TriCo Bancshares
63 Constitution Drive
Chico, California 95973
September 14, 2009
Via EDGAR--CORRES
Hugh West
Accounting Branch Chief
U.S. Securities and Exchange Commission
Washington, D.C 20549
Mail Stop 4720
Re: TriCo Bancshares
Form 10-K for Fiscal Year Ended December 31, 2008
Form 10-Q for Quarterly Period Ended June 30, 2009
File Number 000-10611
Dear Mr. West:
We have reviewed your letter dated August 31, 2009 regarding your review of
TriCo Bancshares's (the "Company") Form 10-K for December 31, 2008 and Form 10-Q
for March 31, 2009 filed with the U.S. Securities and Exchange Commission (the
"SEC"). Our responses to your comments are set forth below.
Form 10-Q filed for the period ended June 30, 2009
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Item 1. Financial Statements
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Notes to Unaudited Condensed Consolidated Financial Statements
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Allowance for Loan Losses, page 10
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1. Please revise your future filings to provide the disclosures required
by paragraph 20(a) of SFAS 114. Please note that such disclosures are
required as of each balance sheet date, including quarterly periods.
Response: The Company will include the disclosures required by paragraph 20(a)
of SFAS 114 in future filings.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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Classified Assets, page 30
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2. We note that consumer loans (including HELOC and indirect auto loans)
comprise a significant amount of your overall loan portfolio. So that
a reader would have a clear understanding of how management identifies
problem loans within these specific loan categories as well as the
steps taken to address any potential problems, please expand your
disclosure in future filings to address the following:
o Discuss the specific risks associated with these types of loans;
o Discuss the processes taken by management in identifying
potential problem loans;
o Discuss the steps taken in identifying the nature and type of
underlying collateral supporting these loans;
o Discuss how management determines the value of the underlying
collateral (i.e. if appraisals are obtained, how often and under
what circumstance);
o Discuss how shortfalls are addressed, including the steps taken
by management to address these shortfalls (i.e. include the
timeframe followed); and
o Discuss the timing when both initial and any subsequent loan
charge-offs or additional loan loss provisions are recorded.
Provide us with your proposed future disclosures.
Response: The Company will enhance its future disclosures, beginning
with the Form 10-Q for the period ended September 30, 2009,
to disclose how management identifies problem consumer loans
and the steps that it takes to address potential problems
with such loans.
The Company requires additional time to provide its proposed
disclosures in view of their complexity and respectfully
requests an extension until September 30, 2009 to provide
such response.
3. We note the continued deterioration in the credit quality of your loan
portfolio during fiscal 2008 and into fiscal 2009, which has resulted
in a significant increase in nonperforming loans and assets as well as
significant increases in both the loan loss provision and loan
charge-offs during that timeframe. So that a reader will have a clear
understanding of the deterioration being experienced within your loan
portfolio, please revise your future filings to specifically discuss
the nature, geographical location and type of loans contributing to
these increases, the problems associated with the specific individual
loans, the charge-offs recorded, and the triggering events which lead
to both the charge-offs and the significantly increased loan loss
provisions. Additionally, discuss how these more recent and specific
events and circumstances have been factored into and considered in the
determination of the allowance for loan loss methodologies established
by management. Provide us with your proposed future disclosures.
Response: The Company will enhance its future disclosures, beginning
with the Form 10-Q for the period ended September 30, 2009,
to provide additional disclosures concerning changes in the
credit quality of the loan portfolio as requested.
The Company requires additional time to provide its proposed
disclosures in view of their complexity and respectfully
requests an extension until September 30, 2009 to provide
such response.
4. We note your tabular presentation of classified loans and other
classified assets. To enable a reader to have a clear understanding of
the potential exposure within each of your lending categories, please
revise the presentation to identify the level (or "grading") of
classified loans and other assets by specific loan type. Provide us
with your proposed future disclosures.
Response: Beginning with the Form 10-Q for the period ended September
30, 2009, the Company will enhance its tabular presentation
of classified loans and assets to include levels or grades
of classified loans and other assets by specific loan type.
The Company requires additional time to provide its proposed
form of tabular disclosure and respectfully requests an
extension until September 30, 2009 to provide such response.
5. Tell us supplementally and revise your disclosure in future filings,
to explain the nature of the U.S. Government guarantees which are
considered by the Company both in the determination of the level of
nonperforming loans in the determination of the loan loss allowance.
Response: The guarantees are provided by various government agencies
including the United States Department of Agriculture, Small
Business Administration, Bureau of Indian Affairs, Statewide
Health Planning Development, California Capital Financial
Development Corporation, and Safe Bidco. These guarantees
range from 50% to 100% of the loan amount with the majority
at 80% or higher. Historically, we have disclosed the level
of nonperforming loans before consideration of such
guarantees (gross) and after consideration (net) of such
guarantees. We consider these guarantees when considering
the adequacy of the loan loss allowance.
The Company will enhance its future disclosures, beginning
with the Form 10-Q for the period ended September 30, 2009,
to explain the nature of U.S. Government guarantees
considered in determining the level of nonperforming loans
and the loan loss allowance.
Nonperforming Loans, page 30
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6. Given the significant increase in nonaccrual loans recognized during
fiscal 2008 and into fiscal 2009, and in order to give the reader a
clear understanding of the problem loans, please revise the tabular
presentation, in future filings, to include a detail of nonaccrual
loans by loan type.
Response: Beginning with the Form 10-Q for the period ended September
30, 2009, the Company will enhance its tabular presentation
of problem loans to include a detail of nonaccrual loans by
loan type.
7. To the extent you continue to experience increase in OREO, consider
disclosing a roll-forward of activity within OREO in future filings
(e.g. beginning balance, additions, sales, gains or losses and
impairment and ending balance).
Response: The Company will continue to monitor its level of OREO and will
disclose roll-forward activity within OREO in future filings
where material.
The Company acknowledges that it is responsible for the adequacy and accuracy of
the disclosures included in its SEC filings. Additionally, the Company
acknowledges that comments from the SEC's staff or changes to disclosures in
response to staff comments do not foreclose the SEC from taking any action with
respect to the filings. The Company will not assert staff comments from the SEC
as a defense in any proceeding initiated by the SEC or any person under the
federal securities laws of the United States.
We appreciate your review and insights in the Company's filings. Should you need
additional information concerning the items during your review or the responses
noted above, please contact me at (530) 898-0300.
Sincerely,
/s/ Thomas J. Reddish
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Thomas J. Reddish
Executive Vice President and Chief Financial Officer
TriCo Bancshaers