounts. Overall average rates paid on interest-bearing liabilities in the first six months of 1996 increased 3 basis points to 3.99% from the same period in 1995. The combined effect of the increase in both interest income and interest expense for the first six months of 1996 versus 1995 resulted in an increase of $485,000 or 3.5% in net interest income. Net interest margin increased 6 basis points from 5.28% to 5.34%. The following four tables provide summaries of the components of the interest income, interest expense and net interest margins on earning assets for the quarter and six month periods ended June 30, 1996 versus the same periods in 1995. TRICO BANCSHARES ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS (in thousands)
Three Months Ended 6/30/96 6/30/95 Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loan 2,3 $ 348,779 $ 9,030 10.36% $ 301,032 $ 8,244 10.95% Securities4 188,276 2,693 5.72% 208,963 3,050 5.84% Federal funds sold 1,592 21 5.28% 2,796 40 5.72% ----------- --------- ----------- --------- Total earning assets 538,647 11,744 8.72% 512,791 11,334 8.84% --------- --------- Cash and due from bank 29,113 28,065 Premises and equipment 14,121 13,315 Other assets,net 18,486 21,675 Less: allowance for loan losses (5,383) (5,619) ----------- ----------- Total $ 594,984 $ 570,227 =========== =========== Liabilities and shareholders' equity Interest-bearing Demand deposits $ 84,062 477 2.27% $ 79,640 490 2.46% Savings deposits 160,453 1,226 3.06% 164,733 1,273 3.09% Time deposits 169,516 2,243 5.29% 168,662 2,348 5.57% Federal funds purchased 11,490 144 5.01% 2,983 47 6.30% Short-term debt 19,656 291 5.92% 3,103 44 5.67% Long-term debt 8,252 117 5.67% 16,492 239 5.80% ----------- --------- ----------- --------- Total interest-bearing liabilities 453,429 4,498 3.97% 435,613 4,441 4.08% --------- --------- Noninterest-bearing deposits 77,941 74,739 Other liabilities 8,842 8,455 Shareholders' equity 54,772 51,420 ----------- ----------- Total liabilities and shareholders' equity $ 594,984 $ 570,227 =========== =========== Net interest rate spread5 4.75% 4.76% ========= ========= Net interest income/net $ 7,246 $ 6,893 ========= ========= interest margin6 5.38% 5.38% ========= =========
1 Average balances are computed principally on the basis of daily balances. Average balance of securities is based on amortized cost. 2 Nonaccrual loans are included. 3 Interest income on loans includes fees on loans of $498,000 in 1996 and $428,000 in 1995. 4 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at June 30, 1996 and 1995. 5 Net interest rate spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. 6 Net interest margin is computed by dividing net interest income by total average earning assets. TRICO BANCSHARES ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS (in thousands)
Six Months Ended 6/30/96 6/30/95 Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loan 2,3 $ 334,190 $ 17,593 10.53% $ 300,748 $ 16,281 10.83% Securities4 190,735 5,447 5.71% 219,095 6,257 5.71% Federal funds sold 12,620 332 5.26% 4,630 130 5.62% ----------- ----------- ----------- ----------- Total earning assets 537,545 23,372 8.70% 524,473 22,668 8.64% ----------- ----------- Cash and due from bank 29,387 29,494 Premises and equipment 13,729 13,285 Other assets,net 18,127 15,444 Less: allowance for loan losses (5,488) (5,634) ----------- ----------- Total $ 593,300 $ 577,062 =========== =========== Liabilities and shareholders' equity Interest-bearing Demand deposits $ 84,362 953 2.26% $ 80,548 984 2.44% Savings deposits 163,248 2,492 3.05% 174,140 2,676 3.07% Time deposits 172,495 4,654 5.40% 157,350 4,201 5.34% Federal funds purchased 5,745 144 5.01% 1,819 57 6.27% Short-term debt 9,828 291 5.92% 13,402 406 6.06% Long-term debt 17,153 499 5.82% 17,370 490 5.64% ----------- ----------- ----------- ---------- Total interest-bearing liabilities 452,831 9,033 3.99% 444,629 8,814 3.96% ----------- ---------- Noninterest-bearing deposits 77,358 74,318 Other liabilities 8,720 7,655 Shareholders' equity 54,391 50,460 ----------- ----------- Total liabilities and shareholders' equity $ 593,300 $ 577,062 =========== =========== Net interest rate spread5 4.71% 4.68% ========== ========== Net interest income/net $ 14,339 $ 13,854 =========== =========== interest margin6 5.34% 5.28% =========== ===========
1 Average balances are computed principally on the basis of daily balances. Average balance of securities is based on amortized cost. 2 Nonaccrual loans are included. 3 Interest income on loans includes fees on loans of $905,000 in 1996 and $810,000 in 1995. 4 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at June 30, 1996 and 1995. 5 Net interest rate spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. 6 Net 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 thousands) For the three months ended June 30, 1996 over 1995 Yield/ Volume Rate4 Total --------------- ----------- ------------- Increase (decrease) in interest income: Loans 1,2 $ 1,308 $ (522) $ 786 Investment securities3 (302) (55) (357) Federal funds sold (17) (2) (19) --------------- ----------- ------------- Total 989 (579) 410 --------------- ----------- ------------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 27 (40) (13) Savings deposits (33) (14) (47) Time deposits 12 (117) (105) Federal funds purchased 134 (37) 97 Short-term debt 235 12 247 Long-term debt (119) (3) (122) --------------- ----------- ------------- Total 256 (199) 57 --------------- ----------- ------------- Increase (decrease) in net interest income $ 733 $ (380) $ 353 =============== =========== ============= 1 Nonaccrual loans are included. 2 Interest income on loans includes fee income on loans of $498,000 in 1996 and $428,000 in 1995. 3 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 for June 30, 1996 and 1995. 4 The rate/volume variance has been included in the rate variance. TRICO BANCSHARES ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE (in thousands) For the six months ended June 30, 1996 over 1995 Yield/ Volume Rate4 Total -------------- ---------- -------------- Increase (decrease) in interest income: Loans 1,2 $ 1,810 $ (498) $ 1,312 Investment securities3 (810) 0 (810) Federal funds sold 224 (22) 202 -------------- ---------- -------------- Total 1,224 (520) 704 -------------- ---------- -------------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 47 (78) (31) Savings deposits (167) (17) (184) Time deposits 404 49 453 Federal funds purchased 123 (36) 87 Short-term debt (108) (7) (115) Long-term debt (6) 15 9 -------------- ---------- -------------- Total 293 (74) 219 -------------- ---------- -------------- Increase (decrease) in net interest income $ 931 $ (446) $ 485 ============== ========== ============== 1 Nonaccrual loans are included. 2 Interest income on loans includes fee income on loans of $905,000 in 1996 and $810,000 in 1995. 3 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 for June 30, 1996 and 1995. 4 The rate/volume variance has been included in the rate variance. Provision for Loan Losses In the first six months of 1996, the Bank provided $90,000 for loan losses versus $75,000 in 1995. The allowance for loan losses at June 30, 1996 was 1.40% of outstanding loans versus 1.75% at December 31,1995. Management's ongoing analysis of the loan portfolio determined that the remaining balance of $5,234,000 in the allowance for loan losses should be adequate to cover known or potential problem loans. Noninterest Income Noninterest income is comprised of "service charges and fees", "other income" and "securities gains and losses". Noninterest income for the second quarter 1996 was down $58,000 or 3.5% from the second quarter of 1995. Service charges and fee income increased 15.9% or $161,000. This increase was due mainly to a change in account volumes as basic fee rates had not changed. This was offset by a decrease in other income from $602,000 in 1995 to $404,000 in 1996. There was over $250,000 in non recurring items recorded in the second quarter of 1995. Commissions on the sales of annuities and mutual funds helped offset this decrease as they increased $95,000 or 38.9% in the second quarter of 1996 as compared to the same period in 1995. Other miscellaneous items accounted for the remaining unfavorable variance. Results for the first six months were consistent with the second quarter. Overall, noninterest income decreased $24,000 or .8% in the first six months of 1996 versus the same period in 1995. Service charges and fee income reflected a 12.7% increase to $2,295,000 and were the result of volume changes. In the other income category, commissions on annuities and mutual funds were up $179,000 or 37.8%. The reduction in non recurring income items as detailed above offset this favorable trend. These items account for the significant changes within the noninterest income category. Noninterest Expense Noninterest expense is comprised of operating expenses of the Company and the Bank, plus the total noninterest (income) expenses (excluding gains or losses from securities) of the Bank's real estate development subsidiary. These expenses increased $353,000 to $5,824,000 in the second quarter of 1996 versus 1995. For the quarter, salaries and benefits increased $281,000 or 10.3% which reflects costs for additional employees at two new in-store branches, two loan production offices, increases in fringe benefits and normal salary increases. Other expenses increased $72,000 or 2.6% in the second quarter 1996 versus 1995. The magnitude of this increase was favorably impacted by a $282,000 reduction in FDIC insurance expense because of the virtual elimination of the premium for 1996. Factors contributing to the increase included: a television advertising campaign for $200,000; costs associated with the out-sourcing of the internal audit function which started in July 1995; and a mix of other various operating items. For the six month period noninterest expenses increased $302,000 or 2.7% in 1996 over 1995. Salaries and related expenses were up $430,000 or 7.8% due to the issues discussed for the quarter. Other expenses decreased $128,000 or 2.3%. Premise and equipment expenses were down slightly as several computer related equipment leases expired. FDIC insurance costs were down $569,000. Costs relating to maintenance of premium deposit accounts and credit cards increased $154,000 or 73.9% due to increased activity. These costs were offset by increases in service charge and fee income related those products. The Company has run two television advertising campaigns in the first half of 1996 versus one in the same period of 1995. Because of this costs for advertising increased $105,000 or 63.9%. The second advertising campaign will run into the third quarter. When it is completed, no other major advertising projects are planned for the balance of the year. The balance of the increases are spread throughout the expense categories. The overhead efficiency ratio for the first six months of 1996 was 65.3% versus 65.4% in the like period of 1995. This is about 3% higher than the first quarter 1996 average for California peer banks. Management is focused on improving this ratio. Provision for Income Taxes The effective tax rate for the six months ended June 30, 1996 is 41.8%. This rate approximates the combined California and Federal statutory rates. The actual rate equals the statutory rate as the Bank does not have significant holdings of tax exempt securities. The Bank does not anticipate increasing its holdings of tax-free securities in the near term. Loans In the second quarter of 1996, loan balances increased $43,343,000 or 13.2% from the ending balances at March 31, 1996. Loan balances were higher in all categories. The balances also exceeded year end balances by $54,142,000 and 1995 second quarter ending balances by $64,219,000. The year over year gains suggest that the Bank has been successful in marketing its loan products. Management has made a concerted effort to develop a more highly refined sales culture among its loan officers. A new Chief Credit Officer who has significant experience with California middle market companies was brought on board to manage the credit function. Loan underwriting standards have been maintained, but pricing has been more competitive. Management believes loan growth should continue through the third quarter. Securities At June 30, 1996, securities held-to-maturity had a cost basis of $108,279,000 and a fair value of $104,643,000. This portfolio contained mortgage-backed securities totaling $85,722,000 of which $35,580,000 were CMO's. The securities available-for-sale portfolio had a fair market value of $75,529,000 with a cost basis of $77,378,000. This portfolio contained mortgage-backed securities with fair market values totaling $30,504,000 of which $21,439,000 were CMO's. During the first six months of 1996, maturities of securities exceeded purchases by $7,830,000. As long as loan demand continues to increase, management intends to continue to move funds from maturing securities into loans. Nonperforming Loans As shown in the following table, total nonperforming assets increased $1,607,000 to $4,671,000 during the first six months of 1996. Non performing assets represent only 0.76% of total assets at June 30, 1996. The increase in nonperforming loans was attributable to several borrowers and is not considered to be indicative of a general trend. All nonaccrual loans are considered to be impaired when determining any valuation allowance under SFAS 114. 1996 1995 Nonaccrual loans $ 3,904 $ 2,213 Accruing loans past due 90 days or more 20 220 Restructured loans (in compliance with modified terms) 0 0 ------------ ------------ Total nonperforming loans 3,924 2,433 Other real estate owned 747 631 ------------ ------------ Total nonperforming assets $ 4,671 $ 3,064 ============ ============ Nonincome producing investments in real estate held by Bank's real estate development subsidiary $ 1,173 $ 1,173 ============ ============ Nonperforming loans to total loans 1.05% 0.76% Allowance for loan losses to nonperforming loans 133% 229% Nonperforming assets to total assets 0.76% 0.51% Allowance for loan losses to nonperforming assets 112% 182% Allowance for Loan Loss The Bank maintains its allowance for loan losses at a level considered by Management to be adequate to cover the risk of loss in the loan portfolio at a particular point in time. This determination includes an evaluation and analysis of historical experience, current loan mix and volume, and projected economic conditions. The following table presents information concerning the allowance and provision for loan losses. 1996 1995 (in thousands) Balance, Beginning of period $ 5,580 $ 5,608 Provision charged to operations 90 75 Loans charged off (697) (173) Recoveries of loans previously charged off 261 99 Balance, end of period $ 5,234 $ 5,609 ================ ================ Ending loan portfolio $ 372,918 $ 308,699 ================ ================ Allowance for loan losses as a percentage of ending loan portfolio 1.40% 1.82% ================ ================ Equity The following table indicates the amounts of regulatory capital of the Company. Tier I Total Risk- Leverage Based --------------------------------------------------- (dollars in thousands) June 30,1996 Company's % 12.9% 14.1% 9.0% Regulatory minimum % 4.0% 8.0% 4.0% Company's capital $ $ 55,728 $ 60,962 $ 55,728 Regulatory minimum $ 17,320 34,640 24,677 -------------- -------------- -------------- Computed excess $ 38,408 $ 26,322 $ 31,051 ============== ============== ============== PART II Other Information Item 5. Exhibits Index Page a. Exhibits Computations of Earnings Per Share 24 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 August 12, 1996 /s/ Robert H. Steveson Robert H. Steveson President and Chief Executive Officer Date August 12, 1996 /s/ Robert M. Stanberry Robert M. Stanberry Vice President and Chief Financial Officer EX-11 2 EX-11 EXHIBIT 11 COMPUTATIONS OF EARNINGS PER SHARE (in thousands except earnings per share) (unaudited)
For the three months For the six months ended June 30, ended June 30, 1996 1995 1996 1995 Shares used in the computation of earnings per share: Weighted daily average of shares outstanding 4,463,891 4,414,639 4,464,909 4,405,528 Shares used in the computation of primary earnings per shares 4,651,031 4,624,785 4,648,761 4,611,545 ============= ============ ============= =========== Shares used in the computation of fully diluted earnings per share 4,660,819 4,627,564 4,664,660 4,619,674 ============= ============ ============= =========== Net income used in the computation of earnings per common share: Net income, as reported $ 1,704 $ 1,764 $ 3,448 $ 3,394 Adjustment for preferred stock dividend (105) (210) ------------- ------------ ------------- ----------- Net income, as adjusted $ 1,704 $ 1,659 $ 3,448 $ 3,184 ============= ============ ============= =========== Primary earnings per share $ 0.37 $ 0.36 $ 0.74 $ 0.69 ============= ============ ============= =========== Fully diluted earnings per share $ 0.37 $ 0.36 $ 0.74 $ 0.69 ============= ============ ============= ===========
EX-27 3 EX-27
9 0000356171 TRICO BANCSHARES 1,000 6-MOS DEC-31-1996 JUN-30-1996 30,572 409,265 0 0 75,529 108,279 104,643 372,918 5,234 616,936 491,009 39,828 6,742 24,458 0 0 44,627 10,272 616,936 17,593 5,402 332 23,327 8,099 9,033 14,294 90 0 11,329 5,921 3,448 0 0 3,448 0.74 0.74 8.70 3,904 20 0 0 5,580 697 261 5,234 5,234 0 0
-----END PRIVACY-ENHANCED MESSAGE-----