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. – (July 25, 2013) – TriCo Bancshares (NASDAQ: 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:

	Three months ended June 30,
(dollars in thousands)	2013			2012			$ Change			% Change
Net Interest Income	$	24,589		$	25,934		($	1,345	)		(5.2	%)
Provision for loan losses		(614	)		(3,371	)		2,757			(81.8	%)
Noninterest income		10,131			10,577			(446	)		(4.2	%)
Noninterest expense		(23,509	)		(24,367	)		858			(3.5	%)
Provision for income taxes		(4,272	)		(3,452	)		(820	)		23.8	%
Net income	$	6,325		$	5,321		$	1,004			18.9	%

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
	June 30, 2013								March 31, 2013								June 30, 2012
	Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate
Assets
Earning assets
Loans	$	1,608,511	$	23,883			5.94	%	$	1,548,565	$	24,072			6.22	%	$	1,534,006	$	25,792			6.73	%
Investments - taxable		164,907		1,229			2.98	%		156,057		1,187			3.04	%		208,417		1,615			3.10	%
Investments - nontaxable		17,108		240			5.61	%		8,884		162			7.29	%		9,561		171			7.15	%
Federal funds sold		632,292		494			0.31	%		721,424		446			0.25	%		579,164		430			0.30	%
Total earning assets		2,422,818		25,846			4.27	%		2,434,930		25,867			4.25	%		2,331,148		28,008			4.81	%
Other assets, net		161,916								174,864								177,951
Total assets	$	2,584,734							$	2,609,794							$	2,509,099
Liabilities and shareholders’ equity
Interest-bearing
Demand deposits	$	518,961		125			0.10	%	$	520,507		141			0.11	%	$	473,124		197			0.17	%
Savings deposits		782,339		246			0.13	%		782,173		271			0.14	%		731,988		296			0.16	%
Time deposits		322,668		484			0.60	%		333,556		513			0.62	%		380,943		584			0.61	%
Other borrowings		7,596		1			0.05	%		8,188		1			0.05	%		62,300		601			3.86	%
Trust preferred securities		41,238		311			3.02	%		41,238		311			3.02	%		41,238		332			3.22	%
Total interest-bearing liabilities		1,672,802		1,167			0.28	%		1,685,662		1,237			0.29	%		1,689,593		2,010			0.48	%
Noninterest-bearing deposits		635,503								651,303								562,909
Other liabilities		36,444								39,150								33,569
Shareholders’ equity		239,985								233,679								223,028
Total liabilities and shareholders’ equity	$	2,584,734							$	2,609,794							$	2,509,099
Net interest rate spread							3.99	%							3.96	%							4.33	%
Net interest income/net interest margin (FTE)				24,679			4.07	%				24,630			4.05	%				25,998			4.46	%
FTE adjustment				(90	)							(61	)							(64	)
Net interest income (not FTE)			$	24,589							$	24,569							$	25,934

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:

	Three months ended June 30,
(dollars in thousands)	2013			2012			$ Change			% Change
Service charges on deposit accounts		3,277			3,644		($	367	)		(10.1	%)
ATM fees and interchange		2,233			2,026			207			10.2	%
Other service fees		562			570			(8	)		(1.4	%)
Mortgage banking service fees		430			379			51			13.5	%
Change in value of mortgage servicing rights		191			(464	)		655			(141.2	%)
Total service charges and fees		6,693			6,155			538			8.7	%
Gain on sale of loans		1,590			1,237			353			28.5	%
Commission on NDIP		841			842			(1	)		(0.1	%)
Increase in cash value of life insurance		380			450			(70	)		(15.6	%)
Change in indemnification asset		(314	)		662			(976	)		(147.4	%)
Gain on sale of foreclosed assets		615			304			311			102.3	%
Other noninterest income		326			927			(601	)		(64.8	%)
Total other noninterest income		3,438			4,422			(984	)		(22.3	%)
Total noninterest income		10,131			10,577		($	446	)		(4.2	%)

Noninterest income decreased $446,000 (4.2%) to $10,131,000 in the three months ended June 30, 2013 when compared to the three months ended June 30, 2012. The decrease in noninterest income was due primarily to a $976,000 decrease in change in indemnification asset to a loss of $314,000, and a $600,000 decrease in gain on life insurance death benefit, included in other noninterest income, to zero that were partially offset by a $655,000 increase in change in value of mortgage servicing rights to $191,000, a $353,000 increase in gain on sale of loans to $1,590,000, and a $311,000 increase in gain on sale of foreclosed assets to $615,000. The decrease in change in indemnification asset was due to increased real estate collateral values that resulted in lower expected losses on covered impaired loans. The increase in change in value of mortgage servicing rights was due to a sharp increase in mortgage rates that occurred near the end of the quarter ended June 30, 2013 that reduced the rate of mortgage refinancing that in turn increased the expected future life and cash flow stream of our existing mortgage servicing portfolio. The increase in gain on sale of loans was due to decreased mortgage rates that existed for much of the quarter ended June 30, 2013 when compared to the quarter ended June 30, 2012, and our focus of additional resources in this area when compared to the year-ago quarter. The increase in gain on sale of foreclosed assets was due to increased real estate values.

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

	Three months ended June 30,
(dollars in thousands)	2013		2012		$ Change			% Change
Salaries	$	8,508	$	8,273	$	235			2.8	%
Commissions and incentives		1,299		1,347		(48	)		(3.6	%)
Employee benefits		3,083		2,870		213			7.4	%
Total salaries and benefits expense		12,890		12,490		400			3.2	%
Occupancy		1,753		1,857		(104	)		(5.6	%)
Equipment		913		1,126		(213	)		(18.9	%)
Change in reserve for unfunded commitments		35		40		(5	)		(12.5	%)
Data processing and software		1,280		1,278		2			0.2	%
Telecommunications		587		567		20			3.5	%
ATM network charges		679		532		147			27.6	%
Professional fees		658		691		(33	)		(4.8	%)
Advertising and marketing		415		863		(448	)		(51.9	%)
Postage		133		218		(85	)		(39.0	%)
Courier service		255		256		(1	)		(0.4	%)
Intangible amortization		53		52		1			1.9	%
Operational losses		122		143		(21	)		(14.7	%)
Provision for foreclosed asset losses		546		1,004		(458	)		(45.6	%)
Foreclosed asset expense		163		267		(104	)		(39.0	%)
Assessments		543		590		(47	)		(8.0	%)
Other		2,484		2,393		91			3.8	%
Total other noninterest expense		10,619		11,877		(1,258	)		(10.6	%)
Total noninterest expense	$	23,509	$	24,367	($	858	)		(3.5	%)

Salary and benefit expenses increased $400,000 (3.2%) to $12,890,000 during the three months ended June 30, 2013 compared to the three months ended June 30, 2012. Base salaries increased $235,000 (2.8%) to $8,508,000 due mainly to annual merit increases. Incentive and commission related salary expenses decreased $48,000 (3.6%) to $1,299,000 due primarily to decreases in production related incentives. Benefits expense, including retirement, medical and workers’ compensation insurance, and taxes, increased $213,000 (7.4%) to $3,083,000 due primarily to increased health and workers’ compensation insurance expenses.

Other noninterest expenses decreased $1,258,000 (10.6%) to $10,619,000 during the three months ended June 30, 2013 when compared to the three months ended June 30, 2012. The decrease in other noninterest expense was due primarily a $562,000 (44.2%) decrease in the provision for, and expenses related to, foreclosed assets, a $448,000 (51.9%) decrease in advertising and marketing expense, and a $317,000 (10.6%) decrease in occupancy and equipment expenses. The decrease in foreclosed asset provision and expenses was due to increased property values and a reduction in foreclosed assets from $12,743,000 at June 30, 2012 to $5,054,000 at June 30, 2013. The decrease in advertising and marketing expense from the year ago period was due to cost savings efforts in this area. The decrease in occupancy and equipment expense was primarily due to reduced furniture and equipment expense as the Bank focused on its new campus and operations center that came into service at the end of June 2013.

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, 2012. 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 38-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 at http://www.tricountiesbank.com.

TRICO BANCSHARES—CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands, except share data)

	Three months ended
	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Statement of Income Data
Interest income	$	25,756		$	25,806		$	26,143		$	27,465		$	27,944
Interest expense		1,167			1,237			1,372			1,834			2,010
Net interest income		24,589			24,569			24,771			25,631			25,934
(Benefit from) provision for loan losses		614			(1,108	)		1,524			532			3,371
Noninterest income:
Service charges and fees		6,693			5,929			6,035			5,783			6,155
Other income		3,438			4,289			3,976			3,344			4,422
Total noninterest income		10,131			10,218			10,011			9,127			10,577
Noninterest expense:
Base salaries net of deferred loan origination costs		8,508			8,348			8,324			8,337			8,273
Incentive compensation expense		1,299			1,286			1,162			1,254			1,347
Employee benefits and othercompensation expense		3,083			3,327			2,852			2,771			2,870
Total salaries and benefits expense		12,890			12,961			12,338			12,362			12,490
Other noninterest expense		10,619			8,640			12,788			13,228			11,877
Total noninterest expense		23,509			21,601			25,126			25,590			24,367
Income before taxes		10,597			14,294			8,132			8,636			8,773
Net income	$	6,325		$	8,477		$	4,722		$	5,020		$	5,321
Share Data
Basic earnings per share	$	0.39		$	0.53		$	0.30		$	0.31		$	0.33
Diluted earnings per share	$	0.39		$	0.53		$	0.29		$	0.31		$	0.33
Book value per common share	$	14.90		$	14.75		$	14.33		$	14.21		$	13.96
Tangible book value per common share	$	13.87		$	13.71		$	13.30		$	13.16		$	12.91
Shares outstanding		16,065,469			16,005,191			16,000,838			15,992,893			15,992,893
Weighted average shares		16,027,557			16,002,482			15,996,137			15,992,893			15,985,922
Weighted average diluted shares		16,134,510			16,091,150			16,064,685			16,051,876			16,047,344
Credit Quality
Nonperforming originated loans	$	52,661		$	54,763		$	61,769		$	66,654		$	69,749
Total nonperforming loans		61,466			63,963			72,516			81,611			82,877
Guaranteed portion of nonperforming loans		106			108			131			218			218
Foreclosed assets, net of allowance		5,054			6,124			7,498			10,185			12,743
Loans charged-off		1,947			2,771			4,006			3,368			4,188
Loans recovered		1,065			1,098			983			1,133			1,214
Selected Financial Ratios
Return on average total assets		0.98	%		1.30	%		0.74	%		0.80	%		0.85	%
Return on average equity		10.54	%		14.51	%		8.20	%		8.85	%		9.54	%
Average yield on loans		5.94	%		6.22	%		6.16	%		6.49	%		6.73	%
Average yield on interest-earning assets		4.27	%		4.25	%		4.40	%		4.68	%		4.81	%
Average rate on interest-bearing liabilities		0.28	%		0.29	%		0.33	%		0.44	%		0.48	%
Net interest margin (fully tax-equivalent)		4.07	%		4.05	%		4.17	%		4.37	%		4.46	%
Supplemental Loan Interest Income Data:
Discount accretion PCI—cash basis loans		129			167			42			24			108
Discount accretion PCI—other loans		732			597			979			1,192			886
Discount accretion PNCI loans		815			766			841			591			1,391
Regular interest Purchased loans		3,234			3,074			3,226			3,251			3,439
All other loan interest income		18,973			19,468			19,157			20,472			19,968
Total loan interest income		23,883			24,072			24,245			25,530			25,792

TRICO BANCSHARES—CONSOLIDATED FINANCIAL DATA

(Unaudited. Dollars in thousands)

	Three months ended
	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Balance Sheet Data
Cash and due from banks	$	592,155		$	802,271		$	748,899		$	622,494		$	644,102
Securities, available for sale		127,519			144,454			163,027			183,432			202,849
Securities, held to maturity		85,643			—			—			—			—
Federal Home Loan Bank Stock		9,163			9,647			9,647			9,647			9,990
Loans held for sale		6,582			7,931			12,053			14,937			5,321
Loans:
Commercial loans		128,410			115,483			135,528			145,469			139,733
Consumer loans		387,217			376,063			386,111			388,844			393,248
Real estate mortgage loans		1,097,446			1,010,249			1,010,130			1,007,432			984,147
Real estate construction loans		38,967			30,567			33,054			33,902			35,354
Total loans, gross		1,652,040			1,532,362			1,564,823			1,575,647			1,552,482
Allowance for loan losses		(39,599	)		(39,867	)		(42,648	)		(44,146	)		(45,849	)
Foreclosed assets		5,054			6,124			7,498			10,185			12,743
Premises and equipment		31,194			29,468			26,985			24,083			22,595
Cash value of life insurance		51,388			51,008			50,582			50,742			50,292
Goodwill		15,519			15,519			15,519			15,519			15,519
Intangible assets		987			1,040			1,092			1,144			1,196
Mortgage servicing rights		5,571			4,984			4,552			4,485			4,757
FDIC indemnification asset		1,441			1,807			1,997			2,485			4,046
Accrued interest receivable		7,339			7,201			6,636			7,638			7,545
Other assets		35,935			38,484			38,607			37,189			38,030
Total assets	$	2,587,931			2,612,433			2,609,269			2,515,481			2,525,618
Deposits:
Noninterest-bearing demand deposits		645,461			639,420			684,833			592,529			578,010
Interest-bearing demand deposits		514,088			531,695			503,465			483,557			480,337
Savings deposits		791,978			786,352			762,919			767,244			737,433
Time certificates		315,175			328,083			338,485			358,309			369,997
Total deposits		2,266,702			2,285,550			2,289,702			2,201,639			2,165,777
Accrued interest payable		944			975			1,036			1,139			1,415
Reserve for unfunded commitments		3,210			3,175			3,615			2,555			2,590
Other liabilities		29,936			37,340			35,122			32,449			30,538
Other borrowings		6,575			8,125			9,197			9,264			60,831
Junior subordinated debt		41,238			41,238			41,238			41,238			41,238
Total liabilities		2,348,605			2,376,403			2,379,910			2,288,284			2,302,389
Total shareholders’ equity		239,326			236,030			229,359			227,197			223,229
Accumulated other comprehensive gain		49			1,538			2,159			3,635			3,537
Average loans		1,608,511			1,548,565			1,574,329			1,573,816			1,534,006
Average interest-earning assets		2,422,818			2,434,920			2,383,226			2,351,164			2,331,148
Average total assets		2,584,734			2,609,794			2,565,307			2,519,259			2,509,099
Average deposits		2,259,471			2,287,539			2,247,776			2,174,085			2,148,964
Average total equity	$	239,985		$	233,679		$	230,296		$	226,857		$	223,028
Total risk based capital ratio		14.7	%		15.2	%		14.5	%		14.4	%		14.3	%
Tier 1 capital ratio		13.5	%		13.9	%		13.3	%		13.1	%		13.0	%
Tier 1 leverage ratio		10.2	%		9.9	%		9.8	%		9.9	%		9.7	%
Tangible capital ratio		8.7	%		8.5	%		8.2	%		8.4	%		8.2	%