TriCo Bancshares (NASDAQ: TCBK) (the "Company"), parent company of Tri Counties Bank (the ?Bank?), today announced a quarterly earnings of $3,126,000 for the quarter ended December 31, 2010. This compares with earnings of $2,313,000 the Company reported for the quarter ended December 31, 2009. Diluted earnings per share for the quarter ended December 31, 2010 was $0.20 compared to diluted earnings per share of $0.14 for the quarter ended December 31, 2009. Diluted earnings per share for the year ended December 31, 2010 and 2009 were $0.37 and $0.62, respectively, on earnings of $6,005,000 and $9,962,000, respectively.

Included in the Company's results for the three and twelve month periods ended December 31, 2010 is the acquisition of the banking operations of Granite Community Bank (?Granite?), Granite Bay, California from the FDIC under a whole bank purchase and assumption agreement with loss sharing on May 28, 2010 by Tri Counties Bank. The assets acquired and liabilities assumed in the Granite acquisition have been accounted for under the acquisition method of accounting (formerly the purchase method). The acquired loan portfolio and foreclosed assets are referred to as ?covered loans? and ?covered foreclosed assets?, respectively. Collectively these balances are referred to as ?covered assets?.

Total assets of the Company increased $19,269,000 (0.9%) to $2,189,789,000 at December 31, 2010 from $2,170,520,000 at December 31, 2009. Total loans of the Company decreased $80,640,000 (5.4%) to $1,419,571,000 at December 31, 2010 from $1,500,211,000 at December 31, 2009. The decrease in loans is net of $64,802,000 of loans acquired in the Granite acquisition. Total deposits of the Company increased $23,661,000 (1.3%) to $1,852,173,000 at December 31, 2010 from $1,828,512,000 at December 31, 2009. The increase in deposits is net of $95,001,000 of deposits acquired in the Granite acquisition on May 28, 2010, and a $70,000,000 decrease in certificates of deposit issued to the State of California during the fourth quarter of 2010.

The following is a summary of the components of net income for the periods indicated (dollars in thousands):

     

 

Three months ended

 

 

December 31,

 

2010

        2009  
Net Interest Income $ 22,591     $ 22,469
Provision for loan losses (8,144 ) (7,800 )
Noninterest income 9,881 7,925
Noninterest expense (19,470 ) (19,528 )
Benefit (provision) for income taxes   (1,732 )       (753 )
Net income $ 3,126       $ 2,313  
 

Net interest income for the three months ended December 31, 2010 was $22,591,000, an increase of $122,000 or 0.5% compared to the same period in 2009. The increase in net interest income was attributable to a $119,488,000 or 6.0% increase in the average balance of total interest-earning assets that was partially offset by a decrease in fully tax-equivalent (FTE) net interest margin to 4.30% during the three months ended December 31, 2010 from 4.55% during the year-ago quarter. The decrease FTE net interest margin was mainly due to a change in the mix of interest-earning assets, with average loan balances decreasing and other categories of lower yielding assets increasing.

The following table details the components of the net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the three months ended December 31, 2010 and 2009:

             
Quarter ended December 31, 2010           Quarter ended December 31, 2009
Average         Yield/ Average         Yield/
(Dollars in thousands) Balance     Income     Rate           Balance     Income     Rate
Assets:
Loans $ 1,443,603 $ 23,070 6.39 % $ 1,508,472 $ 24,356 6.46 %
Securities 297,971 2,391 3.21 % 232,881 2,745 4.71 %
Cash at Fed and other banks $ 365,925   252   0.28 % $ 246,658   154   0.25 %
Total earning assets $ 2,107,499   25,713   4.88 % 1,988,011   27,255   5.48 %

 

Other assets   127,972   147,611
Total assets   2,235,471   2,135,622
Liabilities and shareholders' equity:
Interest-bearing demand
deposits $ 393,356 $ 459 0.47 % $ 339,924 $ 709 0.83 %
Savings deposits 580,451 449 0.31 % 484,638 762 0.63 %
Time deposits 515,809 1,200 0.93 % 597,091 2,254 1.51 %
Junior sub debt 41,238 320 3.10 % 41,238 319 3.09 %
Other borrowings   63,040   608   3.86 %   69,593   617   3.55 %
Total interest-bearing
liabilities $ 1,593,894   3,036   0.76 % 1,532,484   4,661   1.22 %
Noninterest-bearing
deposits 405,390 362,618
Other liabilities 32,475 35,264
Shareholders' equity 203,712 205,256
Total liabilities and    
shareholders' equity $ 2,235,471 $ 2,135,622
Net interest rate spread 4.12 % 4.27 %
Net interest income/net
interest margin (FTE) $ 22,677   4.30 % $ 22,594   4.55 %

 

FTE adjustment   (86 )   (125 )
Net interest income before FTE adjustment $ 22,591   $ 22,469  

 

 

The provision for loan losses was $8,144,000 for the three months ended December 31, 2010, compared to $7,800,000 for the three months ended December 31, 2009. The increases in the provision for loan losses for the three months ended December 31, 2010 as compared to the same period in 2009 was primarily the result of changes in the make-up of the loan portfolio and the Bank's loss factors in reaction to increased losses in the construction, commercial real estate, commercial & industrial (C&I), home equity and auto indirect loan portfolios. Management re-evaluates its loss ratios and assumptions quarterly and makes changes as appropriate based upon, among other things, changes in loss rates experienced, collateral support for underlying loans, changes and trends in the economy, and changes in the loan mix.Included in the provision for loan losses for the three months ended December 31, 2010 is $1,394,000 related to loans covered under FDIC loss sharing agreements that was substantially offset by a $1,294,000 increase in the FDIC loss-share indemnification asset recorded in noninterest income.

Noninterest income for the three months ended December 31, 2010 was $9,881,000, an increase of $1,956,000, or 24.7%, as compared to the same period in 2009. The following table presents the key components of noninterest income for the three months ended December 31, 2010 and 2009:

   

Three months ended December 31,

            Change       Change
(dollars in thousands)   2010         2009         Amount       Percent
Service charges on deposit accounts $ 3,510 $ 4,153 ($643 ) (15.5 %)
ATM fees and interchange revenue 1,601 1,317 284 21.6 %
Other service fees 378 402 (24 ) (6.0 %)
 
Mortgage servicing fees 358 306 52 17.0 %
Change in value of mortgage servicing rights 198 (235 ) 433
Gain on sale of loans 1,394 673 721 107.1 %
 
Commissions on sale of nondeposit investment products 342 271 71 (26.2 %)
Increase in cash value of life insurance 569 1,059 (490 ) (46.3 %)
Gain (loss) on disposition of foreclosed assets 156 - 156
Change in FDIC loss-share indemnification asset 1,294 - 1,294
Other noninterest income   81         (21 )         102          
Total noninterest income $ 9,881       $ 7,925         $ 1,956         24.7 %
 

The decrease in service charges in the three months ended December 31, 2010 over the same period in 2009 is mainly due to new overdraft regulations that became effective on July 1, 2010 and caused a decrease in non-sufficient funds fees. ATM fees and interchange revenue increased due to increased customer point-of-sale transactions that are the result of incentives for such usage. Other service fees increase mainly due to increased loan servicing fees from higher balances of loans being serviced. Change in value of mortgage servicing rights increased primarily due to increased residential mortgage rates at the end of the quarter that are expected to decrease the pace of future mortgage refinancing that in turn increase the value of mortgage servicing rights. Gain on sale of loans increased due to increased mortgage refinancing activity when compared to prior year similar periods. The reduction in increase in cash value of life insurance is primarily due to unusually high earnings rates from such insurance policies during the fourth quarter of 2009. The large contribution from change in FDIC loss-share is due to increased actual and estimated losses related to loans covered under FDIC loss sharing agreements that occurred during the fourth quarter of 2010.

Noninterest expense for the three months ended December 31, 2010 was $19,470,000, a decrease of $58,000, or 0.3%, as compared to the same period in 2009. The following table presents the key components of noninterest expense for the three months ended December 31, 2010 and 2009:

                   
Three months ended December 31, Change Change
(dollars in thousands)   2010     2009 Amount Percent
Salaries and benefits expense:
Base salaries net of deferred origination costs $ 7,160 $ 7,031 $ 129 1.8 %
Incentive compensation expense 478 308 170 55.2 %
Benefits and other compensation costs   2,434     2,350 84 3.6 %
Total salaries and benefits expense   10,072     9,689 383 4.0 %
Other noninterest expense:
Equipment and data processing 1,613 1,804 (191 ) (10.6 %)
Occupancy 1,457 1,276 181 14.2 %
Advertising 702 706 (4 ) (0.6 %)
ATM network charges 475 687 (212 ) (30.9 %)
Telecommunications 456 496 (40 ) (8.1 %)
Professional fees 396 571 (175 ) (30.6 %)
Courier service 222 221 1 0.5 %
Postage 217 226 (9 ) (4.0 %)
Intangible amortization 85 65 20 30.8 %
Operational losses 103 90 13 14.4 %
Assessments 833 1,465 (632 ) (43.1 %)
Change in reserve for unfunded commitments (200 ) - (200 )
Provision for foreclosed asset losses 336 33 303 918.2 %
Foreclosed assets expense 601 100 501 501.0 %
Other   2,102     2,099 3 0.1 %
Total other noninterest expense $ 9,398     9,839 (441 ) (4.5 %)
Total noninterest expense $ 19,470   $ 19,528 ($58 ) (0.3 %)
 
Average full time equivalent employees 677 658 19 2.9 %
 

Salaries and related benefits increased $383,000, or 4.0% in the three months ending December 31, 2010, as compared to the same period in the prior year. The increase was due to very low incentive compensation in all product lines during the fourth quarter of 2009, and a 2.9% percent increase in average full time equivalent staff, primarily in new branches and loan collection functions. Equipment expense decreased due to reduced equipment purchases and some equipment reaching full depreciation. Occupancy expense increased for the three months ended December 31, 2010, as compared to the same period in the prior year, primarily due to four new branch openings, one each in the third and fourth quarters of 2009 and one each in the first and second quarters of 2010, and three branches and one admin facility acquired in the Granite acquisition on May 28, 2010. The increases in provision for foreclosed asset losses and foreclosed assets expense is due to additional value deterioration of such foreclosed assets and associated operating and maintenance expenses.

For the three months ended December 31, 2010, the Company recorded an income tax expense of $1,732,000. This tax expense represents 35.7% of the $4,858,000 net income before tax recorded for the three months ended December 31, 2010. The effective tax rate for the three month period ended December 31, 2009 was 24.6%. The provision or benefit for income taxes for all periods presented is primarily attributable to the respective level of earnings and the incidence of allowable deductions, particularly from increase in cash value of life insurance, tax-exempt loans and state and municipal securities.

In addition to the historical information contained herein, this press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The reader of this press release 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, interest rate fluctuations, economic conditions in the Company's primary market area, demand for loans, regulatory and accounting changes, 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 detailed in the Company's reports filed with the Securities and Exchange Commission which are incorporated herein by reference, including the Form 10-K for the year ended December 31, 2009. These reports and this entire press release 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. Any forward-looking statement may turn out to be wrong and cannot be guaranteed. The Company does not intend to update any of the forward-looking statements after the date of this release.

TriCo Bancshares and Tri Counties Bank are headquartered in Chico, California. Tri Counties Bank has a 35-year history in the banking industry. It operates 34 traditional branch locations and 27 in-store branch locations in 23 California counties. Tri Counties Bank offers financial services and provides a diversified line of products and services to consumers and businesses, which include demand, savings and time deposits, consumer finance, online banking, mortgage lending, and commercial banking throughout its market area. It operates a network of 69 ATMs and a 24-hour, seven days-a-week telephone customer service center. Brokerage services are provided by the Bank's investment services affiliate, Raymond James Financial Services, Inc. For further information please visit the Tri Counties Bank web site at http://www.tricountiesbank.com.

 
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands, except share data)
        Three months ended
December 31,     September 30,     June 30,     March 31,     December 31,
2010     2010     2010     2010     2009
Statement of Income Data
Interest income $25,627 $27,233 $25,776 $25,936 $27,130
Interest expense 3,036 3,497 3,642 3,958 4,661
Net interest income $22,591 23,736 22,134 21,978 22,469
Provision for loan losses 8,144 10,814 10,000 8,500 7,800
Noninterest income:
Service charges and fees 6,045 5,237 6,082 5,735 5,943
Other income 3,836 1,926 2,022 1,812 1,982
Total noninterest income 9,881 7,163 8,104 7,547 7,925
Noninterest expense:
Base salaries net of deferred
loan origination costs $7,160 7,131 6,990 6,974 7,031
Incentive compensation expense 478 294 526 546 308
Employee benefits and other
compensation expense 2,434 2,473 2,469 2,630 2,350
Total salaries and benefits expense 10,072 9,898 9,985 10,150 9,689
Other noninterest expense 9,398 10,626 8,423 8,653 9,839
Total noninterest expense 19,470 20,524 18,408 18,803 19,528
Income (loss) before taxes $4,858 (439) 1,830 2,222 3,066

 

Net income $3,126 $1 $1,320 $1,558 $2,313

 

Share Data
Basic earnings per share $0.20 $0.00 $0.08 $0.10 $0.15
Diluted earnings per share $0.20 $0.00 $0.08 $0.10 $0.14
Book value per common share $12.64 $12.66 $12.76 $12.63 $12.71
Tangible book value per common share $11.62 $11.64 $11.74 $11.63 $11.71
Shares outstanding 15,860,138 15,860,138 15,860,138 15,860,138 15,787,753
Weighted average shares 15,860,138 15,860,138 15,860,138 15,822,789 15,787,753
Weighted average diluted shares 16,009,538 15,972,826 16,107,909 16,073,875 16,012,078
Credit Quality
Nonperforming loans $75,987 $84,983 $72,708 $70,284 $49,871
Guaranteed portion of nonperforming loans(2) 3,937 4,131 4,674 4,853 4,975
Foreclosed assets, net of allowance 9,913 11,172 9,945 5,579 3,726
Loans charged-off 6,040 11,163 8,424 8,101 7,258
Loans recovered 1,698 689 513 468 380
Allowance for losses to total loans(1) 3.18% 2.86% 2.75% 2.75% 2.62%
Allowance for losses to NPLs(1) 59% 49% 57% 57% 78%
Allowance for losses to NPAs(1) 53% 43% 50% 53% 73%
Selected Financial Ratios
Return on average total assets 0.56% 0.00% 0.24% 0.29% 0.43%
Return on average equity 6.14% 0.00% 2.61% 3.05% 4.51%
Average yield on loans 6.39% 6.61% 6.20% 6.21% 6.46%
Average yield on interest-earning assets 4.88% 5.31% 5.13% 5.19% 5.48%
Average rate on interest-bearing liabilities 0.76% 0.87% 0.92% 1.02% 1.22%
Net interest margin (fully tax-equivalent) 4.30% 4.63% 4.41% 4.40% 4.55%
 
(1) Allowance for losses includes allowance for loan losses and reserve for unfunded commitments.
(2) Portion of nonperforming loans guaranteed by the U.S. Government, including its agencies and
its government-sponsored agencies.
 
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Unaudited. Dollars in thousands)
      Three months ended
December 31,     September 30,     June 30,     March 31,     December 31,
Balance Sheet Data   2010         2010         2010         2010         2009  
Cash and due from banks $ 371,066 $ 398,191 $ 322,644 $ 308,664 $ 346,589
Securities, available-for-sale 277,271 250,012 275,783 292,065 211,622
Federal Home Loan Bank Stock 9,133 9,157 9,523 9,274 9,274
Loans held for sale 4,988 9,455 4,153 3,384 4,641
Loans:
Commercial loans 141,902 149,743 162,898 147,988 163,181
Consumer loans 423,238 436,597 434,943 444,831 458,083
Real estate mortgage loans 807,482 821,562 860,615 810,386 815,375
Real estate construction loans 46,949 44,890 42,484 48,600 58,931
Total loans, gross 1,419,571 1,452,792 1,500,940 1,451,805 1,495,570
Allowance for loan losses (42,571 ) (38,770 ) (38,430 ) (36,340 ) (35,473 )
Foreclosed assets 9,913 11,172 9,945 5,579 3,726
Premises and equipment 19,120 18,947 19,001 19,178 18,742
Cash value of life insurance 50,541 49,972 49,546 49,120 48,694
Goodwill 15,519 15,519 15,519 15,519 15,519
Intangible assets 580 665 750 260 325
Mortgage servicing rights 4,605 3,905 4,033 4,310 4,089
FDIC indemnification asset 5,640 5,098 7,515 - -
Accrued interest receivable 7,131 7,318 7,472 7,715 7,763
Other assets 37,282 36,185 36,251 39,054 39,439
Total assets 2,189,789 2,229,618 2,224,645 2,169,587 2,170,520
Deposits:
Noninterest-bearing demand deposits 424,070 389,315 386,617 378,695 377,334
Interest-bearing demand deposits 395,413 383,859 383,578 375,313 359,179
Savings deposits 585,845 577,603 552,616 533,115 511,671
Time certificates 446,845 537,764 567,138 546,174 580,328
Total deposits 1,852,173 1,888,541 1,889,949 1,833,297 1,828,512
Accrued interest payable 2,151 2,368 2,487 3,064 3,614
Reserve for unfunded commitments 2,640 2,840 2,840 3,640 3,640
Other liabilities 29,170 26,721 25,257 27,112 26,114
Other borrowings 62,020 67,182 60,452 60,952 66,753
Junior subordinated debt 41,238 41,238 41,238 41,238 41,238
Total liabilities 1,989,392 2,028,890 2,022,223 1,969,303 1,969,871
Total shareholders' equity 200,397 200,728 202,422 200,284 200,649
Accumulated other
comprehensive gain (loss) 1,310 3,606 4,132 2,053 2,278
Average loans 1,443,603 1,481,497 1,463,473 1,469,685 1,508,472
Average interest-earning assets 2,107,499 2,060,108 2,019,684 2,008,896 1,988,011
Average total assets 2,235,471 2,237,670 2,191,660 2,169,138 2,135,622
Average deposits 1,895,006 1,893,677 1,849,118 1,825,190 1,784,271
Average total equity $ 203,712 $ 205,324 $ 203,528 $ 204,200 $ 205,256
Total risk based capital ratio 14.2 % 13.8 % 13.6 % 13.5 % 13.4 %
Tier 1 capital ratio 12.9 % 12.6 % 12.3 % 12.3 % 12.1 %
Tier 1 leverage ratio 10.0 % 9.9 % 10.2 % 10.3 % 10.5 %
Tangible capital ratio 8.5 % 8.3 % 8.4 % 8.6 % 8.6 %

TriCo Bancshares
Richard P. Smith, 530-898-0300
President & CEO