-----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, I8Ry+L6tOVn7rE57Gcye9ufkiaWPnlQy5hmasPIkyiH4SYZRlS9S90q1j8kxucXl dUGoyn9uMc2GHQ0c7Eku3Q== 0000356171-97-000004.txt : 19970506 0000356171-97-000004.hdr.sgml : 19970506 ACCESSION NUMBER: 0000356171-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 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: 97595160 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, 1997 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 May 5, 1997: 4,648,673 TRICO BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
March 31, December 31, ----------------- ----------------- 1997 1996 Assets: Cash and due from banks $ 47,665 $ 52,231 Federal funds sold and repurchase agreements 7,000 - Securities held-to-maturity (approximate fair value $101,513 and $103,488) 102,107 104,713 Securities available-for-sale, net of unrealized gain(loss) of $(1,542) and $(991) 166,584 65,316 Loans, net of allowance for loan losses of $(5,866) and $(6,097) 423,749 433,192 Premises and equipment, net 16,117 14,717 Investment in real estate properties 1,227 1,173 Other real estate owned 1,547 1,389 Accrued interest receivable 4,732 4,572 Other assets 26,573 17,556 ----------------- ----------------- Total assets $ 797,301 $ 694,859 ================= ================= Liabilities: Deposits Noninterest-bearing demand $ 104,364 $ 100,879 Interest-bearing demand 121,969 97,178 Savings 220,958 172,789 Time certificates 256,087 224,775 ----------------- ----------------- Total deposits 703,378 595,621 Federal funds purchased - 4,900 Accrued interest payable and other liabilities 11,280 9,280 Long term borrowings 21,278 24,281 ----------------- ----------------- Total liabilities 735,936 634,082 Shareholders' equity: Common stock 47,737 47,652 Retained earnings 14,905 14,076 Unrealized loss on securities available-for-sale, net (1,277) (951) ----------------- ----------------- Total shareholders' equity 61,365 60,777 ----------------- ----------------- Total liabilities and shareholders' equity $ 797,301 $ 694,859 ================= =================
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands except earnings per common share) For the three months ended March 31, 1997 1996 Interest income: Interest and fees on loans $ 10,731 $ 8,563 Interest on investment securities-taxable 2,944 2,698 Interest on investment - - securities-tax exempt 68 33 Interest on federal funds sold 215 311 ------------- ------------- Total interest income 13,958 11,605 ------------- ------------- Interest expense: Interest on deposits 5,209 4,153 Interest on federal funds purchased 39 - Interest on other borrowings 360 382 ------------- ------------- Total interest expense 5,608 4,535 ------------- ------------- Net interest income 8,350 7,070 Provision for loan losses 600 40 ------------- ------------- Net interest income after provision for loan losses 7,750 7,030 Noninterest income: Service charges and fees 1,491 1,119 Other income 606 347 ------------- ------------- Total noninterest income 2,097 1,466 ------------- ------------- Noninterest expenses: Salaries and related expenses 3,576 2,959 Other, net 3,716 2,546 ------------- ------------- Total noninterest expenses 7,292 5,505 ------------- ------------- Net income before income taxes 2,555 2,991 Income taxes 991 1,247 ------------- ------------- Net income 1,564 1,744 Primary earnings per common share $ 0.32 $ 0.38 ============= ============= Fully diluted earnings per common share $ 0.32 $ 0.37 ============= ============= TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) (in thousands, except number of shares)
Common stock ------------------------------- Unrealized Number Retained loss on of shares Amount earnings securities, net Total --------------- ------------- ------------- ----------------- ------------ Balance, December 31, 1996 4,641,223 $ 47,652 $ 14,076 $ (951) $ 60,777 Exercise common stock options 4,150 33 $ 33 Common stock cash dividends (735) $ (735) Change in unrealized loss on securities, net (326) $ (326) Stock option amortization 52 $ 52 Net income, March 31, 1997 1,564 $ 1,564 --------------- ------------- ------------- ----------------- ------------ Balance, March 31, 1997 4,645,373 $ 47,737 $ 14,905 $ (1,277) $ 61,365 =============== ============= ============= ================= ============
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the three months ended March 31, 1997 1996 Operating activities: Net income $ 1,564 $ 1,744 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 600 40 Provision for losses on other real estate owned 10 - Depreciation and amortization 492 415 Amortization of investment security discounts (10) 38 Deferred income taxes 4,452 (250) (Gain) loss on sale of OREO, net (14) 8 (Gain) loss on sale of loans, net (17) (2) (Gain) loss on sale of fixed assets (6) - Origination of loans held for sale (4,481) (7,645) Proceeds from loan sales 4,073 1,220 Amortization of stock options 52 52 (Increase) decrease in interest receivable (160) 586 Increase (decrease) in interest payable 1,388 679 (Increase) decrease in other assets and liabilities (3,523) 189 ------------ ------------ Net cash provided (used) by operating activities 4,420 (2,926) Investing activities: Proceeds from maturities of securities held-to-maturity 2,643 6,626 Purchases of securities held-to-maturity - (2,520) Proceeds from maturities of securities available-for-sale 15,230 5,555 Purchases of securities available-for-sale (117,036) (2,035) Net (increase) decrease in loans 9,200 (4,417) Proceeds from sales of fixed assets 9 - Purchases of premises and equipment (1,137) (941) Purchases and additions to real estate properties (54) - Proceeds from the sale of OREO 97 98 Net cash received from purchase of Wells Fargo branch deposits 140,000 - ------------ ------------ Net cash provided (used) by investing activities 48,952 2,366 Financing activities: Net increase (decrease) in deposits (excluding effects of purchase of Wells Fargo branch deposits (42,333) (25,185) Repayment of fed funds purchased (4,900) - Payments of principal on long-term debt agreements (3,003) (2,003) Cash dividends - Common (735) (595) Exercise of common stock options 33 31 ------------ ------------ Net cash provided (used) by financing activities (50,938) (27,752) ------------ ------------ Increase (decrease) in cash and cash equivalents 2,434 (28,312) Cash and cash equivalents at beginning of year 52,231 65,273 ------------ ------------ Cash and cash equivalents at end of period $ 54,665 $ 36,961 ============ ============ Supplemental information: Cash paid for taxes $ - $ 362 Cash paid for interest expense $ 4,220 $ 3,856
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, 1997 and 1996 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, 1996. Note B - Acquisition On February 21, 1997, the Bank purchased and assumed substantially all of the deposit liabilities of nine branches from Wells Fargo Bank, N.A, San Francisco. In connection with the acquisition of such deposit liabilities and related cash balances, Tri Counties Bank also acquired certain other assets of the branches, including real estate (four branches), furniture and fixtures and a relatively insignificant amount of loans which were secured by deposit accounts. All assets constituting plant and equipment or other physical property will continue to be used in the banking business. Wells Fargo Bank retained all other revenue producing assets which had originated from these branches. A preliminary summary of the deposit liabilities and limited assets acquired by Tri Counties Bank is shown below: Total deposits (liabilities) acquired $150,090,000 Less assets acquired Furniture and fixtures 214,000 Land and premises 585,000 Loans 183,000 ---------- Total assets acquired 982,000 Less premium paid for deposits 9,108,000 ---------- Net cash received by Tri Counties Bank for the deposits acquired $140,000,000 ============ Note C - Recently Issued Accounting Pronouncements In February of 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). The Company is required to adopt SFAS 128 in the fourth quarter of 1997 and at that time will restate earnings per share data for prior periods to conform with SFAS 128. Earlier application is not permitted. SFAS 128 replaces current earnings per share reporting requirements and requires a dual presentation of basic and diluted earnings per share. Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average common shares outstanding during the reported period. Diluted earnings per share reflects the potential dilution that could occur if common shares were issued pursuant to the exercise of options under the Bank's Stock Option Plans. Diluted earnings per share under SFAS 128 should not be significantly different than primary earnings per share currently reported for the periods. Pro forma amounts for basic and diluted earnings per share assuming SFAS 128 had been in effect for the three months ended March 31, 1997 and 1996 are as follows: Three months ended March 31, 1997 1996 Basic earnings per share $0.34 $0.39 Diluted earnings per share $0.32 $0.38 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 earned $1,564,000 for the first quarter ended March 31, 1997 versus $1,744,000 in the prior year. Fully diluted earnings per share were $0.32 versus $0.37. The 1997 first quarter pretax earnings were adversely impacted by startup costs related to the February 21, 1997 acquisition of deposits from nine branches formerly owned by Wells Fargo Bank, N.A. and higher quarter over quarter charge offs for credit cards and provisions for loan losses. As a result, first quarter 1997 pretax earnings decreased $436,000 to $2,555,000. Net interest income reflected growth of 18.1% to $8,350,000. The interest income component was up $2,253,000 (20.3%) due to higher quarter over quarter volume of both loans and securities and a 27 basis point increase in yields on securities. Average rates received on loans were lower by 78 basis points due primarily to the effect of lower rate mortgage loans acquired in the Sutter Buttes Savings Bank acquisition in the fourth quarter of last year. Interest expense increased $1,073,000 (23.7%) which was due entirely to increased volume of interest bearing liabilities as the overall rate on these liabilities was down only 6 basis points to 3.95%. Net interest margin was 5.14% for the first quarter of 1996 versus 5.29% in the prior year. A change in the asset and liability mix affected the net interest margin as the acquired deposits from Wells Fargo were invested in government securities and Sutter Buttes added mostly mortgage loans and time deposits. The net interest margin for 1997 will likely be somewhat lower than prior year levels until loan production replaces some of the investment securities. Noninterest income reflected growth of 43.0% to a total of $2,097,000 for the first quarter of 1997 over the prior year. The service charge and fee income portion increased 33.2% to $1,491,000 due to an increase in account volumes and selective fee increases made in June 1996. Other income increased from $347,000 in 1996 to $606,000 in 1997. Commissions on the sale of mutual funds and annuities accounted for $97,000 of the increase. Earnings on life insurance which funds supplemental retirement programs totaled $60,000 versus an expense of $33,000 in 1996. Noninterest expense increased $1,787,000 to $7,292,000 in the first quarter 1997 versus 1996. Direct costs related to the conversion of the nine Wells Fargo branches totaled $273,000. Operating costs for these branches during the quarter were $477,000 which includes $113,000 of core deposit and goodwill amortization. Salary and benefit expense not related to the nine branches, increased $394,000 or 13.3% on a quarter over quarter basis. The salary expense was higher due to increased staff from the Sutter Buttes acquisition, higher benefit costs and normal salary progression. Occupancy costs exclusive of the nine branches was $164,000 (19.0%) higher. Other expenses such as communications, telephone, ATM charges, office supplies, postage, promotion and advertising increased as a result of the Sutter Buttes and Wells Fargo branch acquisitions. Assets of the Company totaled $797,301,000 at March 31, 1997 which was an increase of $102,442,000 (14.8%) and $218,695,000 (37.8%) from the December 31, 1996 and March 31, 1996 ending balances, respectively. Changes in earning assets from the prior year quarter end balances included: an increase in loans of $100,040,000 to $429,615,000; and an increase in securities of $83,619,000 to $268,691,000. For the first quarter of 1997 the Company had an annualized return on assets of 0.85% and a return on equity of 10.19% versus 1.18% and 12.92% in 1996. TriCo Bancshares ended the quarter with a leverage ratio of 8.1%, a Tier 1 capital ratio of 10.5% and a total risk-based capital ratio of 11.7%. The following table provides a summary of the major elements of income and expense for the first quarter of 1997 compared with the first quarter of 1996. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share) Three months ended March 31, Percentage 1997 1996 Change (in thousands, except increase earnings per share) (decrease) Interest income $ 13,993 $ 11,629 20.3% Interest expense 5,608 4,535 23.7% -------------- -------------- Net interest income 8,385 7,094 18.2% Provision for loan losses 600 40 1400.0% -------------- -------------- Net interest income after 7,785 7,054 10.4% provision for loan losses Noninterest income 2,097 1,466 43.0% Noninterest expenses 7,292 5,505 32.5% -------------- -------------- Net income before income taxes 2,590 3,015 -14.1% Income taxes 991 1,247 -20.5% Tax equivalent adjustment1 35 24 46.8% -------------- -------------- Net income 1,564 1,744 -10.3% ============== ============== Primary earnings per common share 0.32 0.38 -15.8% 1Interest on tax-free securities is reported on a tax equivalent basis of 1.52 and 1.73 for March 31, 1997 and 1996 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. For the three months ended March 31, 1997, interest income increased $2,364,000 or 20.3% over the same period in 1996. The average balance of total earning assets was higher by $115,944,000 which was a 21.6% increase. The acquisition of Sutter Buttes Savings Bank in the fourth quarter of 1996 and the purchase of deposits from Wells Fargo Bank in February 1997 helped contribute to the increase in earning assets. The average balances of loans outstanding and securities increased $112,199,000 and $11,104,000, respectively. These two volume increases accounted for additional interest income of $3,006,000 and $158,000. These increases were offset in part by a $7,359,000 or 31.1% decrease in the average balance of Federal Funds sold which resulted in a reduction in interest income of $97,000. The average rate received on loans in the first quarter of 1997 was 9.94% which was a decrease of 78 basis points from the first quarter last year. Interest income was negatively affected by $838,000 because of the lower rate. The large number of mortgage loans in the Sutter Buttes portfolio were the major cause in lowering the average rate for loans. However, the average rate received on securities rose 27 basis points to 5.97% which accounted for an $134,000 increase in interest income. For the first quarter of 1997, interest expense increased by $1,073,000 or 23.7% over the year earlier period. Due to the two acquisitions, average balances of interest bearing liabilities increased in all categories from the previous year except for long-term debt. The higher volumes of interest bearing liabilities increased interest expense $1,215,000. The average rate paid on these liabilities decreased 6 basis points to 3.95% and accounted for a reduction of $142,000 in interest expense. The combined effect of the increase in both interest income and interest expense for the first quarter of 1997 versus 1996 resulted in an increase of $1,291,000 or 18.2% in net interest income. Net interest margin was down 15 basis points from 5.29% to 5.14%. Net interest margin is affected by the rates received on earning assets, the mix of products i.e. loans and securities within the assets, the yields paid on interest bearing liabilities and the mix within these liabilities. As a result of the two acquisitions, all four of these variables changed in the first quarter as compared to the first quarter of last year. Management expects the net interest margin will continue to be somewhat lower in 1997 until higher loan volume can replace investment securities. 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, 1997 versus the same period in 1996. TRICO BANCSHARES ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS (in thousands)
Three Months Ended March 31, 1997 March 31, 1996 Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loan 2,3 $ 431,800 $ 10,731 9.94% $ 319,601 $ 8,563 10.72% Securities 204,298 3,047 5.97% 193,194 2,755 5.70% Federal funds sold 16,289 215 5.28% 23,648 311 5.26% ------------- ------------ ------------- ------------ Total earning assets 652,387 13,993 8.58% 536,443 11,629 8.67% ------------ ------------ Cash and due from bank 40,981 29,661 Premises and equipment 15,511 13,337 Other assets,net 29,080 17,768 Less: allowance for loan losses (6,018) (5,593) ------------- ------------- Total $ 731,941 $ 591,616 ============= ============= Liabilities and shareholders' equity Interest-bearing Demand deposits $ 106,692 604 2.26% $ 84,662 476 2.25% Savings deposits 196,804 1,493 3.03% 166,043 1,266 3.05% Time deposits 237,228 3,112 5.25% 175,474 2,411 5.50% Federal funds purchased 2,854 39 5.47% - - Long-term debt 23,913 360 6.02% 26,054 382 5.86% ------------- ------------ ------------- ------------ Total interest-bearing liabilities 567,491 5,608 3.95% 452,233 4,535 4.01% ------------ ------------ Noninterest-bearing deposits 92,958 76,775 Other liabilities 9,669 8,598 Shareholders' equity 61,823 54,010 ------------- ------------- Total liabilities and shareholders' equity $ 731,941 $ 591,616 ============= ============= Net interest rate spread5 4.63% 4.66% Net interest income/net $ 8,385 $ 7,094 ============ ============= interest margin6 5.14% 5.29% ============ ============= 1 Average balances are computed principally on the basis of daily balances. 2 Nonaccrual loans are included. 3 Interest income on loans includes fees on loans of $576,000 in 1997 and $407,000 in 1996. 4 Interest income is stated on a tax equivalent basis of 1.52 and 1.73 at March 31, 1997 and 1996 respectively. 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 thousand) For the three months ended March 31, 1997 over 1996 Yield/ Volume Rate4 Total ------------ ------------- -------------- Increase (decrease) in interest income: Loans 1,2 $ 3,006 $ (838) $ 2,168 Investment securities3 158 134 292 Federal funds sold (97) 1 (96) ------------ ------------- -------------- Total 3,067 (703) 2,364 ------------ ------------- -------------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 124 4 128 Savings deposits 235 (8) 227 Time deposits 848 (147) 701 Federal funds purchased 39 0 39 Long-term debt (31) 9 (22) ------------ ------------- -------------- Total 1,215 (142) 1,073 ------------ ------------- -------------- Increase (decrease) in net interest income $ 1,852 $ (561) $ 1,291 ============ ============= ============== 1Nonaccrual loans are included. 2Interest income on loans includes fee income on loans of $576,000 in 1997 and $407,000 in 1996. 3Interest income is stated on a tax equivalent basis of 1.52 and 1.73 for March 31, 1997 and 1996 respectively. 4The rate/volume variance has been included in the rate variance. Provision for Loan Losses The Bank provided $600,000 for loan losses in the first quarter of 1997 versus $40,000 in the same period in 1996. Net charge offs for all loans in the first quarter of 1997 totaled $831,000 versus net recoveries of $85,000 in the year earlier period. Included in the charge-offs were credit card losses of $233,000 versus $41,000 in the first quarter of 1996. Selected other nonperforming loans were also charged off to clean up the portfolio. The loan growth recorded in 1996 requires an increase to the allowance for loan losses to cover potential losses as these loans age over time. Accordingly, management anticipates that loan loss provisions will continue at higher levels than were recorded in 1996 until a higher coverage ratio is attained. Noninterest Income Total noninterest income for the first quarter of 1997 increased $631,000 or 43.0% from the same period in 1996. Service charges and fees on deposit accounts increased 33.2% to $1,491,000 in the first quarter versus year ago results. This change is due to increases in account volumes mainly as a result of the previously mentioned acquisitions and selective fee increases made in June 1996. Other income was up from $347,000 in 1996 to $606,000 in 1997. Most of the change was related to a $97,000 increase in commissions on the sale of annuities and mutual funds and earnings of $60,000 on life insurance which funds supplemental retirement programs versus an expense of $33,000 in 1996. 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 $1,787,000 or 32.5% in the first quarter of 1997 versus the same period last year. Direct costs related to the conversion of the nine Wells Fargo branches totaled $273,000. Operating costs for these branches during the quarter were $477,000 which includes $113,000 of core deposit and goodwill amortization. Salary and benefit expense not related to the nine branches, increased $394,000 or 13.3% on a quarter over quarter basis. The salary expense was higher due to increased staff from the Sutter Buttes acquisition, higher benefit costs and normal salary progression. Occupancy costs exclusive of the nine branches was $164,000 (19.0%) higher. Costs in this category which had significant increases included; lease expense, premise and equipment repairs, depreciation on equipment and purchased equipment. Other expenses exclusive of direct costs related to the former Wells branches increased $438,000 (26.9%). Items such as computer communications, telephone, ATM charges, office supplies, postage, promotion and advertising reflected significant increases from the prior year quarter. Provision for Income Taxes The effective tax rate for the three months ended March 31, 1997 is 38.8% and reflects a decrease from 41.7% in the year earlier period. The decrease in tax rate is the result of higher nontaxable earnings from municipal bonds and life insurance on a smaller income base from the prior year first quarter. The Bank has been increasing its holdings of tax-exempt municipal bonds so the tax rate should be somewhat lower during 1997. Loans In the first quarter of 1997, loan balances decreased $9,674,000 or 2.2% from the year end balances mostly due to the seasonality of agriculture loans. Average loan balances for the quarter were $431,800,000 versus $319,601,000 in the same period last year. The quarter balances reflect the Sutter Buttes loans plus the internal growth during 1996. As compared to December 31, 1996 balances, commercial loans decreased $9.7 million; construction loans decreased $0.8 million; real estate loans decreased $0.4 million and consumer loans were up $1.2 million during the first quarter. Securities At March 31, 1997, securities held-to-maturity had a cost basis of $102,107,000 and an approximate fair value of $101,513,000. This portfolio contained mortgage-backed securities totaling $74,763,000 of which $33,438,000 were CMO's. The securities available-for-sale portfolio had a fair value of $166,584,000 and an amortized cost of $168,126,000. This portfolio contained mortgage-backed securities with an amortized cost of $25,069,000 of which $21,121,000 were CMO's. At December 31, 1996, securities held-to-maturity had a cost basis of $104,713,000 and an approximate fair value of $103,488,000. This portfolio contained mortgage-backed securities totaling $81,202,000 of which $33,936,000 were CMO's. The securities available-for-sale portfolio had a fair value of $65,316,000 and an amortized cost of $66,307,000. This portfolio contained mortgage-backed securities with an amortized cost of $30,260,000 of which $21,603,000 were CMO's. As a result of the cash received in the Wells Fargo deposit acquisition in the first quarter of 1997, the Bank implemented a plan to invest these funds in securities. During the quarter $110,000,000 was invested in U.S. Treasury securities with maturities from six months to 26 months. These monies will be used to fund anticipated loan growth. Additionally, $10,230,000 was invested in long-term municipal bonds for yield enhancement and tax benefit purposes. Nonperforming Loans As shown in the following table, total nonperforming assets have decreased about 19.0% to $8,467,000 in the first three months of 1997. At March 31, 1997 non performing assets represent 1.06% of total assets versus 1.5% at year end. Nonperforming loans decreased while OREO increased during this period. All nonaccrual loans are considered to be impaired when determining the valuation allowance under SFAS 114. Management implemented some new procedures during the quarter to improve the timeliness of identifying potential problem loans and the collection process. March 31, December 31, 1997 1996 Nonaccrual loans $ 6,672 $ 9,044 Accruing loans past due 90 days or more 248 20 Restructured loans (in compliance with modified terms) 0 0 ----------- ----------- Total nonperforming loans 6,920 9,064 Other real estate owned 1,547 1,389 ----------- ----------- Total nonperforming assets $ 8,467 $ 10,453 =========== =========== Nonincome producing investments in real estate held by Bank's real estate development subsidiary $ 1,227 $ 1,173 =========== =========== Nonperforming loans to total loans 1.61% 2.06% Allowance for loan losses to nonperforming loans 85% 67% Nonperforming assets to total assets 1.06% 1.50% Allowance for loan losses to nonperforming assets 69% 58% 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, 1997 1996 (in thousands) Balance, beginning of period $ 6,097 $ 5,580 Provision charged to operations 600 40 Loans charged off (861) (123) Recoveries of loans previously charged off 30 209 =================== ================== Balance, end of period $ 5,866 $ 5,706 =================== ================== Ending loan portfolio $ 429,615 $ 329,575 =================== ================== Allowance to loans as a percentage of ending loan portfolio 1.37% 1.73% =================== ================== 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, 1997: Total Capital to Risk Weighted Assets $58,467 11.67% =>$40,085 =>8.0% =>$50,106 =>10.0% Tier I Capital to Risk Weighted Assets $52,601 10.50% =>$20,042 =>4.0% =>$30,063 => 6.0%
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. 11.1 Computation of earnings per share. 22.1 Tri Counties Bank, a California banking corporation, is the only subsidiary of Registrant. (b) Reports on Form 8-K: 1. 8-K filed February 21, 1997 for the purchase of nine branches from Wells Fargo Bank, N.A. No financial statements were required to be 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 May 5, 1997 /s/Robert H. Steveson --------------------- ----------------------- Robert H. Steveson President and Chief Executive Officer Date May 5, 1997 /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 ended March 31, 1997 1996 Shares used in the computation of earnings per share: Weighted daily average of shares outstanding 4,641,833 4,465,927 Shares used in the computation of primary earnings per shares 4,821,344 4,646,490 ============== ============== Shares used in the computation of fully diluted earnings per share 4,839,246 4,668,500 ============== ============== Net income used in the computation of earnings per common share $ 1,564 $ 1,744 ============== ============== Primary earnings per common share $ 0.32 $ 0.38 ============== ============== Fully diluted earnings per common share $ 0.32 $ 0.37 ============== ============== EX-27 3 EX-27
9 0000356171 TRICO BANCSHARES 1,000 3-MOS DEC-31-1997 MAR-31-1997 47,665 599,014 7,000 0 166,584 102,107 101,513 423,749 5,866 797,301 703,378 0 11,280 21,278 0 0 47,737 13,628 797,301 10,731 3,012 215 13,958 5,209 5,608 8,350 600 0 7,292 2,555 0 0 0 1,564 0.32 0.32 8.58 6,672 248 0 0 6,097 861 30 5,866 5,866 0 0
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