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):
July 28, 2003
TriCo Bancshares
(Exact name of registrant as specified in its charter)
California 0-10661 94-2792841
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(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization)
63 Constitution Drive, Chico, California 95973
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (530) 898-0300
Item 7(c): Exhibits
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99.1 Press release dated July 28, 2003
Item 12: Results of Operations and Financial Condition
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On July 28, 2003 TriCo Bancshares announced their quarterly earnings for the
second quarter of 2003. A copy of the press release is attached as Exhibit 99.1
to this Form 8-K and is incorporated herein by reference.
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: July 28, 2003 By: /s/ Thomas J. Reddish
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Thomas J. Reddish, Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press release dated July 28, 2003
PRESS RELEASE Contact: Thomas J. Reddish
Vice President & CFO
For Immediate Release (530) 898-0300
TRICO BANCSHARES ANNOUNCES 2nd QUARTER EARNINGS FOR 2003
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Chico, CA -- July 28, 2003. TriCo Bancshares (NASDAQ: TCBK), parent company
of Tri Counties Bank, today announced quarterly earnings of $4,254,000, or $0.53
per diluted share, for the three months ended June 30, 2003. These results
represent a 12.8% increase from the $0.47 earnings per diluted share reported
for the three months ended June 30, 2002 on earnings of $3,365,000. Diluted
earnings per share for the six months ended June 30, 2003 and 2002 were $1.03
and $0.93, respectively, on earnings of $7,867,000 and $6,694,000, respectively.
Included in the results ended June 30, 2003 was the effect of the Company's
acquisition of North State National Bank on April 4, 2003. On April 4, 2003,
North State National Bank had assets of $140 million, loans totaling $77
million, and deposits totaling $126 million. The Company issued $13,090,057 in
cash, 723,512 shares of TriCo common stock, and options to purchase 79,587 TriCo
common shares at an average exercise price of $6.22 per share in exchange for
all of the 1,234,375 common shares and options to purchase 79,937 common shares
of North State National Bank outstanding as of April 4, 2003.
The improvement in results from the year-ago quarter was due to a
$1,778,000 (13.4%) increase in fully tax-equivalent net interest income to
$15,000,000, a $350,000 (70.0%) decrease in provision for loan losses to
$150,000, and a $2,611,000 (66.2%) increase in noninterest income to $6,554,000.
These contributing factors were partially offset by a $3,405,000 (31.1%)
increase in noninterest expense to $14,368,000 for the quarter ended June 30,
2003.
Richard Smith, President and Chief Executive Officer commented that, "We
are pleased with the Company's performance during this most recent quarter.
Highlights of the quarter include the successful merger of North State National
Bank into Tri Counties Bank. The reactions of North State customers and
employees to the merger have been very positive, and the financial results of
the merger are exceeding our expectations. We also experienced strong internal
loan growth in all sectors of our loan portfolio during this most recent
quarter. We continue to capitalize on the strong mortgage refinance market for
noninterest income."
During the quarters ended June 30, 2003 and 2002, the Company's net
interest margin was 5.02% and 5.74%, respectively, on interest-earning asset
balances averaging $1.19 billion and $921 million, respectively. The 29.6%
increase in the average balance of interest earning assets more than offset the
decrease in net interest margin resulting in an increase in fully tax equivalent
net interest margin of $1,778,000 (13.4%) to $15,000,000.
Noninterest income for the second quarter of 2003 increased $2,611,000
(66.2%) to $6,554,000 from $3,943,000 in the year-ago quarter. The increase in
noninterest income from the year-ago quarter was mainly due to an increase in
service charges on deposit products (up $1,626,000 or 104% to $3,192,000), and
an increase in gain on sale of loans (up $780,000 or 145% to $1,319,000). The
increase in service charges income was mainly due to the introduction of an
overdraft privilege deposit product in July 2002 that has added a new stream of
recurring noninterest income. The increase in gain on sale of loans is due to
the Company's ability to originate and sell an increased volume of residential
real estate mortgage loans in the current environment of record mortgage
refinance. ATM fees and interchange income increased from the year-ago quarter
(up $159,000 or 36.3% to $597,000) due to expansion of Company's ATM network and
increased debit card usage.
Noninterest expense for the second quarter of 2003 increased $3,405,000
(31.1%) to $14,368,000 from $10,963,000 in the second quarter of 2002. The
increase in noninterest expense was mainly due to a $1,863,000 (32.3%) increase
in salary and benefit expense to $7,636,000. The increase in salary and benefits
expense was mainly due to annual salary increases, increased commission and
incentive expense, and new employees at the Company's four newly opened branches
in 2002 and from the merger with North State National Bank on April 4, 2003.
Noninterest expense excluding salaries and benefits also increased (up
$1,542,000 or 29.7% to $6,732,000). Approximately $236,000 of this increase were
expenses related to the overdraft privilege product introduced in July 2002, and
included in professional fees. Also related to the overdraft privilege product
introduced in July 2002, was a $112,000 increase in operational losses from the
year-ago quarter. Increased advertising expenses accounted for $69,000 of the
increase in other noninterest expense.
Provision for loan losses for the second quarter of 2003 was $150,000
versus $500,000 in the same quarter in 2002. The Company had net loan
charge-offs of $1,916,000 in the second quarter of 2003 compared to $224,000 of
net loan charge-offs in the same period of 2002. The increase in charge-offs is
primarily due to a $1,900,000 charge-off related to two commercial real estate
loans to a single entity collateralized by a single building. The Company had
previously established a specific allowance for the two commercial real estate
loans noted above in its allowance for loan losses. Based on current
information, the Company does not anticipate any further charge-offs or increase
in loan loss provision related to these two commercial real estate loans. The
Company is diligently pursuing collection of these two commercial real estate
loans.
Nonperforming loans net of government agency guarantees were $20,539,000,
$8,180,000, and $9,553,000 as of June 30, 2003, December 31, 2002, and June 30,
2002, respectively. The increase in nonperforming loans between December 31,
2002 and June 30, 2003 is mainly due to the two commercial real estate loans
noted above. As of June 30, 2003, December 31, 2002, and June 30, 2002, the
ratio of allowance for loan losses to total loans was 1.58%, 2.09% and 2.03%,
respectively. The decrease in the ratio of allowance for loan losses to total
loans from 2.09% to 1.58% is due to strong loan growth during the second quarter
of 2003, including the addition of $77 million from the merger of North State
National Bank, and the $1,900,000 charge-off noted above. Based on the current
conditions of the loan portfolio, Management believes that the $13,455,000
allowance for loan losses at June 30, 2003 is adequate to absorb probable losses
inherent in the Company's loan portfolio.
Assets of the Company at June 30, 2003 were $1.36 billion compared to $1.03
billion at June 30, 2002. Loan balances at June 30, 2003 were $852 million
compared to $672 million at June 30, 2002, and deposit balances at June 30, 2003
were $1.17 billion compared to $898 million at June 30, 2002.
For the second quarter of 2003, the Company had an annualized return on
assets of 1.27% and a return on equity of 13.88% versus 1.33% and 14.72%,
respectively, in the second quarter of 2002. As of June 30, 2003, TriCo
Bancshares had a Tier 1 capital ratio of 9.1% and a total risk-based capital
ratio of 10.4%.
As previously announced on October 19, 2001, the Board of Directors
approved a plan to repurchase, as conditions warrant, up to 150,000 shares of
the Company's common stock on the open market or in privately-negotiated
transactions. The timing of purchases and the exact number of shares to be
purchased will depend on market conditions. This repurchase plan represented
approximately 2.2% of the Company's 6,992,080 common shares outstanding on
October 19, 2001, and is open-ended with no expiration date. As of this date,
the Company has repurchased 118,800 shares under this plan, with none of those
shares being repurchased in the quarter ended June 30, 2003. The Company can
repurchase 31,200 shares under the plan and intends to continue its share
repurchases as market conditions allow.
In addition to the historical information contained herein, this press
release contains certain forward-looking statements. 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, 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. 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.
TriCo Bancshares and Tri Counties Bank are headquartered in Chico,
California. Tri Counties Bank has a 28 year history in the banking industry. Tri
Counties Bank operates 33 traditional branch locations and 10 in-store branch
locations in 20 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 54 ATMs and a 24-hour, seven days a week
telephone customer service center. Brokerage services are provided at the Bank's
offices by the Bank's association with Raymond James Financial, Inc. For further
information please visit the Tri Counties Bank web-site at
http://www.tricountiesbank.com
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
Three months ended
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June 30, March 31, December 31, Sept. 30, June 30,
2003 2003 2002 2002 2002
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Statement of Income Data
Interest income $ 18,161 $ 16,349 $ 16,228 $ 16,435 $ 16,075
Interest expense 3,445 3,115 3,245 3,227 3,179
Net interest income 14,716 13,234 12,983 13,208 12,896
Provision for loan losses 150 150 800 700 500
Noninterest income:
Service charges and fees 3,985 3,500 3,651 3,521 2,141
Other income 2,569 1,896 2,347 1,892 1,802
Total noninterest income 6,554 5,396 5,998 5,413 3,943
Noninterest expense:
Salaries and benefits 7,636 6,877 6,434 6,344 5,773
Intangible amortization 324 228 228 228 228
Other expense 6,408 5,546 5,811 5,561 4,962
Total noninterest expense 14,368 12,651 12,473 12,133 10,963
Net income before taxes 6,752 5,829 5,708 5,788 5,376
Net income $ 4,254 $ 3,613 $ 3,748 $ 3,627 $ 3,365
Share Data
Basic earnings per share $ 0.55 $ 0.51 $ 0.53 $ 0.52 $ 0.48
Diluted earnings per share 0.53 0.50 0.52 0.50 0.47
Book value per common share $ 15.86 $ 14.39 $ 14.02 $ 13.70 $ 13.25
Shares outstanding 7,852,110 7,080,470 7,060,965 7,035,590 7,025,690
Weighted average shares 7,796,383 7,070,701 7,046,246 7,026,120 7,011,306
Weighted average diluted shares 8,021,229 7,250,178 7,211,705 7,231,165 7,213,800
Credit Quality
Non-performing loans, net of
government agency guarantees $ 20,539 $ 20,610 $ 8,180 $ 11,031 $ 9,533
Other real estate owned 1,551 1,608 932 - 71
Loans charged-off 2,063 280 870 73 282
Loans recovered $ 147 $ 46 $ 66 $ 141 $ 58
Allowance for loan losses to total loans 1.58% 2.06% 2.09% 2.10% 2.03%
Allowance for loan losses to NPLs 66% 69% 176% 130% 143%
Allowance for loan losses to NPAs 61% 64% 158% 130% 142%
Selected Financial Ratios
Return on average total assets 1.27% 1.26% 1.35% 1.39% 1.33%
Return on average equity 13.88% 14.29% 15.35% 15.17% 14.72%
Average yield on loans 7.34% 7.64% 7.75% 7.89% 8.05%
Average yield on earning assets 6.18% 6.36% 6.53% 7.02% 7.12%
Average rate on earning liabilities 1.45% 1.52% 1.65% 1.72% 1.74%
Net interest margin 5.02% 5.17% 5.25% 5.67% 5.74%
Total risk based capital ratio 10.4% 11.6% 12.0% 11.9% 12.0%
Tier 1 Capital ratio 9.1% 10.4% 10.7% 10.6% 10.8%
TRICO BANCSHARES - CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
Three months ended
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June 30, March 31, December 31, Sept. 30, June 30,
2003 2003 2002 2002 2002
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Balance Sheet Data
Cash and due from banks $ 65,051 $ 58,925 $ 67,170 $ 56,749 $ 54,094
Fed funds sold 3,200 10,100 8,100 23,400 27,800
Securities, available-for-sale 354,040 354,007 338,024 268,921 234,544
Loans
Commercial loans 147,746 117,329 125,982 142,290 138,770
Consumer loans 237,704 210,633 201,858 191,601 171,178
Real estate mortgage loans 407,218 330,001 319,969 313,191 321,260
Real estate construction loans 59,622 35,810 39,713 36,472 40,592
Total loans, gross 852,290 693,773 687,522 683,554 671,800
Allowance for loan losses (13,455) (14,293) (14,377) (14,382) (13,613)
Premises and equipment 19,830 17,542 17,224 16,583 16,195
Cash value of life insurance 34,633 29,257 15,208 15,045 14,927
Intangible assets 22,189 3,815 4,043 4,387 4,615
Other assets 23,124 23,377 21,660 19,266 19,199
Total assets 1,360,902 1,176,503 1,144,574 1,073,523 1,029,561
Noninterest bearing demand deposits 260,861 226,373 232,499 202,895 188,546
Interest bearing demand deposits 204,538 188,575 182,816 175,883 169,343
Savings deposits 393,198 324,584 297,926 268,182 255,264
Time certificates 315,008 293,120 291,996 290,935 284,757
Total deposits 1,173,605 1,032,652 1,005,237 937,895 897,910
Fed funds purchased & repurchase agreements 17,400 - - - -
Other liabilities 22,425 19,044 17,399 16,275 15,589
Other borrowings 22,905 22,915 22,924 22,932 22,940
Total liabilities 1,236,335 1,074,611 1,045,560 977,102 936,439
Total shareholders' equity 124,567 101,892 99,014 96,421 93,122
Accumulated other
comprehensive income 3,433 2,688 2,303 2,333 1,393
Average loans 801,493 679,975 675,626 676,009 648,618
Average interest earning assets 1,194,618 1,048,286 1,013,175 954,611 921,486
Average total assets 1,339,107 1,149,759 1,112,660 1,044,518 1,009,727
Average deposits 1,146,211 1,003,853 970,666 908,675 879,579
Average total equity $ 122,567 $ 101,139 $ 97,684 $ 95,645 $ 91,429