-----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, Bq+GtmTKZlJLfTX/7NDSyet1ABtvlClLATsGaui3JOS6K0NrGJtg4hR7NBt0VCSC cUv8U1HMqWPcFxhJsYqnqA== 0000356171-96-000007.txt : 19961115 0000356171-96-000007.hdr.sgml : 19961115 ACCESSION NUMBER: 0000356171-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96660302 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 September 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 November 11, 1996: 4,641,223 TRICO BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
September 30, December 31, 1996 1996 --------- --------- Assets: Cash and due from banks ................................................................. $ 36,190 $ 39,673 Federal funds sold ...................................................................... -- 25,600 Securities held-to-maturity (approximate fair value $103,339 and $116,576) ......................................... 105,949 116,865 Securities available-for-sale, net of unrealized (loss) of $(2,145) and $(236) ............................................... 68,148 76,246 Loans, net of allowance for loan losses of $(5,571) and $(5,580) ........................ 374,379 313,186 Premises and equipment, net ............................................................. 14,130 13,189 Investment in real estate properties .................................................... 1,173 1,173 Other real estate owned ................................................................. 1,582 631 Accrued interest receivable ............................................................. 4,082 4,609 Other assets ............................................................................ 15,406 12,382 --------- --------- Total assets ....................................................................... $ 621,039 $ 603,554 ========= ========= Liabilities: Deposits Noninterest-bearing demand ............................................................. $ 83,009 $ 90,308 Interest-bearing demand ................................................................ 89,352 84,314 Savings ................................................................................ 159,853 161,479 Time certificates ....................................................................... 193,405 180,092 --------- --------- Total deposits ..................................................................... 525,619 516,193 Fed funds purchased ..................................................................... 7,500 -- Accrued interest payable and other liabilities .......................................... 7,579 7,856 Long term borrowings .................................................................... 24,284 26,292 --------- --------- Total liabilities .................................................................. 564,982 550,341 Shareholders' equity: Common stock ............................................................................ 44,745 44,315 Retained earnings ....................................................................... 12,974 9,548 Unrealized loss on securities available for sale ........................................ (1,662) (650) --------- --------- Total shareholders' equity ......................................................... 56,057 53,213 --------- --------- Total liabilities and shareholders' equity ......................................... $ 621,039 $ 603,554 ========= =========
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands except earnings per common share)
For the three months For the nine months ended September 30, ended September 30, 1996 1995 1996 1995 Interest income: Interest and fees on loans ...................................... $ 9,955 $ 8,724 $ 27,548 $ 25,005 Interest on investment securities-taxable ............................................. 2,577 2,857 7,916 8,962 Interest on investment securities-tax exempt .......................................... 30 38 93 125 Interest on federal funds sold .................................. -- 10 332 140 -------- -------- -------- -------- Total interest income ........................................ 12,562 11,629 35,889 34,232 -------- -------- -------- -------- Interest expense: Interest on deposits ............................................ 4,196 4,127 12,295 11,988 Interest on federal funds purchased ............................. 204 49 348 106 Interest on other borrowings .................................... 456 353 1,246 1,249 -------- -------- -------- -------- Total interest expense ....................................... 4,856 4,529 13,889 13,343 -------- -------- -------- -------- Net interest income .......................................... 7,706 7,100 22,000 20,889 Provision for loan losses ......................................... 537 160 627 235 -------- -------- -------- -------- Net interest income after provision for loan losses .................................... 7,169 6,940 21,373 20,654 Noninterest income: Service charges and fees ........................................ 1,296 1,067 3,591 3,103 Other income .................................................... 449 375 1,200 1,419 Securities gains (losses), net .................................. -- -- -- (10) -------- -------- -------- -------- Total noninterest income ..................................... 1,745 1,442 4,791 4,512 -------- -------- -------- -------- Noninterest expenses: Salaries and related expenses ................................... 2,941 2,652 8,905 8,186 Other, net ...................................................... 2,876 2,600 8,241 8,093 -------- -------- -------- -------- Total noninterest expenses ................................... 5,817 5,252 17,146 16,279 -------- -------- -------- -------- Net income before income taxes .................................... 3,097 3,130 9,018 8,887 Income taxes .................................................... 1,276 1,286 3,749 3,649 -------- -------- -------- -------- Net income ................................................... 1,821 1,844 5,269 5,238 Preferred stock dividends ......................................... -- 35 -- 245 -------- -------- -------- -------- Net income available to common shareholders .............................................. 1,821 1,809 5,269 4,993 -------- -------- -------- -------- Primary earnings per common share ................................. $ 0.39 $ 0.39 $ 1.13 $ 1.08 ======== ======== ======== ======== Fully diluted earnings per common share $ ......................... 0.39 $ 0.38 $ 1.13 $ 1.06 ======== ======== ======== ========
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 62,862 356 $ 356 Repurchase of common stock (8,285) (82) (64) $ (146) Common stock cash dividends (1,779) $ (1,779) Change in securities loss on securities (1,012) $ (1,012) Stock option amortization 156 $ 156 Net income, September 30, 1996 5,269 $ 5,269 -------------- ------------- ------------- ------------ ------------ Balance, September 30, 1996 4,519,405 $ 44,745 $ 12,974 $ (1,662) $ 56,057 ============== ============= ============= ============ ============
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
For the nine months ended September 30, 1996 1995 Operating activities: Net income ...................................................... $ 5,269 $5,238 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ................................... 627 235 Provision for losses on OREO ................................ -- 35 Depreciation and amortization ............................... 1,328 1,202 Amortization of investment security discounts ............... 42 89 Deferred income taxes ....................................... 107 (112) Investment security losses (net) ............................ -- 10 (Gain) loss on sale of other real estate owned .............. (5) (73) (Gain) loss on sale of premises and equipment ............... (7) -- (Gain) loss on sale of loans ................................ (8) (23) Proceeds from loan sales .................................... 13,217 5,819 Origination of loans held for sale .......................... (20,483) (6,794) Amortization of stock options ............................... 156 157 (Increase) decrease in interest receivable .................. 527 335 Increase (decrease) in interest payable ..................... (729) 959 (Increase) decrease in other assets and liabilities ......... (2,195) (1,346) -------- -------- Net cash provided (used) by operating activities .......... (2,154) 5,731 -------- -------- Investing activities: Proceeds from maturities of securities held-to-maturity ..... 14,256 11,191 Purchases of securities held-to-maturity .................... (5,516) -- Proceeds from maturities of securities available-for-sale ... 12,677 8,554 Proceeds from sales of securities available-for-sale ........ -- 6,993 Purchases of securities available-for-sale .................. (13,644) (5,720) Net (increase) decrease in loans ............................ (56,007) (12,077) Purchases of premises and equipment ......................... (2,030) (852) Proceeds from sale of other real estate owned ............... 515 1,180 -------- -------- Net cash provided (used) by investing activities .......... 40,278 9,269 -------- --------
(continued) TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) (continued)
For the nine months ended September 30, 1996 1995 Financing activities: Net increase (decrease) in deposits ......................... 9,426 (8,160) Net increase in federal funds purchased ..................... 7,500 7,700 Repayment of repurchase agreements .......................... -- (20,629) Payments of principal on long-term debt agreements .......... (2,008) (2,033) Redemption of preferred stock ............................... -- (4,000) Repurchase of common stock .................................. (146) -- Cash dividends - Preferred .................................. -- (245) Cash dividends - Common ..................................... (1,779) (1,061) Exercise of common stock options ............................ 356 513 -------- -------- Net cash provided (used) by financing activities .......... 13,349 (27,915) -------- -------- Increase (decrease) in cash and cash equivalents .......... (29,083) (12,915) Cash and cash equivalents at beginning of year ............ 65,273 39,709 -------- -------- Cash and cash equivalents at end of period ................ $ 36,190 $ 26,794 ======== ======== Supplemental information: Cash paid for taxes ......................................... $ 4,097 $ 3,540 Cash paid for interest expense .............................. $ 14,618 $ 12,384
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 nine months ended September 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 nine months ended September 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 $1,821,000 for the third quarter ended September 30, 1996 versus $1,844,000 for the same period in 1995. Fully diluted earnings per share for the third quarter periods were $0.39 and $0.38, respectively. Earnings for the nine months ended September 30, 1996 were $5,269,000 versus year ago results of $5,238,000. The fully diluted earnings per share were $1.13 and $1.06 for the respective nine month periods. Earnings per common share in 1996 have benefited from the redemption of all outstanding preferred stock in the third quarter of 1995, as the Company paid preferred stock dividends totaling $35,000 and $245,000 for the third quarter and nine month periods respectively in 1995. For the quarter net interest income was up $599,000 or 8.4% as average loans outstanding were $64.6 million (20.6%) higher than in the third quarter of 1995. The effect on interest income from the higher loan balances was offset in part by a 60 basis point decline in the average yield on loans to 10.52% and a reduction of $22.6 million (11.0%) in the average balances of securities and Federal funds sold. Interest expense was higher with a 7.2% increase of $327,000 resulting from higher balances of interest-bearing liabilities offset in part by a 12 basis point decline in the average rate paid on these liabilities. The Company provided $537,000 for loan losses in the third quarter of 1996 versus $160,000 in the same period last year. For these periods, net loans charged off were $200,000 and $111,000 respectively. Because of continuing loan growth in 1996 Management determined that additions to the allowance for loan losses were warranted. At this time Management anticipates the loan loss provision in the fourth quarter will exceed the $100,000 provided in the fourth quarter of 1995. Noninterest income is comprised of "service charges and fees" and "other income". Service charge and fee income increased 21.5% to $1,296,000 in the third quarter versus year ago results. Both higher account volumes and higher fee rates contributed to the increase in this category. Other income was up from $375,000 in 1995 to $449,000 in 1996. Several non-recurring items accounted for this increase. Overall, noninterest income increased $303,000 or 21.0% for the quarter. Noninterest expenses increased $565,000 to $5,817,000 in the third quarter 1996 versus 1995. Salary and benefit expenses were up $289,000 or 10.9% which reflects costs for additional employees at two new in-store branches, two loan production offices, fringe benefits and normal salary increases. Costs relating to customer deposit services, ATM networks, credit card servicing and telecommunications accounted for $207,000 of the increase as they were up 34.2%. These costs reflect higher volumes related to the products. Net increases in various other expenses made up the remaining difference. Assets of the Company totaled $621,039,000 at September 30, 1996 which was up $17,485,000 from the 1995 ending balances. Changes in assets from year end balances included: an increase in loans of $61,184,000 to $379,950,000; a decrease in securities of $19,014,000 to $174,097,000; and a decrease in cash and near cash items of $29,083,000 to $36,190,000. Loan balances were up $66,066,000 or 18.8% at September 30, 1996 versus the same date in 1995. The increase in loans outstanding is reflective of a stronger economy and some additions to and reorganization of the loan production staff. The loan to deposit ratio at September 30, 1996 was 72.3% versus 66.2% a year ago. For the third quarter of 1996 the Company had an annualized return on assets of 1.17% and a return on equity of 12.8% versus 1.21% and 13.94% in 1995. TriCo Bancshares ended the quarter with a leverage ratio of 9.3% (based on ending assets), a Tier 1 capital ratio of 12.9% and a total risk-based capital ratio of 14.2%. The previously announced acquisition of Sutter Buttes Savings Bank closed at 5:00pm, October 16, 1996. At closing Sutter Buttes Savings Bank had total assets of $64.2 million, $60.8 million in loans, $56.0 million in deposits and common shareholders' equity of $3.4 million. The acquisition will be accounted for under the purchase method which will result in the recognition of approximately $850,000 of core deposit and other intangibles. On October 16, 1996 the Company announced that it had reached a definitive agreement with Wells Fargo Bank to purchase nine of Wells' branches located in Northern California. The purchase includes deposit accounts and facilities and is scheduled to close in the first quarter of 1997 subject to regulatory approval. The following tables provide a summary of the major elements of income and expense for the third quarter of 1996 compared with the third quarter of 1995 and for the first nine months of 1996 compared with the first nine months of 1995. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share)
Three months ended September 30, Percentage 1996 1995 Change (in thousands, except increase earnings per share) (decrease) Interest income ............................................................ $ 12,584 $ 11,658 7.9% Interest expense ........................................................... 4,856 4,529 7.2% -------- -------- Net interest income ........................................................ 7,728 7,129 8.4% Provision for loan losses .................................................. 537 160 235.6% -------- -------- Net interest income after .................................................. 7,191 6,969 3.2% provision for loan losses Noninterest income ......................................................... 1,745 1,442 21.0% Noninterest expenses ....................................................... 5,817 5,252 10.8% -------- -------- Net income before income taxes ............................................. 3,119 3,159 -1.3% Income taxes ............................................................... 1,276 1,286 -0.8% Tax equivalent adjustment1 ................................................. 22 29 -24.2% -------- -------- Net income ................................................................. 1,821 1,844 -1.2% ======== ======== Preferred stock dividends .................................................. -- (35) -100.0% Net income available to .................................................... 1,821 1,809 0.7% common shareholders' Primary earnings per common share .......................................... 0.39 0.39 0.0%
1 Interest on tax-free securities is reported on a tax equivalent basis of 1.72 and 1.75 for September 30, 1996 and 1995 respectively. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share)
Nine months ended September 30, Percentage 1996 1995 Change (in thousands, except increase earnings per share) (decrease) Interest income ............................................................ $ 35,956 $ 34,326 4.7% Interest expense ........................................................... 13,889 13,343 4.1% -------- -------- Net interest income ........................................................ 22,067 20,983 5.2% Provision for loan losses .................................................. 627 235 166.8% -------- -------- Net interest income after .................................................. 21,440 20,748 3.3% provision for loan losses Noninterest income ......................................................... 4,791 4,512 6.2% Noninterest expenses ....................................................... 17,146 16,279 5.3% -------- -------- Net income before income taxes ............................................. 9,085 8,981 1.2% Income taxes ............................................................... 3,749 3,649 2.7% Tax equivalent adjustment1 ................................................. 67 94 -28.6% -------- -------- Net income ................................................................. 5,269 5,238 0.6% ======== ======== Preferred stock dividends .................................................. -- (245) -100.0% Net income available to .................................................... 5,269 4,993 5.5% common shareholders' Primary earnings per common share .......................................... 1.13 1.08 4.6%
1 Interest on tax-free securities is reported on a tax equivalent basis of 1.72 and 1.75 for September 30, 1996 and 1995 respectively. 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 September 30, 1996, interest income increased $926,000 or 7.9% over the same period in 1995. Average loans outstanding were 20.6% or $64,591,000 higher in the third quarter of 1996 compared to the third quarter of 1995. Interest income due to this increase totaled $1,795,000. The loan growth was funded by growth in liabilities and capital and reductions in investment securities and Federal funds sold. The increase in interest income due to the growth in loans was offset in part by lower average balances in investment securities and Federal funds sold which resulted in a $322,000 reduction in interest income in the third quarter of 1996 as compared to the same period in 1995. Additionally, average rates received on loans decreased 60 basis points or 5.4%. The lower loan rates reduced interest income by $564,000 in the third quarter of 1996 as compared to the same period in 1995. Since the beginning of the third quarter of 1995, the Bank's base lending rate has decreased 75 basis points in parallel with rate reductions by the Federal Reserve. Interest expense was higher by $327,000 or 7.2% in the third quarter of 1996 over the year earlier period. Most all of the increase was due to higher average balances of interest bearing liabilities as average rates paid on these liabilities decreased 12 basis points to 4.05%. Time deposit average balances were up $18,695,000 (11.1%) and accounted for $265,000 of additional interest expense. Federal Funds purchased average balances were up $10,291,000 (301%) and accounted for $148,000 of additional interest expense. In total the higher average balances resulted in a $563,000 increase in interest expense. The lower average rates paid on these liabilities offset $276,000 of the increase in the third quarter of 1996 as compared to the same period in 1995. The combined effect of the increase in both interest income and interest expense for the third quarter of 1996 versus the same period in 1995 resulted in an increase of $599,000 (8.4%) in net interest income. Net interest margin improved 2 basis points to 5.51% for the third quarter of 1996. For the nine month period ending September 30, 1996, interest income increased $1,630,000 or 4.8% 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 $3,805,000. It was offset by an $1,122,000 decrease in interest income on investment securities for volume changes and $1,070,000 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 nine month period ended September 30, 1996 increased 3 basis points to 8.79% from that for the same period in 1995. Interest expense for the nine month period increased $546,000 (4.1%) from that for the same period in 1995. The average balance of time deposits was up $16,328,000 or 10.1% which accounted for a $668,000 increase in interest expense. Since the average rate paid on those instruments was down 12 basis points to 5.34%, it resulted in an offsetting decrease of $157,000 in interest expense. A reduction in the average balance of savings accounts coupled with slightly lower rates resulted in a 4.8% decrease of $191,000 in interest expense for that item. Increases in both the average balance and interest rates paid on long term debt added $266,000 (31.6%) to total interest expense for the nine month period in 1996 versus the same period in 1995. Overall average rates paid on interest-bearing liabilities in the first nine months of 1996 decreased 2 basis points to 4.01% from the same period in 1995. The combined effect of the increase in both interest income and interest expense for the first nine months of 1996 versus 1995 resulted in an increase of $599,000 or 2.8% in net interest income. Net interest margin increased 4 basis points from 5.35% to 5.39%. 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 nine month periods ended September 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 30-Sep-96 30-Sep-95 Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loans 2,3 $ 378,449 $ 9,955 10.52% $ 313,858 $ 8,724 11.12% Securities4 182,899 2,629 5.75% 204,748 2,924 5.71% Federal funds sold - - 721 10 5.55% ------------ ----------- ------------ ----------- Total earning assets 561,348 12,584 8.97% 519,327 11,658 8.98% ----------- ----------- Cash and due from bank 33,374 26,552 Premises and equipment 14,293 13,170 Other assets, net 18,603 17,018 Less: allowance for loan losses (5,338) (5,633) ------------ ------------ Total $ 622,280 $ 570,434 ============ ============ Liabilities and shareholders' equity Interest-bearing Demand deposits $ 90,215 519 2.30% $ 80,546 501 2.49% Savings deposits 158,640 1,229 3.10% 157,844 1,236 3.13% Time deposits 187,129 2,448 5.23% 168,434 2,390 5.68% Federal funds purchased 13,701 204 5.96% 3,410 49 5.75% Short-term debt 6,196 88 5.68% - - - Long-term debt 24,310 368 6.06% 24,606 353 5.74% ------------ ----------- ------------ ----------- Total interest-bearing liabilities 480,191 4,856 4.05% 434,840 4,529 4.17% ----------- ----------- Noninterest-bearing deposits 78,999 76,457 Other liabilities 7,166 9,630 Shareholders' equity 55,924 49,507 ------------ ------------ Total liabilities and shareholders' equity $ 622,280 $ 570,434 ============ ============ Net interest rate spread5 4.92% 4.81% =========== =========== Net interest income/net $ 7,728 $ 7,129 =========== =========== interest margin6 5.51% 5.49% =========== =========== 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 $502,000 in 1996 and $395,000 in 1995. 4 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at September 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)
Nine Months Ended 30-Sep-96 30-Sep-95 Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loans 2,3 $ 348,943 $ 27,548 10.53% $ 305,118 $ 25,005 10.93% Securities4 188,123 8,076 5.72% 214,313 9,181 5.71% Federal funds sold 8,383 332 5.28% 3,327 140 5.61% ------------- ------------ ------------ ------------- Total earning assets 545,449 35,956 8.79% 522,758 34,326 8.76% ------------ ------------- Cash and due from bank 30,716 28,513 Premises and equipment 13,917 13,247 Other assets, net 18,316 15,968 Less: allowance for loan losses (5,438) (5,634) ------------- ------------ Total $ 602,960 $ 574,852 ============= ============ Liabilities and shareholders' equity Interest-bearing Demand deposits $ 86,313 1,472 2.27% $ 80,547 1,485 2.46% Savings deposits 161,712 3,721 3.07% 168,708 3,912 3.09% Time deposits 177,373 7,102 5.34% 161,045 6,591 5.46% Federal funds purchased 8,397 348 5.53% 2,349 106 6.02% Short-term debt 3,285 137 5.56% 8,827 406 6.13% Long-term debt 24,871 1,109 5.95% 19,890 843 5.65% ------------- ------------ ------------ ------------- Total interest-bearing liabilities 461,951 13,889 4.01% 441,366 13,343 4.03% ------------ ------------- Noninterest-bearing deposits 77,905 75,030 Other liabilities 8,202 8,311 Shareholders' equity 54,902 50,145 ------------- ------------ Total liabilities and shareholders' equity $ 602,960 $ 574,852 ============= ============ Net interest rate spread5 4.78% 4.72% =========== =========== Net interest income/net $ 22,067 $ 20,983 ============ ============= interest margin6 5.39% 5.35% ============ ============= 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 $1,407,000 in 1996 and $1,205,000 in 1995. 4 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at September 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 September 30, 1996 over 1995 Yield/ Volume Rate4 Total ------------------ ------------------- --------------------- Increase (decrease) in interest income: Loans 1,2 $ 1,795 $ (564) $ 1,231 Investment securities3 (312) 17 (295) Federal funds sold (10) - (10) ------------------ ------------------- --------------------- Total 1,473 (547) 926 ------------------ ------------------- --------------------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 60 (42) 18 Savings deposits 6 (13) (7) Time deposits 265 (207) 58 Federal funds purchased 148 7 155 Short-term debt 88 - 88 Long-term debt (4) 19 15 ------------------ ------------------- --------------------- Total 563 (236) 327 ------------------ ------------------- --------------------- Increase (decrease) in net interest income $ 910 $ (311) $ 599 ================== =================== =====================
1 Nonaccrual loans are included. 2 Interest income on loans includes fees on loans of $502,000 in 1996 and $395,000 in 1995. 3 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at September 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 nine months ended September 30, 1996 over 1995 Yield/ Volume Rate4 Total ------------------ ----------------- ------------------ Increase (decrease) in interest income: Loans 1,2 $ 3,592 $ (1,049) $ 2,543 Investment securities3 (1,122) 17 (1,105) Federal funds sold 213 (21) 192 ------------------ ----------------- ------------------ Total 2,683 (1,053) 1,630 ------------------ ----------------- ------------------ Increase (decrease) in interest expense: Demand deposits (interest-bearing) 106 (119) (13) Savings deposits (162) (29) (191) Time deposits 668 (157) 511 Federal funds purchased 273 (31) 242 Short-term debt (255) (14) (269) Long-term debt 211 55 266 ------------------ ----------------- ------------------ Total 841 (295) 546 ------------------ ----------------- ------------------ Increase (decrease) in net interest income $ 1,842 $ (758) $ 1,084 ================== ================= ==================
1 Nonaccrual loans are included. 2 Interest income on loans includes fee income on loans of $1,407,000 in 1996 and $1,205,000 in 1995. 3 Interest income is stated on a tax equivalent basis of 1.72 and 1.75 at September 30, 1996 and 1995. 4 The rate/volume variance has been included in the rate variance. Provision for Loan Losses In the first nine months of 1996, the Bank provided $627,000 for loan losses versus $235,000 in 1995. The provision mostly offset the $636,000 in net loans charged off during the first nine months of 1996. The Bank experienced a higher level of credit card charge offs than had been the case in prior years. The allowance for loan losses at September 30, 1996 was 1.47% of outstanding loans versus 1.77% at September 30, 1995. Management's ongoing analysis of the loan portfolio determined that the remaining balance of $5,571,000 in the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio. Noninterest Income Total noninterest income for the third quarter of 1996 increased $303,000 or 21.0% from the same period in 1995. Selective rate increases in service charges which took effect July 1, 1996 as well as increased volumes in some fee categories added approximately $228,000 to noninterest income. Other income was up from $375,000 to $449,000 in 1996. Several non recurring items accounted for this increase. No other individual items had significant changes. Results for the nine months were mixed. Overall, noninterest income increased $279,000 or 6.2% in 1996 versus 1995. Service charges and fee income were up $488,000 or 15.7%. This increase resulted from the same factors as detailed above. In the other income category commissions on sales of annuities and mutual funds increased by $305,000 (24.3%) during the first nine months of 1995. However, overall other income decreased by $219,000 (15.4%) for the first nine months of 1996 as compared the same period in 1995. Fewer favorable non recurring items accounted for the decrease. Noninterest Expense Noninterest expense is comprised of operating expenses of the Company and the Bank, plus the total noninterest (income) expenses of the Bank's real estate development subsidiary. These expenses increased $565,000 or 10.8% in the third quarter of 1996 versus the same period last year. For the quarter, salaries and benefits were up $289,000 or 10.9% from the prior year. This increase reflects costs for additional employees at two new in-store branches, two loan production offices, fringe benefits and normal salary increases. Other expenses increased $276,000 or 10.6% in the third quarter . Costs relating to customer deposit services, ATM networks, credit card servicing and telecommunications accounted for $207,000 of the increase as they were up 34.2%. These costs reflect higher volumes related to the products. Net increases in various other expense categories made up the remaining difference. For the nine month period noninterest expenses increased $867,000 or 5.3% in 1996 over 1995. Expense increases for the nine month period are fairly reflective of those for the quarter as detailed in the previous paragraph especially as related to salaries and benefits. Management continually reviews these expenses and expense controls. Management expects noninterest expenses to increase from current levels in the fourth quarter of 1996 and the first quarter of 1997 as the Bank prepares to support the additional nine branches to be purchased from Wells Fargo Bank. Provision for Income Taxes The effective tax rate for the nine months ended September 30, 1996 is 41.6%. 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 third quarter of 1996, loan balances increased $7,032,000 or 1.9% from the ending balances at June 30, 1996. The third quarter growth slowed as agricultural borrowers typically lock up their credit needs in the first and second quarters. The third quarter growth was about evenly split between real estate construction and consumer loans. The balances of $379,950,000 at September 30, 1996 exceeded year end balances by $61,184,000 and 1995 third quarter ending balances by $60,066,000. The year over year gain is reflective of an improved economy and the Bank's success in marketing its loan products. Management has made a concerted effort to develop a more highly refined sales culture among its loan officers while maintaining its credit underwriting standards. Because of the inherent seasonality in the Bank's loan portfolio where agricultural production loans paydown in the fourth quarter, Management believes loan growth will be modest to flat through the fourth quarter. Securities At September 30, 1996, securities held-to-maturity had a cost basis of $105,945,000 and a fair value of $103,339,000. This portfolio contained mortgage-backed securities totaling $83,367,000 of which $34,665,000 were CMO's. The securities available-for-sale portfolio had a fair market value of $68,148,000 and an amortized cost basis of $70,293,000. This portfolio contained mortgage-backed securities with fair market values totaling $29,056,000 of which $20,896,000 were CMO's. At December 31, 1996 the cost basis of the two portfolios was $196,914,000. The Bank has continued to re-deploy funds from matured securities into the loan portfolio. Nonperforming Loans As shown in the following table, total nonperforming assets have increased $3,230,000 to $6,294,000 in the first nine months of 1996. Approximately $2.0 million of the increase in nonperforming loans are loans secured by commercial real estate and are related to one borrower. Non performing assets represent 1.01% of total assets. All nonaccrual loans are considered to be impaired when determining any valuation allowance under SFAS 114.
1996 1995 ---- ---- Nonaccrual loans $ 4,692 $ 2,213 Accruing loans past due 90 days or more 20 220 Restructured loans (in compliance with modified terms) - - ------------------ ------------------ Total nonperforming loans 4,712 2,433 Other real estate owned 1,582 631 ------------------ ------------------ Total nonperforming assets $ 6,294 $ 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 1.24% 0.76% Allowance for loan losses to nonperforming loans 118% 229% Nonperforming assets to total assets 1.01% 0.51% Allowance for loan losses to nonperforming assets 89% 182%
Allowance for Loan Losses 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.
September 30, September 30, 1996 1995 (in thousands) Balance, Beginning of period $ 5,580 $ 5,608 Provision charged to operations 627 235 Loans charged off (919) (361) Recoveries of loans previously charged off 283 176 Balance, end of period $ 5,571 $ 5,658 =================== ================== Ending loan portfolio $ 379,950 $ 319,884 =================== ================== Allowance for loans as a percentage of ending loan portfolio 1.47% 1.77% =================== ==================
Equity The following table indicates the amounts of regulatory capital of the Company. Tier I Total Risk- Leverage Based ----------------------------------------------------------- (dollars in thousands) September 30, 1995 Company's % 12.9% 14.2% 9.3% Regulatory minimum % 4.0% 8.0% 4.0% Company's capital $ $ 57,719 $ 63,290 $ 57,719 Regulatory minimum $ 17,865 35,729 24,842 ----------------- ----------------- ----------------- Computed excess $ 39,854 $ 27,561 $ 32,877 ================= ================= ================= PART II Other Information Item 5. Exhibits Index Page a. Exhibits Computations of Earnings Per Share 25 b. Reports on Form 8-K: A Form 8-K, for Item 2 was filed on October 16, 1996 which reported the acquisition of Sutter Buttes Savings Bank. Financial statements for this transaction have not yet been filed. 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 November 11, 1996 /s/ Robert H. Steveson Robert H. Steveson President and Chief Executive Officer Date November 11, 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 nine months ended September 30, ended September 30, 1996 1995 1996 1995 Shares used in the computation of earnings per share: Weighted daily average of shares outstanding 4,498,831 4,445,341 4,476,299 4,419,078 Shares used in the computation of primary earnings per shares 4,673,451 4,685,485 4,657,051 4,636,191 ================ ================ ============== ============== Shares used in the computation of fully diluted earnings per share 4,713,229 4,721,841 4,680,967 4,695,576 ================ ================ ============== ============== Net income used in the computation of earnings per common share: Net income, as reported $ 1,821 $ 1,844 $ 5,269 $ 5,238 Adjustment for preferred stock dividend - (35) - (245) ---------------- ---------------- -------------- -------------- Net income, as adjusted $ 1,821 $ 1,809 $ 5,269 $ 4,993 ================ ================ ============== ============== Primary earnings per share $ 0.39 $ 0.39 $ 1.13 $ 1.08 ================ ================ ============== ============== Fully diluted earnings per share $ 0.39 $ 0.38 $ 1.13 $ 1.06 ================ ================ ============== ==============
EX-27 3 EX-27
9 0000356171 TRICO BANCSHARES 1,000 9-MOS DEC-31-1996 SEP-30-1996 36,190 442,610 0 0 68,148 105,949 103,339 379,950 5,571 621,039 525,619 7,500 7,579 24,284 0 0 44,745 11,312 621,039 27,548 8,009 332 35,889 12,295 13,889 22,000 627 0 17,146 9,018 5,269 0 0 5,269 1.13 1.13 8.97 4,692 20 0 0 5,580 919 283 5,571 5,571 0 0
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