-----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, J6BqLZIKgSjeyjNf5f5Og/RgPH0d/7Eh0v1rPfgziCmHVgXilmbc7vod2ko8o2DM rcmQNst03dsmH/PPCQwi0Q== 0000356171-98-000003.txt : 19980514 0000356171-98-000003.hdr.sgml : 19980514 ACCESSION NUMBER: 0000356171-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: SEC FILE NUMBER: 000-10661 FILM NUMBER: 98617672 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, 1998 Commission file number 0-10661 - -------------------------------- ------------------------------ TRICO BANCSHARES (Exact name of registrant as specified in its charter) California 94-2792841 - ----------------------------- ---------------------- (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 63 Constitution Drive, Chico, California 95973 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 530/898-0300 - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Class: Common stock, no par value Outstanding shares as of May 12, 1998: 4,675,192 TRICO BANCSHARES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
March 31, December 31, 1998 1997 ----------------- ----------------- Assets: Cash and due from banks $ 33,572 $ 48,476 Federal funds sold and repurchase agreements 2,000 15,000 ----------------- ----------------- Cash and cash equivalents 35,572 63,476 Securities held-to-maturity (approximate fair value $86,535 and $88,950) 86,622 90,764 Securities available-for-sale, net of unrealized gain of $370 and $480 188,026 175,753 Loans, net of allowance for loan losses of $(6,784) and $(6,459) 461,371 442,508 Premises and equipment, net 18,056 18,901 Investment in real estate properties 449 856 Other real estate owned 1,335 2,230 Accrued interest receivable 5,496 5,701 Other assets 25,495 25,976 ----------------- ----------------- Total assets $ 822,422 $ 826,165 ================= ================= Liabilities: Deposits Noninterest-bearing demand $ 114,739 $ 122,069 Interest-bearing demand 132,833 130,958 Savings 213,572 216,402 Time certificates 267,861 254,665 ----------------- ----------------- Total deposits 729,005 724,094 Federal funds purchased - 15,300 Repurchase agreements 3,300 - Accrued interest payable and other liabilities 12,344 10,207 Long term borrowings 11,436 11,440 ----------------- ----------------- Total liabilities 756,085 761,041 Shareholders' equity: Common stock 48,221 48,161 Retained earnings 18,140 16,956 Unrealized gain(loss) on securities available-for-sale, net (24) 7 ----------------- ----------------- Total shareholders' equity 66,337 65,124 ----------------- ----------------- Total liabilities and shareholders' equity $ 822,422 $ 826,165 ================= =================
TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands except earnings per common share) For the three months ended March 31, 1998 1997 -------------- ------------- Interest income: Interest and fees on loans $ 11,321 $ 10,731 Interest on investment securities-taxable 3,630 2,944 Interest on investment securities-tax exempt 248 68 Interest on federal funds sold 66 215 -------------- ------------- Total interest income 15,265 13,958 -------------- ------------- Interest expense: Interest on deposits 5,712 5,209 Interest on federal funds purchased 4 39 Interest on repurchase agreements 53 - Interest on other borrowings 169 360 -------------- ------------- Total interest expense 5,938 5,608 -------------- ------------- Net interest income 9,327 8,350 Provision for loan losses 825 600 -------------- ------------- Net interest income after provision for loan losses 8,502 7,750 Noninterest income: Service charges and fees 1,882 1,491 Other income 1,124 606 -------------- ------------- Total noninterest income 3,006 2,097 -------------- ------------- Noninterest expenses: Salaries and related expenses 4,187 3,576 Other, net 4,200 3,716 -------------- ------------- Total noninterest expenses 8,387 7,292 -------------- ------------- Net income before income taxes 3,121 2,555 Income taxes 1,191 991 -------------- ------------- Net income 1,930 1,564 Basic earnings per common share $ 0.41 $ 0.34 ============== ============= Diluted earnings per common share $ 0.40 $ 0.32 ============== ============= TRICO BANCSHARES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) (in thousands, except number of shares)
Common stock Unrealized ------------------------------- Gain/(Loss) Number Retained on Securities, of shares Amount earnings Net Total --------------- ------------- ------------- ----------------- ------------ Balance, December 31, 1997 4,662,649 $ 48,161 $ 16,956 $ 7 $ 65,124 Exercise common stock options 2,100 19 $ 19 Common stock cash dividends (746) $ (746) Change in unrealized (loss) on securities (31) $ (31) Stock option amortization 41 $ 41 Net income 1,930 $ 1,930 --------------- ------------- ------------- ----------------- ------------ Balance, March 31, 1998 4,664,749 $ 48,221 $ 18,140 $ (24) $ 66,337 =============== ============= ============= ================= ============
TRICO BANCSHARES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the three months ended March 31, 1998 1997 --------------- -------------- Operating activities: Net income $1,930 $1,564 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 825 600 Provision for losses on other real estate owned 38 10 Depreciation and amortization 628 492 Amortization of intangible assets 335 185 Accretion of investment security discounts (162) (10) Deferred income taxes (36) 4,452 Investment security (gains) losses (net) (80) - (Gain) loss on sale of OREO (25) (14) (Gain) loss on sale of loans (215) (17) (Gain) loss on sale of fixed assets 38 (6) Amortization of stock options 41 52 (Increase) decrease in interest receivable 205 (160) Increase (decrease) in interest payable 54 1,388 (Increase) decrease in other assets and liabilities 2,274 (3,708) --------------- -------------- Net cash provided by operating activities $5,850 $4,828 --------------- -------------- Investing activities: Proceeds from maturities of securities held-to-maturity 4,191 2,643 Proceeds from maturities of securities available-for-sale 53,091 15,230 Proceeds from sales of securities available-for-sale 15,079 - Purchases of securities available-for-sale (80,298) (117,036) Proceeds from sale of fixed asset 173 9 Net (increase) decrease in loans (18,049) 8,792 Purchases of premises and equipment (982) (1,137) Proceeds from sale of OREO 882 97 Purchases and additions to real estate properties (21) (54) --------------- -------------- Net cash used by investing activities (25,934) (91,456) --------------- -------------- Financing activities: Net increase (decrease) in deposits 4,911 97,667 Net increase (decrease) in Fed funds purchased (15,300) (4,900) Net increase (decrease) in repurchase agreements 3,300 - Payments of principal on long-term debt agreements (4) (3,003) Cash dividends - Common (746) (735) Exercise of common stock options 19 33 --------------- -------------- Net cash provided by financing activities (7,820) 89,062 --------------- -------------- Increase (decrease) in cash and cash equivalents (27,904) 2,434 Cash and cash equivalents at beginning of year 63,476 52,231 --------------- -------------- Cash and cash equivalents at end of year $35,572 $54,665 =============== ============== Supplemental information Cash paid for taxes $280 - Cash paid for interest expense $5,884 $4,220
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, 1998 and 1997 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, 1997. Note B - Comprehensive Income As of January 1, 1998, the Company adopted FASB Statement of Financial Accounting Standards No 130, Reporting Comprehensive Income, (SFAS 130). This statement established standards for the reporting and display of comprehensive income and its components in the financial statements. For the Company comprehensive income includes net income reported on the statement of income and changes in the fair value of its available-for-sale investments reported as a component of shareholder's equity. The following table presents net income adjusted by the change in unrealized gains or losses on the available-for-sale investments as a component of comprehensive income (in thousands). Three months ended March 31, 1998 1997 Net income $ 1,930 $ 1,564 Net change in unrealized gains (losses) on available-for-sale investments (31) (326) --------- --------- Comprehensive income $ 1,899 $ 1,238 ========= ========= 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 $1,930,000, a 23% increase, for the first quarter ended March 31, 1998 versus $1,564,000 in the first quarter of 1997. Diluted earnings per share were $0.40 versus $0.32. Factors contributing to the improved operating results included growth in both the loan and securities portfolios and higher noninterest income. Gains in these areas were offset in part by a higher provision for loan losses and increases in noninterest expenses. As the acquisition of deposits and operations of nine branches formerly owned by Wells Fargo Bank, N.A. "Wells" took place on February 21, 1997, the 1998 first quarter operating results include nearly two months additional operational income and costs for those branches as compared to 1997 first quarter results. First quarter 1997 noninterest expenses included one time acquisition costs of $273,000 or $0.03 per share. First quarter 1998 pretax earnings increased $566,000 to $3,121,000 compared to the first quarter of 1997. Net interest income reflected growth of 11.7% to $9,327,000. The interest income component was up $1,307,000 (9.4%) due to higher quarter over quarter volume of both loans and securities. A large portion of the increase in securities average balance was due to the investment of proceeds from the Wells branch deposits. Average yields on both loans and securities were up slightly in the first quarter of 1998. Interest expense increased $330,000 (5.9%) which was due to increased volume of interest bearing liabilities. The average rate paid on interest bearing liabilities decreased 11 basis points to 3.84%. Net interest margin was up slightly to 5.22% for the first quarter of 1998 versus 5.14% in the prior year. Given a stable interest rate environment and continuing loan growth, management would expect net interest margin to improve slightly for the remainder of 1998. Provision for loan losses for the first quarter of 1998 was $825,000 which was $225,000 higher than in the same quarter in 1997. The higher provision was made to cover loan growth and to increase the allowance for loan losses. Noninterest income reflected growth of $909,000 (43.4%) to a total of $3,006,000 for the first quarter of 1998 over the prior year. The service charge and fee income portion increased $391,000 to $1,882,000 due to an increase in account volumes and new ATM fees imposed on non-Bank customers. Other income increased from $606,000 in 1997 to $1,124,000 in 1998. The sale of mortgage loans originated in the first quarter added $198,000 which was the largest single factor in the increase. The Company also realized gains of $80,000 on the sale of investment securities in 1998 versus none in 1997. Commissions on the sale of mutual funds and annuities increased $66,000 to total $458,000. Noninterest expense increased $1,095,000 to $8,387,000 in the first quarter 1998 versus 1997. Salary and benefit expense increased $611,000 or 17.1% on a quarter over quarter basis. The salary expense was higher due to increased staff from the Wells branch acquisition, higher benefit costs and normal salary progression. Occupancy costs increased $151,000 due mostly to higher depreciation relating to equipment for the acquired branches and upgraded technology. Other expenses such as communications, telephone, ATM charges, courier service and postage, costs were higher as a result of the 1997 Wells branch acquisitions. The amortization of intangible assets related to the Wells branches added $149,000 of expense in the first quarter of 1998. Assets of the Company totaled $822,422,000 at March 31, 1998 which was a decrease of $3,743,000 from the December 31, 1997 total and a $25,121,000 increase from the March 31, 1997 ending balances. For the first quarter of 1998 the Company had an annualized return on assets of 0.96% and a return on equity of 11.66% versus 0.85% and 10.12% in 1997. TriCo Bancshares ended the quarter with a Tier 1 capital ratio of 10.7% and a total risk-based capital ratio of 12.0%. The following table provides a summary of the major elements of income and expense for the first quarter of 1998 compared with the first quarter of 1997. TRICO BANCSHARES CONDENSED COMPARATIVE INCOME STATEMENT (in thousands, except earnings per common share) Three months ended March 31, Percentage 1998 1997 Change (in thousands, except increase earnings per share) (decrease) Interest income $ 15,394 $ 13,993 10.0% Interest expense 5,938 5,608 5.9% ---------- ---------- Net interest income 9,456 8,385 12.8% Provision for loan losses 825 600 37.5% ---------- ---------- Net interest income after 8,631 7,785 10.9% provision for loan losses Noninterest income 3,006 2,097 43.3% Noninterest expenses 8,387 7,292 15.0% ---------- ---------- Net income before income taxes 3,250 2,590 25.5% Income taxes 1,191 991 20.2% Tax equivalent adjustment1 129 35 264.7% ---------- ---------- Net income 1,930 1,564 23.4% ========== ========== Diluted earnings per common share 0.40 0.32 25.0% 1Interest on tax-free securities is reported on a tax equivalent basis of 1.52 and 1.52 for March 31, 1998 and 1997 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. Net interest income and net interest margin comparisons between the first quarters of 1998 and 1997 are influenced by the inclusion of three months of operations in 1998 of the nine branches purchased from Wells on February 21, 1997, compared to the inclusion of just over one month of such operations in 1997. For the three months ended March 31, 1998, interest income increased $1,401,000 or 10.0% over the same period in 1997. The average balance of total earning assets was higher by $72,781,000 which was an 11.2% increase. The average balances of loans and securities outstanding increased $21,732,000 (5.0%) and $62,881,000 (30.8%), respectively, while Federal Funds sold decreased $11,382,000 (72.6%). The loan and securities volume increases accounted for additional interest income of $540,000 and $938,000 respectively. The decrease in the average balance of Federal Funds sold resulted in a reduction in interest income of $156,000. The average yields on loans, securities and Federal Funds sold were higher by 4, 3 and 64 basis points respectively, adding $79,000 to interest income for the quarter. Nevertheless, the overall yield on earning assets fell 9 basis points to 8.49% as securities, which have lower yields than loans, made up a higher percentage of the earning assets. For the first quarter of 1998, interest expense increased by $330,000 or 5.9% over the year earlier period. Average balances of all deposit categories and short term borrowings were $62,976,000 higher for the first quarter of 1998 versus year earlier balances. Long-term debt average balance was $12,475,000 lower. All of the increase in interest expense was the result of the higher balances, offset in part by a decrease in the average rate paid on interest bearing liabilities by 11 basis points to 3.84%. The combined effect of the increase in both interest income and interest expense for the first quarter of 1998 versus 1997 resulted in an increase of $1,071,000 or 12.8% in net interest income. Net interest margin was up 8 basis points from 5.14% to 5.22%. Management expects the net interest margin to move higher during the balance of 1998 to the extent the Bank is successful in replacing some of the investment portfolio with higher yielding loans. 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, 1998 versus the same period in 1997. TRICO BANCSHARES ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS (in thousands)
Three Months Ended March 31, 1998 March 31, 1997 -------------- -------------- Average Income/ Yield/ Average Income/ Yield/ Balance1 Expense Rate Balance1 Expense Rate Assets Earning assets Loan 2,3 $ 453,532 $ 11,321 9.98% $ 431,800 $ 10,731 9.94% Securities 267,179 4,007 6.00% 204,298 3,047 5.97% Federal funds sold 4,457 66 5.92% 16,289 215 5.28% ------------- ------------- ----------- ------------- ------------ ----------- Total earning assets 725,168 15,394 8.49% 652,387 13,993 8.58% ------------- ------------ Cash and due from bank 32,670 40,981 Premises and equipment 18,985 15,511 Other assets,net 34,419 29,080 Less: allowance for loan losses (6,621) (6,018) ------------- ------------- Total $ 804,621 $ 731,941 ============= ============= Liabilities and shareholders' equity Interest-bearing Demand deposits $ 133,610 748 2.24% $ 106,692 604 2.26% Savings deposits 217,184 1,648 3.04% 196,804 1,493 3.03% Time deposits 251,803 3,316 5.27% 237,228 3,112 5.25% Fed funds purchased 235 4 6.81% 2,854 39 5.47% Repurchase agreements 3,722 53 5.70% - - - Long-term debt 11,438 169 5.91% 23,913 360 6.02% ------------- ------------- ----------- ------------- ------------ ----------- Total interest-bearing liabilities 617,992 5,938 3.84% 567,491 5,608 3.95% ------------- ------------ Noninterest-bearing deposits 109,581 92,958 Other liabilities 10,845 9,669 Shareholders' equity 66,203 61,823 ------------- ------------- Total liabilities and shareholders' equity $ 804,621 $ 731,941 ============= ============= Net interest rate spread5 4.65% 4.63% Net interest income/net $ 9,456 $ 8,385 ============= ============ interest margin6 5.22% 5.14% ============= ============ 1Average balances are computed principally on the basis of daily balances. 2Nonaccrual loans are included. 3Interest income on loans includes fees on loans of $627,000 in 1998 and $576,000 in 1997. 4Interest income is stated on a tax equivalent basis of 1.52 and 1.52 at March 31, 1998 and 1997 respectively. 5Net interest rate spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. 6Net interest margin is computed by dividing net interest income by total average earning assets.
TRICO BANCSHARES ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE (in thousand) For the three months ended March 31, 1998 over 1997 Yield/ Volume Rate4 Total --------- ----------- ----------- Increase (decrease) in interest income: Loans 1,2 $ 540 $ 50 $ 590 Investment securities3 938 22 960 Federal funds sold (156) 7 (149) --------- --------- ---------- Total 1,322 79 1,401 --------- --------- ---------- Increase (decrease) in interest expense: Demand deposits (interest-bearing) 152 (8) 144 Savings deposits 155 - 155 Time deposits 191 13 204 Federal funds purchased (36) 1 (35) Repurchase agreements 53 - 53 Long-term debt (188) (3) (191) --------- -------- ---------- Total 327 3 330 --------- -------- ---------- Increase (decrease) in net interest income $ 995 $ 76 $ 1,071 ========= ======== ========== 1Nonaccrual loans are included. 2Interest income on loans includes fee income on loans of $627,000 in 1998 and $576,000 in 1997. 3Interest income is stated on a tax equivalent basis of 1.52 and 1.52 for March 31, 1998 and 1997 respectively. 4The rate/volume variance has been included in the rate variance. Provision for Loan Losses The Bank provided $825,000 for loan losses in the first quarter of 1998 versus $600,000 in 1997. Net charge-offs for all loans in the first quarter of 1998 totaled $500,000 versus $831,000 in the year earlier period. The higher provision for 1998 was made to cover loan growth and to increase the overall coverage to nonperforming loans. In the first quarter of 1998, net charge offs of credit cards totaled $262,000 versus $233,000 in the year earlier period. As of May 1, 1998, the Bank sold its credit card portfolio and is no longer liable for charge offs in that portfolio. For all of 1997, net credit card charge offs totaled $958,000 which was 36.3% of the total charge offs for the year. Management anticipates the level of the monthly provision should decrease as a result of the sale of the credit card portfolio. Noninterest Income Total noninterest income for the first quarter of 1998 increased $909,000 or 43.4% from the same period in 1997. Service charges and fees on deposit accounts increased 26.2% to $1,882,000 in the first quarter versus year ago results. This change is due to increases in account volumes mainly as a result of the nine branch acquisition in 1997 and newly implemented ATM fees imposed on non-bank customers. Other income was up from $606,000 in 1997 to $1,124,000 in 1998. Gains on sales of securities contributed $80,000. Real estate mortgage production increased substantially from the prior year with the result that gains on sale of those loans amounted to $215,000 versus $17,000 in the first quarter of 1997. Nonrecurring miscellaneous income was $126,000 higher in 1998. 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 $1,095,000 or 15.0% in the first quarter of 1998 versus the same period last year. One time direct costs related to the conversion of the nine Wells branches totaled $273,000 in 1997. Salary and benefit expense increased $611,000 or 17.1% on a quarter over quarter basis. The salary expense was higher due to increased staff from the 1997 Wells branch acquisition, higher benefit costs and normal salary progression. Occupancy costs increased $151,000 mostly due to higher depreciation relating to equipment for the acquired branches and upgraded technology. Other expenses such as computer communications, telephone, ATM charges, courier service and postage were higher as a result of the branch acquisition. Amortization of intangible assets related to the Wells branches added $149,000 of expense in the first quarter of 1998. Provision for Income Taxes The effective tax rate for the three months ended March 31, 1998 is 38.2% and reflects a decrease from 38.8% in the year earlier period. The decrease in tax rate is the result of higher nontaxable earnings from municipal bonds. The Bank has been increasing its holdings of tax-exempt municipal bonds so the tax rate should continue to be somewhat lower during 1998. Loans In the first quarter of 1998, loan balances increased $19,188,000 or 4.3% from the year end balances. Both commercial and real estate loans increased while there was a slight decrease in consumer loans. At March 31, 1998 loans totaled $468,155,000 which was a $38,540,000 (9.0%) increase from the year earlier totals. Subsequent to March 31, 1998 the Bank sold its credit card portfolio which at March 31, 1998 had outstanding balances of $14,423,000. The Bank expects to record a net gain of approximately $725,000 related to the sale in the second quarter of 1998. Securities At March 31, 1998, securities held-to-maturity had a cost basis of $86,622,000 and an approximate fair value of $86,535,000. This portfolio contained mortgage-backed securities totaling $64,244,000 of which $25,320,000 were collateralized mortgage obligations (CMO's). The securities available-for-sale portfolio had a fair value of $188,026,000 and an amortized cost of $187,656,000. This portfolio contained mortgage-backed securities with an amortized cost of $58,177,000 of which $19,915,000 were CMO's. Nonperforming Loans As shown in the following table, total nonperforming assets have decreased 18.7% to $6,081,000 in the first three months of 1998. Non performing assets represent only 0.74% of total assets. Both nonaccrual loans and OREO decreased during this period. All nonaccrual loans are considered to be impaired when determining the valuation allowance under SFAS 114. The collections department personnel continue to make a concerted effort to work problem and potential problem loans to reduce risk of loss. March 31, December 31, 1998 1997 Nonaccrual loans $ 4,529 $ 4,721 Accruing loans past due 90 days or more 217 528 Restructured loans (in compliance with modified terms) 0 0 --------- ---------- Total nonperforming loans 4,746 5,249 Other real estate owned 1,335 2,230 --------- ---------- Total nonperforming assets $ 6,081 $ 7,479 ========= ========== Nonincome producing investments in real estate held by Bank's real estate development subsidiary $ 449 $ 856 ========= ========== Nonperforming loans to total loans 1.01% 1.17% Allowance for loan losses to nonperforming loans 143% 123% Nonperforming assets to total assets 0.74% 0.91% Allowance for loan losses to nonperforming assets 112% 86% 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, 1998 1997 (in thousands) Balance, beginning of period $ 6,459 $ 6,097 Provision charged to operations 825 600 Loans charged off (556) (861) Recoveries of loans previously charged off 56 30 =============== =============== Balance, end of period $ 6,784 $ 5,866 =============== =============== Ending loan portfolio $ 468,155 $ 429,615 =============== =============== Allowance to loans as a percentage of ending loan portfolio 1.45% 1.37% =============== =============== 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, 1998: Total Capital to Risk Weighted Assets $64,528 11.96% =>$43,146 =>8.0% =>$53,933 =>10.0% Tier I Capital to Risk Weighted Assets $57,794 10.72% =>$21,573 =>4.0% =>$32,360 => 6.0%
Item 3. MARKET RISK MANAGEMENT There have not been any significant changes in the risk management profile of the Bank since December 31, 1997. 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: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRICO BANCSHARES Date May 12, 1998 /s/ Robert H. Steveson -------------------- -------------------------- Robert H. Steveson President and Chief Executive Officer Date May 12, 1998 /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, 1998 1997 Shares used in the computation of earnings per share: Shares used in the computation of basic earnings per share 4,659,029 4,641,833 =============== ================ Shares used in the computation of diluted earnings per share 4,851,658 4,821,344 =============== ================ Net income used in the computation of earnings per common share $ 1,930 $ 1,564 =============== ================ Basic earnings per common share $ 0.41 $ 0.34 =============== ================ Diluted earnings per common share $ 0.40 $ 0.32 =============== ================ EX-27 3 EX-27
9 0000356171 TRICO BANCSHARES 1,000 3-MOS DEC-31-1998 MAR-31-1998 33,572 614,266 2,000 0 188,026 86,622 86,535 468,155 6,784 822,422 729,005 3,300 12,344 11,436 0 0 48,221 18,116 822,422 11,321 3,878 66 15,265 5,712 5,938 9,327 825 80 8,387 3,121 3,121 0 0 1,930 0.41 0.40 8.49 4,529 217 0 0 6,459 556 56 6,784 6,784 0 0
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