TriCo Bancshares Announces Quarterly Results

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TriCo Bancshares Announces Quarterly Results

CHICO, Calif.--(BUSINESS WIRE)-- TriCo Bancshares (NAS: TCBK) (the "Company"), parent company of Tri Counties Bank (the "Bank"), today announced earnings of $8,477,000, or $0.53 per diluted share, for the three months ended March 31, 2013. These results compare to earnings of $3,931,000, or $0.25 per diluted share reported by the Company for the three months ended March 31, 2012.

Total assets of the Company increased $79,525,000 (3.1%) to $2,612,433,000 at March 31, 2013 from $2,532,908,000 at March 31, 2012. Total loans increased $21,277,000 (1.4%) to $1,532,362,000 at March 31, 2013 from $1,511,085,000 at March 31, 2012. Total deposits increased $115,804,000 (5.3%) to $2,285,550,000 at March 31, 2013 from $2,169,746,000 at March 31, 2012.


The following is a summary of the components of the Company's consolidated net income for the periods indicated:

Three months ended  
March 31,
(dollars in thousands) 2013   2012 

$ Change

% Change
Net Interest Income$24,569$25,036($467)(1.9%)
Benefit from (provision for) loan losses1,108(3,996)5,104(127.7%)
Noninterest income10,2188,2651,95323.6%
Noninterest expense(21,601)(22,915)1,314(5.7%)
Provision for income taxes (5,817) (2,459) (3,358)136.6%
Net income$8,477 $3,931 $4,546 115.6%
 

The following table shows the components of net interest income and net interest margin on a fully tax-equivalent (FTE) basis for the periods indicated:

 
ANALYSIS OF CHANGE IN NET INTEREST MARGIN ON EARNING ASSETS
(unaudited, dollars in thousands)
 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

March 31, 2013

December 31, 2012

March 31, 2012

Average Income/ Yield/Average Income/ Yield/Average Income/ Yield/
BalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
Assets
Earning assets
Loans$1,548,565$24,0726.22%$1,574,329$24,2456.16%$1,527,536$24,9296.53%
Investments - taxable156,0571,1873.04%174,9541,3483.08%224,7371,7593.13%
Investments - nontaxable8,8841627.29%9,4331687.12%9,5611737.24%
Federal funds sold 721,424 446 0.25% 624,510 445 0.29% 573,008 368 0.26%
Total earning assets2,434,930 25,867 4.25%2,383,226 26,206 4.40%2,334,842 27,229 4.66%
Other assets, net 174,864 182,081 179,699
Total assets$2,609,794$2,565,307$2,514,541
Liabilities and shareholders' equity
Interest-bearing
Demand deposits$520,5071410.11%$494,2591740.14%$439,7862170.20%
Savings deposits782,1732710.14%772,2333050.16%790,5902970.15%
Time deposits333,5565130.62%347,7145700.66%402,9856700.67%
Other borrowings8,18810.05%9,02420.09%70,1046063.46%
Trust preferred securities 41,238 311 3.02% 41,238 321 3.11% 41,238 338 3.28%
Total interest-bearing liabilities1,685,662 1,237 0.29%1,664,468 1,372 0.33%1,744,703 2,128 0.49%
Noninterest-bearing deposits651,303633,570515,851
Other liabilities39,15036,97333,621
Shareholders' equity 233,679 230,296 220,366

Total liabilities and shareholders' equity

$2,609,794$2,565,307$2,514,541
Net interest rate spread3.96%4.07%4.17%
Net interest income/net interest margin (FTE) 24,630 4.05% 24,834 4.17% 25,101 4.30%
FTE adjustment (61) (63) (65)
Net interest income (not FTE)$24,569 $24,771 $25,036 
 

Net interest income (FTE) during the first quarter of 2013 decreased $471,000 (1.9%) from the same period in 2012 to $24,630,000. The decrease in net interest income (FTE) was due primarily to a 31 basis point decrease in average yield on loans, and a $69,357,000 decrease in average balance of investments, that were partially offset by a $21,029,000 increase in the average balance of loans, and a $61,916,000 decrease in the average balance of other borrowings. The 31 basis point decrease in average loan yields reduced net interest income by $1,200,000 while the decrease in average investment balances reduced net interest income by $549,000 from the year ago period. The increase in average loan balances added $343,000 to net interest income, and the decrease in average other borrowings added $536,000 to net interest income when compared to the year ago period. Accretion of loan purchase discounts totaling $1,530,000 and $2,080,000 are included in interest income for the three months ended March 31, 2013 and 2012, respectively.

Loans acquired through purchase or acquisition of other banks are classified as Purchased Not Credit Impaired (PNCI), Purchased Credit Impaired - cash basis (PCI - cash basis), or Purchased Credit Impaired - other (PCI - other). Loans not acquired in an acquisition or otherwise "purchased" are classified as "originated". Often, such purchased loans are purchased at a discount to face value, and part of this discount is accreted into (added to) interest income over the remaining life of the loan. Generally, as time goes on, the effect of this discount accretion becomes less and less as these purchased loans mature or payoff early. Further details regarding interest income from loans, including fair value discount accretion, may be found under the heading "Supplemental Loan Interest Income Data" in the Consolidated Financial Data table at the end of this announcement.

The Company benefited from a $1,108,000 reversal of provision for loan losses in the first quarter of 2013 versus a $1,524,000 provision for loan losses in the fourth quarter of 2012, and a $3,996,000 provision for loan losses in the first quarter of 2012. The $1,108,000 reversal of provision for loan losses in the first quarter of 2013 is due primarily to a decrease in the required allowance for loan losses as of March 31, 2013 when compared to the required allowance for loan losses as of December 31, 2012 less net loan charge offs during the three months ended March 31, 2013. The decrease in the required allowance for loan losses during the quarter ended March 31, 2013 is due primarily to reduced impaired loans, improvements in estimated cash flows and collateral values for the remaining impaired loans, and reductions in historical loss factors that, in part, determine the required loan loss allowance for performing loans in accordance with the Company's allowance for loan losses methodology.

The following table presents the key components of noninterest income for the periods indicated:

    
Three months ended
March 31,
(dollars in thousands)20132012

$ Change

% Change
Service charges on deposit accounts3,1403,527($387)(11.0%)
ATM fees and interchange1,8751,819563.1%
Other service fees559603(44)(7.3%)
Mortgage banking service fees4163724411.8%
Change in value of mortgage servicing rights(61)(369) 308 (83.5%)
Total service charges and fees5,929 5,952  (23)(0.4%)
 
Gain on sale of loans2,2941,65064439.0%
Commission on NDIP761819(58)(7.1%)
Increase in cash value of life insurance426450(24)(5.3%)
Change in indemnification asset(101)(353)252(71.4%)
Gain on sale of foreclosed assets551(358)909(253.9%)
Other noninterest income358 105  253 241.0%
Total other noninterest income4,289 2,313  1,976 85.4%
Total noninterest income10,218 8,265 $1,953 23.6%
 

Noninterest income increased $1,953,000 (23.6%) to $10,218,000 in the three months ended March 31, 2013 when compared to the three months ended March 31, 2012. The increase in noninterest income was due primarily to a $909,000 increase in gain/loss on sale of foreclosed assets to $551,000, and a $644,000 increase in gain on sale of loans to $2,294,000. The increase in gain on sale of foreclosed assets is due to a general increase in property values and sales activity from their lows during the financial crisis that started in 2008. The increase in gain on sale of loans is due to increased residential real estate loan refinance activity and our focus to service that activity.

Salary and benefit expenses increased $199,000 (1.6%) to $12,961,000 during the three months ended March 31, 2013 compared to the three months ended March 31, 2012. Base salaries increased $189,000 (2.3%) to $8,348,000 during the three months ended March 31, 2013 versus the year ago period due mainly to a 2.6% increase in average full time equivalent staff to 750 and annual merit increases, that were substantially offset by a March 2012 reduction in temporary employee expense that was related to the Citizens acquisition in September 2011. Incentive and commission related salary expenses decreased $89,000 (6.5%) to $1,286,000 during three months ended March 31, 2013 due primarily to decreases in production related incentives. Benefits expense, including retirement, medical and workers' compensation insurance, and taxes, increased $99,000 (3.1%) to $3,327,000 during the three months ended March 31, 2013 due primarily to the increase in average full time equivalent staff noted above.

Other noninterest expenses decreased $1,513,000 (14.9%) to $8,640,000 during the three months ended March 31, 2013 when compared to the three months ended March 31, 2012. The decrease in other noninterest expense is due primarily a $482,000 (79.3%) decrease in the provision for, and expenses related to, foreclosed assets, a $250,000 increase in reversal of provision for loan losses related to unfunded commitments from $190,000 to $440,000, a $216,000 (16.7%) decrease in data processing and software expense, and a $173,000 (34.7%) decrease in advertising and marketing expense. The decreases in foreclosed asset provision and expenses are due to increased property values and a reduction in foreclosed assets from $14,789,000 at March 31, 2012 to $6,124,000 at March 31, 2013. The increase in reversal of provision for loan losses related to unfunded commitments is due to a decrease in expected losses related to those commitments and the relative change in the amount unfunded commitment from the previous year end. The decrease in data processing and software expense is due primarily to the absence of expenses associated with a system conversion in March 2012 related to the Citizens acquisition in September 2011, and cost savings efforts in this area. The decrease in advertising and marketing expense from the year ago period is due to cost savings efforts in this area. The following table presents the key components of the Company's noninterest expense for the periods indicated:

    
Three months ended
March 31,
(dollars in thousands) 2013  2012 

$ Change

% Change
Salaries$ Read Full Story

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