TriCo Bancshares (TCBK) 8-K Trico Bancshares Announces Quarterly Results

Exhibit 99.1

PRESS RELEASE	Contact:             Richard P. Smith
For Immediate Release	President & CEO (530) 898-0300

TRICO BANCSHARES ANNOUNCES QUARTERLY RESULTS

CHICO, Calif. – (January 28, 2013) – TriCo Bancshares (NASDAQ: TCBK) (the “Company”), parent company of Tri Counties Bank (the “Bank”), today announced earnings of $4,722,000, or $0.29 per diluted share, for the three months ended December 31, 2012. These results compare to earnings of $6,549,000, or $0.41 per diluted share reported by the Company for the three months ended December 31, 2011. Included in the results for the three months ended December 31, 2012 and 2011 were life insurance benefits of $75,000 and $789,000, respectively. Excluding these life insurance benefits, earnings for the three months ended December 31, 2012 and 2011 would have been approximately $4,647,000 and $5,760,000, respectively, or $0.29 and $0.36 per diluted share, respectively.

Diluted earnings per share for the years ended December 31, 2012 and 2011 were $1.18 and $1.16, respectively, on earnings of $18,944,000 and $18,590,000, respectively. Included in the results for the year ended December 31, 2012 is a legal settlement expense of $2,090,000 that was previous disclosed on September 27, 2012, and $675,000 of life insurance benefits. Included in the results for the year ended December 31, 2011 was a $7,575,000 bargain purchase gain related to the Company’s acquisition of the banking operations of Citizens Bank of Northern California on September 23, 2011, and $789,000 of life insurance benefits. Excluding the $2,090,000 legal settlement expense, and the $675,000 of life insurance benefits, earnings for the year ended December 31, 2012 would have been approximately $19,530,000, or approximately $1.22 per diluted share. Excluding the $7,575,000 bargain purchase gain, and the $789,000 of life insurance benefits, earnings for the year ended December 31, 2011 would have been approximately $13,411,000, or $0.84 per diluted share.

Total assets of the Company increased $53,672,000 (2.1%) to $2,609,269,000 at December 31, 2012 from $2,555,597,000 at December 31, 2011. Total loans of the Company increased $13,791,000 (0.9%) to $1,564,823,000 at December 31, 2012 from $1,551,032,000 at December 31, 2011. Total deposits of the Company increased $99,166,000 (4.5%) to $2,289,702,000 at December 31, 2012 from $2,190,536,000 at December 31, 2011.

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

	Three months ended December 31,
(dollars in thousands)	2012			2011			$Change			% Change
Net Interest Income	$	24,771		$	27,280		($	2,509	)		(9.2	%)
Provision for loan losses		(1,524	)		(5,429	)		3,905			(71.9	%)
Noninterest income		10,011			10,489			(478	)		(4.6	%)
Noninterest expense		(25,126	)		(22,076	)		(3,050	)		13.8	%
Provision for income taxes		(3,410	)		(3,715	)		305			(8.2	%)
Net income	$	4,722		$	6,549		($	1,827	)		(27.9	%)

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
	December 31, 2012								September 30, 2012								December 31, 2011
	Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate
Assets
Earning assets
Loans	$	1,574,329	$	24,245			6.16	%	$	1,573,816	$	25,530			6.49	%	$	1,570,648	$	27,247			6.94	%
Investments - taxable		174,954		1,348			3.08	%		195,951		1,455			2.97	%		245,683		1,887			3.07	%
Investments - nontaxable		9,433		168			7.12	%		9,561		173			7.24	%		10,128		181			7.15	%
Federal funds sold		624,510		445			0.29	%		571,837		372			0.26	%		493,746		361			0.29	%
Total earning assets		2,383,226		26,206			4.40	%		2,351,164		27,530			4.68	%		2,320,205		29,676			5.12	%
Other assets, net		182,081								168,095								193,429
Total assets	$	2,565,307							$	2,519,259							$	2,513,634
Liabilities and shareholders’ equity
Interest-bearing
Demand deposits	$	494,259		174			0.14	%	$	479,565		196			0.16	%	$	424,109		235			0.22	%
Savings deposits		772,233		305			0.16	%		757,491		314			0.17	%		800,035		351			0.18	%
Time deposits		347,714		570			0.66	%		359,507		596			0.66	%		433,844		801			0.74	%
Other borrowings		9,024		2			0.09	%		41,852		395			3.78	%		75,179		617			3.28	%
Trust preferred securities		41,238		321			3.11	%		41,238		333			3.23	%		41,238		325			3.15	%
Total interest-bearing liabilities		1,664,468		1,372			0.33	%		1,679,652		1,834			0.44	%		1,774,405		2,329			0.53	%
Noninterest-bearing deposits		633,570								577,523								491,434
Other liabilities		36,973								35,227								32,816
Shareholders’ equity		230,296								226,857								214,979
Total liabilities and shareholders’ equity	$	2,565,307							$	2,519,259							$	2,513,634
Net interest rate spread							4.07	%							4.24	%							4.59	%
Net interest income/net interest margin (FTE)				24,834			4.17	%				25,696			4.37	%				27,347			4.71	%
FTE adjustment				(63	)							(65	)							(67	)
Net interest income (not FTE)			$	24,771							$	25,631							$	27,280

Net interest income (FTE) during the three months ended December 31, 2012 decreased $862,000 (3.4%) when compared to the three months ended September 30, 2012, and decreased $2,513,000 (9.2%) when compared to the three months ended December 31, 2011. These decreases in net interest income (FTE) are primarily due to decreases in the average yield on loans that are primarily due to decreases in market yields on new and renewed loans, and from decreased discount amortization from purchased loans. 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 $1,524,000 for loan losses in the fourth quarter of 2012 versus $532,000 in the third quarter of 2012 and $5,429,000 in the fourth quarter of 2011. The decrease in provision for loan losses during the fourth quarter of 2012 compared to the fourth quarter of 2011 was primarily the result of improvement in collateral values and estimated cash flows related to nonperforming and purchased credit impaired loans, and a reduction in nonperforming loans.

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

	Three months ended December  31,
(dollars in thousands)	2012			2011			$Change			% Change
Service charges on deposit accounts		3,502			3,877		($	375	)		(9.7	%)
ATM fees and interchange		2,040			1,857			183			9.9	%
Other service fees		483			419			64			15.3	%
Mortgage banking service fees		512			389			123			31.6	%
Change in value of mortgage servicing rights		(502	)		(85	)		(417	)		490.6	%
Total service charges and fees		6,035			6,457			(422	)		(6.5	%)
Gain on sale of loans		2,493			1,219			1,274			104.5	%
Commission on NDIP		745			555			190			34.2	%
Increase in cash value of life insurance		470			535			(65	)		(12.1	%)
Change in indemnification asset		(501	)		512			(1,013	)		(197.9	%)
Gain on sale of foreclosed assets		422			213			209			98.1	%
Gain on life insurance death benefit		75			789			(714	)		(90.5	%)
Other noninterest income		272			209			63			30.1	%
Total other noninterest income		3,976			4,032			(56	)		(1.4	%)
Total noninterest income		10,011			10,489		($	478	)		(4.6	%)

The $375,000 decrease in service charges on deposit accounts is due to decreased nonsufficient funds fees. The $183,000 increase in ATM fees and interchange revenue is primarily due to increased interchange revenue as a result of additional resources focused on growing that line of business. The $123,000 increase in mortgage banking service fees, and the $1,274,000 increase in gain on sale of loans are due to a significant increase in residential real estate mortgage loans originated and sold by the Bank for which the Bank remains as the loan servicer. The increase in residential real estate mortgage loans originated by the Bank is primarily due to historically low interest rates, and an increase in resources focused in this area. These same historically low interest rates have shortened the estimated life of the loans that the Bank services, thus shortening and reducing the estimated cash flow stream of servicing revenue from such loans, and thus, reducing the value the Bank’s mortgage servicing rights. This decrease in mortgage servicing rights negatively impacted service charge and fee revenue by $417,000 when compared to the year-ago quarter. The $190,000 increase in commission on sale of non-deposit investment products (NDIP) is due to increase resources focused in that area. The $1,013,000 negative impact from change in indemnification asset is due to improved (lessened) future loss estimates related to loans covered by FDIC loss-sharing agreements. While this item has a negative impact on this revenue item, it is more than offset by a reduction in the Bank’s loan loss provision.

Salary and benefit expenses increased $1,573,000 (14.6%) to $12,338,000 during the three months ended December 31, 2012 compared to the three months ended December 31, 2011. Base salaries increased $253,000 (3.1%) to $8,324,000 during the three months ended December 31, 2012. The increase in base salaries was mainly due to annual merit increases. Incentive and commission related salary expenses increased $974,000 (518%) to $1,162,000 during three months ended December 31, 2012 due primarily to large net income related bonus accrual reversals made during the three months ended December 31, 2011. These reversals were made in the year-ago period when it became apparent that certain production targets would not be achieved. Benefits expense, including retirement, medical and workers’ compensation insurance, and taxes, increased $346,000 (13.8%) to $2,852,000 during the three months ended December 31, 2012 primarily due to increased medical insurance costs.

Other noninterest expenses increased $1,477,000 (13.1%) to $12,788,000 during the three months ended December 31, 2012 when compared to the three months ended December 31, 2011. The increase in other noninterest expense is primarily due to a $960,000 increase in change in reserve for unfunded commitments to $1,060,000 for the three months ended December 31, 2012. This increase in change in reserve for unfunded commitments is primarily due to an increase in unfunded construction loan commitments during the three months ended December 31, 2012. Other changes in the various categories of other noninterest expense are reflected in the table below. The changes are indicative of the economic environment which has led to increases, or fluctuations, in professional loan collection expenses, provision for foreclosed asset losses, and foreclosed asset expenses.

The following table presents the key components of the Company’s noninterest expense for the periods indicated:

	Three months ended December 31,
(dollars in thousands)	2012		2011		$ Change			% Change
Salaries	$	8,324	$	8,071	$	253			3.1	%
Commissions and incentives		1,162		188		974			518.1	%
Employee benefits		2,852		2,506		346			13.8	%
Total salaries and benefits expense		12,338		10,765		1,573			14.6	%
Occupancy		1,839		1,815		24			1.3	%
Equipment		1,063		1,020		43			4.2	%
Change in reserve for unfunded commitments		1,060		100		960
Data processing and software		1,204		1,232		(28	)		(2.3	%)
Telecommunications		575		567		8			1.4	%
ATM network charges		762		525		237			45.1	%
Professional fees		763		682		81			11.9	%
Advertising and marketing		805		871		(66	)		(7.6	%)
Postage		216		337		(121	)		(35.9	%)
Courier service		298		302		(4	)		(1.3	%)
Intangible amortization		52		52		0			0.0	%
Operational losses		357		207		150			72.5	%
Provision for foreclosed asset losses		208		592		(384	)		(64.9	%)
Foreclosed asset expense		398		258		140			54.3	%
Assessments		607		589		18			3.1	%
Other		2,581		2,162		419			19.4	%
Total other noninterest expense		12,788		11,311		1,477			13.1	%
Total noninterest expense	$	25,126	$	22,076	$	3,050			13.8	%

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, 2011. 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 37-year history in the banking industry. It operates 41 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 72 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 athttp://www.tricountiesbank.com.

TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

	Three months ended
	December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012			December 31, 2011
Statement of Income Data
Interest income	$	26,143		$	27,465		$	27,944		$	27,164		$	29,609
Interest expense		1,372			1,834			2,010			2,128			2,329
Net interest income		24,771			25,631			25,934			25,036			27,280
Provision for loan losses		1,524			532			3,371			3,996			5,429
Noninterest income:
Service charges and fees		6,035			5,783			6,155			5,952			6,457
Other income		3,976			3,344			4,422			2,313			4,032
Total noninterest income		10,011			9,127			10,577			8,265			10,489
Noninterest expense:
Base salaries net of deferred loan origination costs		8,324			8,337			8,273			8,159			8,071
Incentive compensation expense		1,162			1,254			1,347			1,375			188
Employee benefits and other compensation expense		2,852			2,771			2,870			3,228			2,506
Total salaries and benefits expense		12,338			12,362			12,490			12,762			10,765
Other noninterest expense		12,788			13,228			11,877			10,153			11,311
Total noninterest expense		25,126			25,590			24,367			22,915			22,076
Income before taxes		8,132			8,636			8,773			6,390			10,264
Net income	$	4,722		$	5,020		$	5,321		$	3,931		$	6,549
Share Data
Basic earnings per share	$	0.30		$	0.31		$	0.33		$	0.25		$	0.41
Diluted earnings per share	$	0.29		$	0.31		$	0.33		$	0.25		$	0.41
Book value per common share	$	14.33		$	14.21		$	13.96		$	13.71		$	13.55
Tangible book value per common share	$	13.30		$	13.16		$	12.91		$	12.66		$	12.49
Shares outstanding		16,000,838			15,992,893			15,992,893			15,978,958			15,978,958
Weighted average shares		15,996,137			15,992,893			15,985,922			15,978,958			15,978,958
Weighted average diluted shares		16,064,685			16,051,876			16,047,344			16,042,765			16,015,312
Credit Quality
Nonperforming originated loans	$	61,769		$	66,654		$	69,749		$	70,764		$	75,775
Total nonperforming loans		72,516			81,611			82,877			82,575			85,731
Guaranteed portion of nonperforming loans		131			218			218			218			3,061
Foreclosed assets, net of allowance		7,498			10,185			12,743			14,789			16,332
Loans charged-off		4,006			3,368			4,188			4,922			5,340
Loans recovered		983			1,133			1,214			464			525
Selected Financial Ratios
Return on average total assets		0.74	%		0.80	%		0.85	%		0.63	%		1.04	%
Return on average equity		8.20	%		8.85	%		9.54	%		7.14	%		12.19	%
Average yield on loans		6.16	%		6.49	%		6.73	%		6.53	%		6.94	%
Average yield on interest-earning assets		4.40	%		4.68	%		4.81	%		4.66	%		5.12	%
Average rate on interest-bearing liabilities		0.33	%		0.44	%		0.48	%		0.49	%		0.53	%
Net interest margin (fully tax-equivalent)		4.17	%		4.37	%		4.46	%		4.30	%		4.71	%
Supplemental Loan Interest Income Data:
Discount accretion PCI - cash basis loans		42			24			108			18			418
Discount accretion PCI - other loans		979			1,192			886			776			949
Discount accretion PNCI loans		841			591			1,391			1,286			1,738
Regular interest Purchased loans		3,226			3,251			3,439			3,420			3,651
All other loan interest income		19,157			20,472			19,968			19,429			20,491
Total loan interest income		24,245			25,530			25,792			24,929			27,247

TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

	Three months ended
	December 31, 2012			September 30, 2012			June 30, 2012			March 31, 2012			December 31, 2011
Balance Sheet Data
Cash and due from banks	$	748,899		$	622,494		$	644,102		$	681,760		$	637,275
Securities, available-for-sale		163,027			183,432			202,849			212,157			229,223
Federal Home Loan Bank Stock		9,647			9,647			9,990			10,508			10,610
Loans held for sale		12,053			14,937			5,321			5,869			10,219
Loans:
Commercial loans		135,528			145,469			139,733			129,906			139,131
Consumer loans		386,111			388,844			393,248			419,539			406,330
Real estate mortgage loans		1,010,130			1,007,432			984,147			924,336			965,922
Real estate construction loans		33,054			33,902			35,354			37,304			39,649
Total loans, gross		1,564,823			1,575,647			1,552,482			1,511,085			1,551,032
Allowance for loan losses		(42,648	)		(44,146	)		(45,849	)		(45,452	)		(45,914	)
Foreclosed assets		7,498			10,185			12,743			14,789			16,332
Premises and equipment		26,985			24,083			22,595			19,814			19,893
Cash value of life insurance		50,582			50,742			50,292			50,853			50,403
Goodwill		15,519			15,519			15,519			15,519			15,519
Intangible assets		1,092			1,144			1,196			1,248			1,301
Mortgage servicing rights		4,552			4,485			4,757			4,784			4,603
FDIC indemnification asset		1,997			2,485			4,046			3,405			4,405
Accrued interest receivable		6,636			7,638			7,545			7,095			7,312
Other assets		38,607			37,189			38,030			39,474			43,384
Total assets		2,609,269			2,515,481			2,525,618			2,532,908			2,555,597
Deposits:
Noninterest-bearing demand deposits		684,833			592,529			578,010			564,143			541,276
Interest-bearing demand deposits		503,465			483,557			480,337			488,573			431,565
Savings deposits		762,919			767,244			737,433			724,449			797,182
Time certificates		338,485			358,309			369,997			392,581			420,513
Total deposits		2,289,702			2,201,639			2,165,777			2,169,746			2,190,536
Accrued interest payable		1,036			1,139			1,415			1,587			1,674
Reserve for unfunded commitments		3,615			2,555			2,590			2,550			2,740
Other liabilities		35,122			32,449			30,538			29,675			30,427
Other borrowings		9,197			9,264			60,831			69,074			72,541
Junior subordinated debt		41,238			41,238			41,238			41,238			41,238
Total liabilities		2,379,910			2,288,284			2,302,389			2,313,870			2,339,156
Total shareholders’ equity		229,359			227,197			223,229			219,038			216,441
Accumulated other comprehensive gain		2,159			3,635			3,537			3,658			3,811
Average loans		1,574,329			1,573,816			1,534,006			1,527,536			1,570,648
Average interest-earning assets		2,383,226			2,351,164			2,331,148			2,334,842			2,320,205
Average total assets		2,565,307			2,519,259			2,509,099			2,514,541			2,513,634
Average deposits		2,247,776			2,174,085			2,148,964			2,149,212			2,149,422
Average total equity	$	230,296		$	226,857		$	223,028		$	220,366		$	214,979
Total risk based capital ratio		14.5	%		14.4	%		14.3	%		14.3	%		13.9	%
Tier 1 capital ratio		13.3	%		13.1	%		13.0	%		13.0	%		12.7	%
Tier 1 leverage ratio		9.8	%		9.9	%		9.7	%		9.5	%		9.5	%
Tangible capital ratio		8.2	%		8.4	%		8.2	%		8.0	%		7.9	%