TriCo Bancshares Announces Quarterly Results

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 $6,325,000, or $0.39 per diluted share, for the three months ended June 30, 2013. These results compare to earnings of $5,321,000, or $0.33 per diluted share reported by the Company for the three months ended June 30, 2012.

Total assets of the Company increased $62,313,000 (2.5%) to $2,587,931,000 at June 30, 2013 from $2,525,618,000 at June 30, 2012. Total loans increased $99,558,000 (6.4%) to $1,652,040,000 at June 30, 2013 from $1,552,482,000 at June 30, 2012. Total investment securities increased $10,313,000 (5.1%) to $213,162,000 at June 30, 2013 from $202,849,000 at June 30, 2012. Total deposits increased $100,925,000 (4.7%) to $2,266,702,000 at June 30, 2013 from $2,165,777,000 at June 30, 2012. Other borrowings decreased $54,256,000 (89.2%) to $6,575,000 at June 30, 2013 from $60,831,000 at June 30, 2012.

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

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:

Net interest income (FTE) during the second quarter of 2013 decreased $1,319,000 (5.1%) from the same period in 2012 to $24,679,000. The decrease in net interest income (FTE) was due primarily to a 79 basis point decrease in average yield on loans that was partially offset by a $74,505,000 increase in the average balance of loans, and a $54,704,000 decrease in the average balance of other borrowings. The 79 basis point decrease in average loan yields reduced net interest income by $3,163,000 from the year ago period. The increase in average loan balances added $1,254,000 to net interest income, and the decrease in average other borrowings added $528,000 to net interest income when compared to the year ago period. Accretion of loan purchase discounts totaling $1,676,000 and $2,385,000 are included in net interest income for the three months ended June, 2013 and 2012, respectively. The Company purchased $60,647,000 of residential real estate mortgage loans during the second quarter of 2013.

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 provided $614,000 for loan losses in the second quarter of 2013 versus a benefit of $1,108,000 in the first quarter of 2013, and a $3,371,000 provision for loan losses in the second quarter of 2012. The level of provision for loan losses during the second quarter of 2013 was due primarily to a decrease in the required allowance for loan losses as of June 30, 2013 when compared to the required allowance for loan losses as of March 31, 2013 less net charge-offs during the three months ended June 30, 2013, and the effect of a change in the methodology for calculating the allowance for loan losses that occurred during the three months ended June 30, 2013. The decrease in the required allowance for loan losses during the quarter ended June 30, 2013 was due primarily to reduced impaired loans, improvements in estimated cash flows and collateral values for the remaining and new 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.

During the three months ended June 30, 2013, the Company modified its loss migration analysis methodology used in its allowance for loan loss calculation. When the Company originally established its loss migration analysis methodology during the quarter ended March 31, 2012, it reviewed the loss experience of each quarter over the most recent three years in order to calculate an annualized loss rate by loan category and risk rating. The use of three years of loss experience data was originally used because that was the extent of the detailed loss data by loan category and risk rating that was available at the time. This three year historical look-back period was used until this most recent quarter ended June 30, 2013. Starting with the quarter ended June 30, 2013 the Company will review all available detailed loss experience data, and not limit it to the most recent three years of historical loss data. This change in methodology resulted in the allowance for loan losses as of June 30, 2013 being $1,314,000 more than it would have been without this change in methodology. Excluding the effect of this change in allowance methodology, the provision for loan losses during the three months ended June 30, 2013 would have been a benefit of $700,000.

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