UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 26, 2010
TriCo Bancshares
(Exact name of registrant as specified in its charter)
California 0-10661 94-2792841
------------------------ --------------- --------------------
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization)
63 Constitution Drive, Chico, California 95973
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(530) 898-0300
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02: Results of Operations and Financial Condition
---------------------------------------------------------
On January 26, 2010, TriCo Bancshares announced its quarterly earnings for the
period ended December 31, 2009. A copy of the press release is attached as
Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
Item 9.01: Exhibits
-------------------
(c) Exhibits
99.1 Press release dated January 26, 2010
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: January 27, 2010 By:/s/Thomas J. Reddish
--------------------
Thomas J. Reddish, Executive Vice President
and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
---------- -----------
99.1 Press release dated January 26, 2010
PRESS RELEASE Contact: Richard P. Smith
For Immediate Release President & CEO (530) 898-0300
TRICO BANCSHARES ANNOUNCES ANNUAL AND QUARTERLY EARNINGS FOR THE PERIODS ENDED
DECEMBER 31, 2009
CHICO, Calif. - (January 26, 2010) - TriCo Bancshares (NASDAQ: TCBK), parent
company of Tri Counties Bank, today announced annual earnings of $9,962,000 for
the year ended December 31, 2009. This represents a 40.7% decrease when compared
with earnings of $16,798,000 for the year ended December 31, 2008. Diluted
earnings per share for the year ended December 31, 2009 decreased 41.0% to $0.62
from $1.05 for the year ended December 31, 2008. Total assets of the Company
increased $127 million (6.2%) to $2.170 billion at December 31, 2009 versus
$2.043 billion at December 31, 2008. Total loans of the Company decreased $91
million (5.7%) to $1.500 billion at December 31, 2009 versus $1.591 billion at
December 31, 2008. Total deposits of the Company increased $159 million (9.5%)
to $1.828 billion at December 31, 2009 versus $1.669 billion at December 31,
2008.
Net income for the quarter ended December 31, 2009 decreased $1,928,000 (45.5%)
to $2,313,000 from $4,241,000 for the quarter ended December 31, 2008. Diluted
earnings per share decreased 46.2% to $0.14 in the quarter ended December 31,
2009 from $0.26 in the quarter ended December 31, 2008.
The $1,928,000 decrease in earnings for the quarter ended December 31, 2009 over
the year-ago quarter was primarily due to a $2,350,000 (43.1%) increase in
provision for loan losses and a $2,796,000 (16.7%) increase in noninterest
expense, that were partially offset by a $1,760,000 (28.6%) increase in
noninterest income. Net interest income decreased $146,000 (0.7%) for the
quarter ended December 31, 2009, from the year-ago quarter. The effective tax
rate in the quarter ended December 31, 2009 was 24.6% versus 35.7% in the
year-ago quarter due to a higher percentage of tax free revenue to total net
income before taxes in the fourth quarter of 2009 versus the year-ago quarter.
The main components of tax free revenue include the increase in cash value of
life insurance, which is federal and state tax free, interest on municipal bonds
which is federal tax free, and interest earned on loans that qualify for the
state tax deduction related to enterprise zones.
The $146,000 decrease in net interest income to $22,469,000 was mainly due to a
40 basis point decrease in the fully tax-equivalent net interest margin to 4.55%
during the quarter ended December 31, 2009 versus 4.95% during the quarter ended
December 31, 2008. Much of the 40 basis point decrease in net interest margin is
due to the fact that despite historically low deposit rates, deposit balances
continue to grow while the ability to deploy these growing deposits into some
interest-earning asset other than short-term low-yield interest-earning cash at
the Federal Reserve Bank has been limited. This limitation is the result of weak
loan demand and investment yields that have been unattractive due to their
interest rate risk profile.
The following table details the components of the net interest income and net
interest margin on a fully tax-equivalent basis for the quarters ended December
31, 2009 and 2008:
Quarter ended December 31, 2009 Quarter ended December 31, 2008
------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Income Rate Balance Income Rate
(Dollars in thousands) ------------------------------------------------------------------------
Assets:
Loans $1,508,472 $24,356 6.46% $1,565,343 $26,365 6.74%
Securities 232,881 2,745 4.71% 265,223 3,441 5.19%
Cash at Fed and other banks $246,658 154 0.25% 10,349 31 1.18%
---------- ------- ---------- -------
Total earning assets 1,988,011 27,255 5.48% 1,840,915 29,837 6.48%
------- -------
Other assets 147,611 154,324
---------- ----------
Total assets 2,135,622 1,995,239
---------- ----------
Liabilities and shareholders' equity:
Interest-bearing demand
deposits $339,924 $709 0.83% $242,390 $311 0.51%
Savings deposits 484,638 762 0.63% 380,172 1,044 1.10%
Time deposits 597,091 2,254 1.51% 598,373 4,503 3.01%
Federal funds purchased - - 16,841 46 1.09%
Junior sub debt 41,238 319 3.09% 41,238 520 5.04%
Other borrwings 69,593 617 3.55% 84,952 640 3.01%
--------- ------ ---------- -------
Total interest-bearing
liabilities 1,532,484 4,661 1.22% 1,363,966 7,064 2.07%
------ -------
Noninterest-bearing
deposits 362,618 404,639
Other liabilities 35,264 30,806
Shareholders' equity 205,256 195,828
Total liabilities and ---------- -----------
shareholders' equity $2,135,622 $1,995,239
========== ===========
Net interest rate spread 4.27% 4.41%
===== =====
Net interest income/net
interest margin (FTE) $22,594 4.55% $22,773 4.95%
======= ===== ======= =====
FTE adjustment (125) (158)
-------- -------
Net interest income before FTE $22,469 $22,615
adjustment ======== ========
The provision for loan loss was $7,800,000 and $5,450,000 during the quarters
ended December 31, 2009 and December 31, 2008, respectively. Net loan
charge-offs were $6,878,000 during the quarter ended December 31, 2009 compared
to $2,448,000 during the quarter ended December 31, 2008. The $6,878,000 of net
loan charge-offs during the quarter ended December 31, 2009 were comprised of
$2,355,000 of home equity lines of credit and loans, $541,000 of indirect auto
loans, $10,000 of residential mortgages, $2,350,000 of residential construction,
$290,000 of small business loans, and $1,332,000 of other loans. The $2,350,000
of net residential construction loan charge-offs were primarily comprised of
$850,000 for a SFR land acquisition loan in the Sacramento Valley, $565,000 on a
condominium construction loan in the Sacramento Valley, $524,000 for a SFR land
acquisition, development, and construction loan in the Sacramento Valley, and
$234,000 for a SFR lot loan in the Sacramento Valley. In comparison, the
$2,448,000 of net loan charge-offs during the quarter ended December 31, 2008
were comprised of $1,140,000 of home equity lines of credit and loans, $378,000
of indirect auto loans, $330,000 of residential mortgages, $189,000 of
residential construction, $175,000 of small business loans, and $236,000 of
other loans.
Nonperforming loans, net of government agency guarantees, were $44,896,000 at
December 31, 2009 compared to $46,607,000 and $27,525,000 at September 30, 2009
and December 31, 2008, respectively. The $1,711,000 decrease in nonperforming
loans, net of government guarantees, during the fourth quarter of 2009 was the
result of new nonperforming loans of $14,691,000, advances on existing
nonperforming loans of $206,000, recoveries on existing nonperforming loans of
$381,000, less gross charge-offs of $7,258,000, and reductions to existing
nonperforming loans of $9,730,000.
The primary causes of the $14,691,000 in new nonperforming loans during the
third quarter of 2009 were increases of $1,382,000 in residential real estate,
$3,044,000 in commercial real estate, $2,787,000 in home equity lines and loans,
$684,000 in auto loans, $164,000 in other consumer loans, $1,599,000 in
Commercial (C&I) loans, $4,437,000 in residential construction loans and
$448,000 in commercial construction loans.
The $3,044,000 in new nonperforming commercial real estate loans were primarily
made up of a $499,000 commercial office building in the Sacramento Valley, a
$464,000 commercial office building in the Sacramento Valley, and the transfer
of a $1,439,000 condominium construction loan in the Sacramento Valley from the
residential construction loan category to the commercial real estate category as
described below.
The $1,599,000 in new nonperforming commercial (C&I) loans were primarily made
up of a $487,000 line of credit to a developer in the Sacramento Valley, and a
$198,000 line of credit to a contractor in the Sacramento Valley. The remainder
is made up of several small loans or lines to commercial borrowers.
The $4,437,000 in new nonperforming residential construction loans were
primarily made up of a $2,500,000 SFR land acquisition loan in the Sacramento
Valley which was also charged down to $1,649,000 during the quarter, a $700,000
SFR land acquisition loan in the Sacramento Valley, a $524,000 SFR land
acquisition loan in the Sacramento Valley which was also charged off during the
quarter, a $403,000 SFR construction loan for a single home in Northern
California, and a $283,000 land loan in the Sacramento Valley.
The primary causes of the $9,730,000 in reductions to existing non-performing
loans were paydowns or upgrades of $251,000 in residential real estate, $448,000
in commercial real estate, $664,000 in home equity lines and loans, $641,000 in
auto loans, $3,080,000 in Commercial (C&I) loans, and $4,617,000 in residential
construction loans.
The $3,080,000 in paydowns or upgrades of nonperforming commercial (C&I) loans
were primarily made up of a paydown of $2,186,000 on a production loan to a
dairy in the San Joaquin Valley, and a $807,000 paydown on a line of credit to a
subcontractor in the Sacramento Valley.
The $4,617,000 in paydowns or upgrades of nonperforming residential construction
loans were primarily made up of a $3,689,000 condominium construction loan of
which $2,250,000 was upgraded to performing status, and the remaining $1,439,000
was transferred to the commercial real estate category as the project is now
rented out and generating income. An additional $876,000 SFR lot development
loan was transferred to OREO accounting for the bulk of the $1,354,000 increase
in OREO.
At December 31, 2009, the Company's allowance for losses, which consists of the
allowance for loan losses ($35,473,000) and the reserve for unfunded commitments
($3,640,000), was $39,113,000 or 2.61% of total loans outstanding and 87% of
nonperforming loans versus $30,155,000 or 1.90% of total loans outstanding and
110% of nonperforming loans at December 31, 2008.
The following table details the components of noninterest income during the
fourth quarters of 2009 and 2008:
(Dollars in thousands) Q4'09 Q4'08
Noninterest income:
Service charges on deposit accounts $4,153 $3,862
ATM fees and interchange 1,317 1,104
Other service fees 402 259
Mortgage banking service fees 306 269
Change in value of mortgage servicing rights (235) (1,117)
------------------
Service charges and fees 5,943 4,377
Gain on sale of investments - -
Gain on sale of loans 673 212
Commission on sale of NDIP 271 530
Increase in CV of life insurance 1,059 754
Other (21) 292
-----------------
Total noninterest income $7,925 $6,165
=================
Noninterest income increased $1,760,000 (28.5%) to $7,925,000 during the quarter
ended December 31, 2009 versus $6,165,000 in the year-ago quarter. Service
charges on deposit accounts were up $291,000 (7.5%) due primarily to increased
per item overdraft fees implemented during 2009. ATM fees and interchange, and
other service fees were up $213,000 (19.3%) and $143,000 (55.2%) due to
increased debit card usage and an expanded customer base. Overall, mortgage
banking activities, which includes amortization of mortgage servicing rights,
mortgage servicing fees, change in value of mortgage servicing rights, and gain
on sale of loans, accounted for $744,000 of noninterest income in the fourth
quarter of 2009 compared to a $636,000 reduction of noninterest income in the
fourth quarter of 2008. The increased contribution from mortgage banking
activities was due to increased loan sales during the fourth quarter of 2009 and
a significant decrease in the value of mortgage rights at the end of 2008.
Commissions on sale of nondeposit investment products decreased $259,000 (48.9%)
in the fourth quarter of 2009 compared to the year-ago quarter due to lesser
demand for these products and decreased resources focused in that area. Increase
in cash value of life insurance was $305,000 (40.5%) higher than in the year-ago
quarter due to higher than expected earning rates on the related life insurance
policies in the fourth quarter of 2009. Other noninterest income decreased
$313,000 (107%) due primarily to decreases in deposit sweep income, official
check float commission rebates, lease brokerage income, and a nonrecurring loss
on disposal of fixed assets related to branch remodels in the fourth quarter of
2009.
The following table summarizes the components of noninterest expense for the
quarters ended December 31, 2009 and 2008:
(Dollars in thousands) Q4'09 Q4'08
Salaries and benefit expense:
Base salaries net of deferred origination costs $7,031 $6,394
Incentive compensation expense 308 794
Benefits and other compensation costs 2,350 2,368
-----------------
Total salaries and benefits expense 9,689 9,556
=================
Equipment and data processing 1,804 1,597
Occupancy 1,276 1,224
Advertising 706 547
ATM network charges 687 552
Telecommunications 496 285
Professional fees 571 552
Courier service 221 273
Postage 226 248
Intangible amortization 65 135
Operational losses 90 291
Assessments 1,465 287
Change in reserve for unfunded commitments - (800)
Net foreclosed assets expense 100 63
Other 2,132 1,922
-----------------
Total other noninterest expense 9,839 7,176
=================
Total noninterest expense $19,528 $16,732
=================
Average full time equivalent employees 658 630
The $2,796,000 increase in noninterest expense during the quarter ended December
31, 2009 compared to the year-ago quarter was mainly due to increased deposit
insurance assessments, and the absence of a reduction in the reserve for
unfunded commitments as was present in the year-ago quarter. The changes in
certain other categories of noninterest expense, such as equipment and data
processing and telecommunications, from the year-ago quarter are indicative of
the Company's efforts to use technology to become more efficient. Salaries and
benefits expense increased $133,000 (1.4%) due to annual salary increases and an
increase in the number of full time equivalent employees that were substantially
offset by a decrease in incentive compensation.
As of December 31, 2009, the Company has repurchased 166,600 shares of its
common stock under its stock repurchase plan adopted on August 21, 2007, which
left 333,400 shares available for repurchase under the plan.
Richard Smith, President and Chief Executive Officer commented, "While earnings
per share are lower in 2009 versus 2008, total bank revenues reached record
levels in 2009. This strong and growing revenue stream continues to provide the
support necessary to expand upon our already strong capital and liquidity
positions, allows for increases in our loan loss provisions, and provides us the
opportunity to continue to make loans available in our marketplace." Smith
added, "We persist in the belief that economic conditions in California will
remain under considerable pressure and unemployment levels will remain at very
high levels throughout 2010. While economic conditions create growth challenges,
we continue to benefit from the addition of many new customers, as evidenced by
our strong core deposit growth, that prefer our local, relationship oriented,
community focused banking model."
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, 2008. 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 34-year history in the banking industry. It operates 32
traditional branch locations and 25 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 64
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,
2009 2009 2009 2009 2008
==========================================================================
Statement of Income Data
Interest income $27,130 $27,889 $28,432 $28,882 $29,679
Interest expense 4,661 4,784 5,286 5,884 7,064
Net interest income 22,469 23,105 23,146 22,998 22,615
Provision for loan losses 7,800 8,000 7,850 7,800 5,450
Noninterest income:
Service charges and fees 5,943 5,645 6,182 5,052 4,377
Other income 1,982 2,148 1,814 1,563 1,788
Total noninterest income 7,925 7,793 7,996 6,615 6,165
Noninterest expense:
Base salaries net of deferred
loan origination costs 7,031 6,827 6,568 6,576 6,394
Incentive compensation expense 308 980 1,024 588 794
Employee benefits and other
compensation expense 2,350 2,456 2,477 2,625 2,368
Total salaries and benefits expense 9,689 10,263 10,069 9,789 9,556
Intangible amortization 65 65 64 134 135
Provision for losses -
unfunded commitments - 500 400 175 (800)
Other expense 9,774 8,549 8,811 7,103 7,841
Total noninterest expense 19,528 19,377 19,344 17,201 16,732
Income before taxes 3,066 3,521 3,948 4,612 6,598
Net income $2,313 $2,255 $2,512 $2,882 $4,241
Share Data
Basic earnings per share $0.15 $0.14 $0.16 $0.18 $0.27
Diluted earnings per share 0.14 0.14 0.16 0.18 0.26
Book value per common share 12.71 12.79 12.67 12.71 12.56
Tangible book value per common share $11.71 $11.78 $11.66 $11.69 $11.54
Shares outstanding 15,787,753 15,787,753 15,782,753 15,782,753 15,756,101
Weighted average shares 15,787,753 15,787,264 15,782,753 15,774,624 15,750,857
Weighted average diluted shares 16,012,078 16,015,952 15,997,437 16,019,488 16,068,456
Credit Quality
Non-performing loans, net of
government agency guarantees $44,896 $46,607 $43,373 $34,360 $27,525
Foreclosed assets, net of allowance 3,726 2,372 2,622 2,407 1,185
Loans charged-off 7,258 7,471 7,308 3,001 2,780
Loans recovered $380 $398 $308 $385 $332
Allowance for losses to total loans(1) 2.61% 2.49% 2.37% 2.27% 1.90%
Allowance for losses to NPLs(1) 87% 82% 85% 103% 110%
Allowance for losses to NPAs(1) 80% 78% 80% 97% 105%
Selected Financial Ratios
Return on average total assets 0.43% 0.43% 0.48% 0.56% 0.85%
Return on average equity 4.51% 4.43% 4.94% 5.70% 8.66%
Average yield on loans 6.46% 6.48% 6.48% 6.52% 6.73%
Average yield on interest-earning assets 5.48% 5.70% 5.91% 6.15% 6.48%
Average rate on interest-bearing liabilities 1.22% 1.27% 1.42% 1.63% 2.07%
Net interest margin (fully tax-equivalent) 4.55% 4.72% 4.82% 4.91% 4.95%
(1) Allowance for losses includes allowance for loan losses and reserve for
unfunded commitments.
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,
2009 2009 2009 2009 2008
==========================================================================
Balance Sheet Data
Cash and due from banks $346,589 $234,570 $182,923 $137,241 $86,355
Securities, available-for-sale 211,622 230,962 252,104 279,122 266,561
Federal Home Loan Bank Stock 9,274 9,274 9,274 9,235 9,235
Loans
Commercial loans 163,181 171,583 172,732 169,765 189,645
Consumer loans 458,083 473,411 486,548 499,168 514,448
Real estate mortgage loans 820,016 814,132 813,898 813,889 802,527
Real estate construction loans 58,931 72,086 79,057 84,134 84,229
Total loans, gross 1,500,211 1,531,212 1,552,235 1,566,956 1,590,849
Allowance for loan losses (35,473) (34,551) (33,624) (32,774) (27,590)
Premises and equipment 18,742 18,102 18,208 18,537 18,841
Cash value of life insurance 48,694 47,635 47,365 47,095 46,815
Goodwill 15,519 15,519 15,519 15,519 15,519
Intangible assets 325 389 454 519 653
Other assets 55,017 42,554 43,383 36,902 35,952
Total assets 2,170,520 2,095,666 2,087,841 2,078,352 2,043,190
Deposits
Noninterest-bearing demand deposits 377,334 349,949 358,618 371,639 401,247
Interest-bearing demand deposits 359,179 314,160 291,641 269,807 241,560
Savings deposits 511,671 473,915 431,424 426,001 380,799
Time certificates 580,328 613,871 655,702 659,259 645,664
Total deposits 1,828,512 1,751,895 1,737,385 1,726,706 1,669,270
Federal funds purchased - - - - -
Reserve for unfunded commitments 3,640 3,640 3,140 2,740 2,565
Other liabilities 29,728 30,759 32,201 31,041 30,180
Other borrowings 66,753 66,197 73,898 76,081 102,005
Junior subordinated debt 41,238 41,238 41,238 41,238 41,238
Total liabilities 1,969,871 1,893,729 1,887,862 1,877,806 1,845,258
Total shareholders' equity 200,649 201,937 199,979 200,546 197,932
Accumulated other
comprehensive gain (loss) 2,278 3,934 2,322 3,474 2,056
Average loans 1,508,472 1,538,239 1,555,778 1,566,350 1,565,343
Average interest-earning assets 1,988,011 1,969,043 1,933,633 1,887,121 1,840,915
Average total assets 2,135,622 2,099,053 2,088,875 2,049,193 1,995,239
Average deposits 1,784,271 1,744,336 1,735,434 1,688,704 1,625,574
Average total equity $205,256 $203,452 $203,596 $202,126 $195,828
Total risk based capital ratio 13.4% 13.2% 12.9% 12.7% 12.4%
Tier 1 capital ratio 12.1% 11.9% 11.6% 11.4% 11.2%
Tier 1 leverage ratio 10.5% 10.6% 10.7% 10.9% 11.1%
Tangible capital ratio 8.6% 8.9% 8.9% 8.9% 9.0%